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Online Journalism Scandinavia: Behind the spin of Mecom’s half-year results

August 27th, 2008 | No Comments | Posted by in Online Journalism

Even former Mirror boss David Montgomery, who has a reputation as a ferocious cost-cutter, admits his new pan-European newspaper group Mecom cannot cost-cut its way out of a recession.

Shares in the company tumbled on the London Stock Exchange last week after the newspaper group failed to impress the market with its interim half-year results.

Perhaps jittery from all the recent talk of recession, investors did not appreciate the highly geared company’s reports of ‘worsening economic conditions’.

Despite Montgomery’s assurances that his business model is very different from that of UK newspapers – with subscription rates as high as 96 per cent in some of the countries Mecom operates in – alert observers noted that advertising still makes up 52 per cent of revenue.

No more title-specific news desks?
As widely reported, this does of course mean employees at the company, already disgruntled about redundancies on the table, will have to prepare for an even tighter ship in times ahead.

But there is more to this story: in a phone conference with employee representatives last week, Montgomery is reported to have admitted the company cannot cost-cut its way out of a recession; and emphasised that new ways of working and new streams of revenue were necessary for newspapers to have a profitable future.

He specifically highlighted two areas as key to the company’s future strategy: digital expansion, where its Norwegian division, Edda Media, is leading the pack with 9 per cent of its revenues from digital operations; and the media house strategy pioneered by Lisbeth Knudsen, the CEO of its Danish operation.

As Journalism.co.uk previously reported, Knudsen has reorganised her company’s titles into ‘verticals’ that deliver copy not only across platforms, but also titles – be they broadsheet, tabloid or regional newspapers. This, apparently, is to become the standard for all future media house strategy in Mecom.

Innovation exchange

“Mecom’s German division for instance – comprised of Berliner Zeitung, a national; Netzeitung, an online-only newspaper, and various magazine titles – should pay heed to these words. This model might be seen as a good fit for Germany,” an employee representative told me.

Mecom has also established an agreement that allows all Mecom countries to exchange software solutions developed in one country to another Mecom country without charge. The Reader’s Newspaper, a citizen journalism portal previously described by Journalism.co.uk, for instance, is to be exported from Norway to Denmark and Poland.

Another Norwegian export is a new range of hyper-local websites and freesheets Mecom is launching in Poland: Moje Miastro – a concept that has been operating for some time in Norway. The newspaper group, often portrayed as cash-starved and too much in debt, has also entered into an agreement to buy Edtytor Sp. z o.o., a regional newspaper business in Olsztyn. It has told employee representatives that the Polish expansion in new products was to blame for the dip in profits from its Polish arm.

Beware the ghost of recession

In other words, keeping an eye on innovations in the various parts of Mecom’s far-flung empire, can give useful pointers to what we can expect on group level.

Unfortunately for Mecom, a less fortunate trend spreading through the many European countries the company operates in is the ghost of recession.

In this age of globalisation, operating in more than one European country is no safe hedge against a market downturn, despite Montgomery indicating otherwise.

As Peter Kirwan recently wrote in his Press Gazette blog: “[W]hen it comes to the ad recession, we’re at the end of beginning, not the beginning of the end.”

In the summer months we have seen the footprints of recession appear in new territories such as Norway and Holland, causing the job and property classifieds markets to shrink – a sure sign that worse is yet to come.

For Mecom, the question is which is strongest, which will have the final say: the ability to come up with new innovative ways of doing business with less resources, or the clammy hand of a jittery market in the throes of recession?

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Online Journalism Scandinavia: Mecom’s Danish arm may ditch costly CMS for Drupal

July 11th, 2008 | 3 Comments | Posted by in Newspapers

Berlingske Media, Denmark’s biggest publisher of daily newspapers, is considering making free open source software Drupal its online publishing system of choice.

Former Mirror-boss David Montgomery’s Danish lieutenant, Lisbeth Knudsen, is contemplating the move, which could save a substantial sum of money – but it does not come without risk.

Berlingske Media already runs some of its sites on Drupal – a long-time favourite free content management system (CMS) of web hacker-geeks – but many consider the open source solution more vulnerable to hackers than proprietary systems.

“Our sports portal, launched early in June, is developed in Drupal, and we will use this for more sites. We are in the process of evaluating future online solutions, and will make a decision on this later this year. So far we have chosen Drupal for some of our smaller sites and Saxotech online for the bigger,” Knudsen told me.

But is Drupal up to the task?

The Danish newspaper publisher is in the process of integrating all its titles into ‘verticals’ that deliver copy across platforms and titles, and its sports site carries material from several of Berlingske’s titles.

Henning Sund, head of digital development for newspaper publisher Edda Media, is sceptical about how well Drupal is suited to such large-scale projects.

”I think part of the reason Berlingske Media is considering Drupal is that they are so desperate to get away from Saxotech Online. That is a desire I understand perfectly,” he said, explaining that Edda Media, Mecom’s Norwegian division, is also in the process of replacing Saxotech Online, but Drupal is not a candidate.

”I do not feel the security in Drupal is well-documented enough. We want a provider that can take responsibility for this, something we will not get with Drupal,” said Sund, adding that you also have to spend a lot of money on developing the desired functionality in Drupal, as it is not ‘plug and play’.

Berlingske-owned AOK.dk, a city guide for Copenhagen that runs on Drupal, has used an east European company to develop extra functionality in Drupal – a concept that has been exported to Berlin and Mecom Germany.

However, Sund does not think that Mecom boss Montgomery will impose Drupal as the standard CMS throughout the company should it be a success:

“Montgomery has made it very clear that as long as you reach your budget targets, you can choose the solutions you see fit. However, if you do not reach these targets, you will get Montgomery breathing down your neck, and that is something you would do anything to avoid.”

For more news on newspapers harnessing open source read about The Jewish Chronicle’s launch of a beta site using Drupal.

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Online Journalism Scandinavia: David Montgomery’s toughest general – Lisbeth Knudsen, editor-in-chief of Berlingske Media

June 23rd, 2008 | 2 Comments | Posted by in Online Journalism

Once so controversial as the boss of The Mirror, over the last few years David Montgomery has reinvented himself as a European media mogul.

As head of the pan-European media company Mecom, Montgomery has emerged as an internet evangelist and one of the most optimistic advocates of a multimedia future.

This is good news for Lisbeth Knudsen, CEO and editor-in-chief of Mecom’s worst performing subsidiary.

Denmark’s Berlingske Media is the biggest publisher of daily newspapers in one of Europe’s toughest newspaper markets. Revenues of paid for dailies in Denmark have been ravaged by a costly two-year-long freesheet war.

When Montgomery bought the Danish company in 2006, it had a paltry 3.5 per cent profit margin – miles away from the 15 – 20 per cent Montgomery was promising his investors.

But it’s all grist to the mill for Knudsen, who rumour has it secured her job last spring by submitting the longest list of potential cost cuts.

Montgomery’s toughest general has been charged with justifying his professed faith in the profits to be made from the new media world.

“It is my task to deliver what I have promised, but also to tell Berlingske’s journalists that we have exciting times ahead of us. It is necessary for our survival that we start using new work processes, develop our journalism and launch new digital products. Old traditions are no longer enough,” Knudsen told Journalism.co.uk

Her first act as head of Berlingske was to publicly denounce Mecom’s profit demands as unrealistic.

Simultaneously, she made it crystal clear that the financial situation required radical changes, skilfully lowering the expectations of both her boss and the unions.

Integrate everything
Central to those changes is integration. Not only converging media platforms, but also altering most of the company’s titles into ‘verticals’ that deliver copy across platforms and titles be they broadsheet, tabloid or regional newspapers.

Berlingske may have created one of the most integrated media operations in Europe, but it has also caused great concern among the company’s journalists about work flow, work culture and how it may erode the different media brands.

“Everyone has to be able to work and plan to all media platforms. Journalists get more resources to cover events in this way. Instead of sending three journalists from three different platforms or titles, we will now have one journalist cover the results of a football match, one live blogging it, and one writing the portrait of the game’s top scorer,” said Knudsen.

To ensure editorial standards, she added, each title will have a brand manager to makes sure it runs only content that is appropriate and in line with its specific values.

Discontent
These assurances have not been enough, however, to assure the domestic journalists union. It has voiced continuous concern about merging titles, job cuts and the new ‘integrated’ work environment where journalists are confined to hot desks to create a paperless environment.

Knudsen says that new technology is necessary. Adding that the increase in the number of tools at the disposal of her reporters has also created many exciting new opportunities for journalists.

“This integration is necessary to survive. Journalists today have to accept that they have to fight for every pair of eyeballs. I accepted this job because I believe, both as a journalist and as CEO, we can create something great in this company,” she said.

Not here to please

As for her proprietor, she said: “It is my impression that you can have a discussion. If I am to be in charge of this, I have to believe in it. I have made it very clear that I’m not here to please. I have a very open and direct dialogue with the management about our goals and progress. During my thirty-something years in the newspaper industry I’ve encountered a lot of unprofessional owners. Mecom is a very professional owner, the company imposes certain demands to our revenues, but that is the way it has to be.”

David Montgomery may have got himself a straight shooter, but what impression is she likely to have made on her newsroom staff? It seems she is a journalististic champion who is both admired and feared.

“If anyone can stand up to Montgomery it is she. She is completely ruthless and resembles Montgomery in many ways. I cannot think of anyone in Danish media who dares to pick a fight with her,” said a journalist who has worked with Knudsen but did not wish to be named.

“But her journalistic integrity is above reproach. She is a journalistic champion.”

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