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Monty’s UK approach to European newspapers appeals to investors

Scandinavian journalists who feared the introduction of a British newspaper culture when David Montgomery’s Mecom business bought Orkla Media last year are being proved right.

The evidence is in a glance at Mecom’s preliminary announcement of results (link to pdf) for 2006 — a loss of £21m. The second slide shows the empire in creation in an arc from Norway, through Denmark, Germany and Poland to outposts in Lithuania and the Ukraine. The objectives are spelled out in four bullet points:

  • To optimise performance using techniques tested in the UK
  • To replicate the benefits of consolidation seen in the UK and elsewhere
  • To exploit our 1.4 million strong subscriber base to generate new revenues
  • To accelerate the growth of online revenues

The next slide includes an approach to business which will strike fear in the heart of every journalist: “Improving profitability through short-term cost reduction.”

To investors who have put another £580m into Mecom’s coffer (share placing and 7 for 10 open offer announcement on April 12) this is music. They are seeing the possibility of the high levels of profitability achieved by British regional paper groups becoming available in Europe.

Journalists in Britain remember Montgomery’s time running Mirror Group. When he faced opposition from journalists in Germany last year a Guardian report included this paragraph which sums up what many British hacks feel about him:

Montgomery is used to such antipathy. Andrew Marr, in his book My Trade, quotes a former editor of the Independent, which was owned by Montgomery’s Mirror group, as saying: “What he [Montgomery] did showed a breathtaking disregard for keeping his word and a merciless savagery unheard of even by Fleet Street’s blood-soaked and hypocritical standards.” Marr adds, with tongue only partially in cheek: “Some of us would put it a little more strongly than that.”

This week Montgomery suffered a slightly bruised nose when his freesheet in Denmark, Dato, merged with Urban: A sensible decision in an overcrowded market where the speculation now is over which will be next to go (via Kristine Lowe).

In both Denmark and Norway journalists are up in arms about redundancies with Danish staff striking. Tastes of the Montgomery approach or, as Kristine Lowe puts it, “Journalists feel something is rotten in Mecom’s Danish and Norwegian fiefdoms…”

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