Ten days ago, Chatham Hedge Fund, owner of the National Enquirer, was the winning bidder for the assets of McClatchy Co., owner of 30 U.S. newspapers, including the Miami Herald, Sacramento Bee and Charlotte Observer, for around $300 million.
This week we learned that Adevinta, a spin-out of the Schibsted Media Group, the Norwegian newspaper-based based local media company, has agreed to buy eBay’s global classified ads marketplace business for $9.2 billion.
Was this some kind of reversal of fortune? The venerable McClatchy & Knight Ridder newspaper franchises are sold for peanuts to a supermarket-tabloid-owning hedge fund, while at the same time a recently spun-out local marketplace division of a newspaper company from Norway is spending almost $10 billion to become the largest online classifieds business in the world?
Nope. This has been in the tea leaves for decades, and reading the news took me back almost 25 years to my first interactions with Scandinavian newspaper executives.
I was in Europe attending my first international newspaper conference as part of a congress of several hundred about “new media,” and I was going to speak about the recent emergence of online advertising in the U.S.
A commotion arose during the audience question segment following one of the first presentations. Three large bearded gentlemen in suits (we all wore suits to conferences in those days) physically took control of one of the auditorium’s floor microphones, as well as the conference overhead projector (yes, the conference’s preferred presentation format, even in 1996, was overhead slides). They announced to the speaker on stage they wouldn’t cede control until they were permitted to give a short presentation to the forum.
Recognizing that the chances of physically removing them were slight -- and would massively disrupt the event -- the conference head allowed them to speak.
We quickly learned that the disrupters were from newspapers in Sweden and Norway, who, I believe, had hoped to address the conference properly but had been denied a speaking slot. However, they deemed their topic of such critical importance they had decided to force their way onto the agenda to ensure we were aware of “the miracle in the North.” I have to say, as a prototypical American who had only secured his first passport months ago at 32, I was totally taken by their physical presence, their accents and their absolute resolve to make sure their point of view was heard.
I remember thinking to myself that I was watching real-life Vikings actually doing what I could only imagine were modern-day Viking kinds of things.
In quick succession, their leader walked us through slides on the ubiquity, density and consumer adoption of digital mobile phones in Scandinavian countries, and, as their piece de resistance, showed us diagrams and photographs of the Nokia 9000 Communicator, a soon-to-be-released mobile phone that could flip open to expose a full alphanumeric keyboard and screen, with a built-in web browser, email client and word processor.
They were upset that the conversations at the conference were primarily focused on the personal computer-based Internet, since they believed the newspaper industry’s survival depended on understanding and adopting the mobile Internet that was already emerging in their countries.
I don’t know whether or not one of those enlightened disrupters was from Schibsted. But I do know that over the next few years, Schibsted was always looked up to as a model for the future, a focused, forward-looking newspaper company committed to controlling its own destiny in the fast-unfolding digital media and marketing world.
Clearly, they played their hand better than most of their U.S. peers. What did they do differently?
There are at least three attributes we all saw in companies like Schibsted -- qualities lacking in those who failed. They are:
Commercial-first focus. Newspaper companies that have won over these past two decades understood the economics of local news. The size of a newspaper on any given day is determined not by how much news occurred the day before, but on how much advertising was sold two days before. Advertising pays for the “newshole.”
Too many companies fell in love with their publisher and editor throne rooms and forgot that they were local print advertising monopolies that needed to extend those monopolies to the digital world. They were embarrassed to admit that making next-generation classifieds and marketplaces (shopper publications) THE core of their businesses was probably the only way they could pay the bills for strong local journalism and newsrooms.
Strong ownership and leadership. Many of the larger U.S. newspaper companies were fortunate to have been owned by smart, long-term-focused owners during those years. Advance, Cox, Landmark, Morris, Blethen, The New York Times and Washington Post were among them.
However, too many of the companies sold out for the hedge fund billions, or couldn’t protect their companies from short-term-focused investors in the public markets because they failed to truly develop, articulate and execute a durable strategy for their digital future.
Resilience. When times were tough -- the bursting of the dot-com bubble, 9/11, financial crises -- so many U.S. newspaper companies pulled back massively on their digital investments and commitment, but not companies like Schibsted.
More than 11 years ago, I wrote that I would never write about the newspaper industry again. I decided to make an exception. I hope you don’t mind.