Christopher Rosenqvist, media expert, on Metro financial situation
newspaper techniques: Metro International just released results for their first quarter 2007. The Swedish operations that used to be the flagship of the group in terms of financial success are not doing well. Do you believe, as CEO Pelle Törnberg explains, that this is due to inadequate management and underperformance of the Metro Bostad property edition, or are there more profound reasons ?
Christopher Rosenqvist: I think those explanations are accurate. I do not believe Metro in Sweden is just suffering under the heavier free sheet competition. The situation is not worse in Stockholm than it is in other places around the world, such as London, Barcelona, Paris, New York, or Hong Kong. The competition is not the explanation for the bad figures. The market for free sheets will still grow in the future, and the more free papers are launched, the larger the market gets. So that is good. Metro is not alone in this segment any more, but will remain unique. The strength of the group is its corporate culture, its way of working, thinking, that’s where its core competence really lies. They are very good in understanding the markets and have also the chance of comparing the different markets and doing benchmarks from different operations around the world. They are very much fact-based and they have so many operations, more than 100 editions in 20 countries. Just this mass of information and knowledge of the markets makes them superior to their challengers.
nt: Pelle Törnberg will leave the company this year. He was the driving force behind the rapid international development of the company. Will that affect the future?
Christopher Rosenqvist: One of the lesson I learned when I worked for Metro is that nobody is irreplaceable. They have strong managers and they have so much confidence that they can support Andreas Ohlson, the new CEO of Metro Nordic. The person they chose is a good choice; he has been in charge of several operations.
nt: What do you think of this rumor of Schibsted taking over Metro International ?
Christopher Rosenqvist: It could very well happen; that is not a bad idea. But the stock price for Metro International is very low right now, so it is not a good time to sell the company. The Metro people are smart in business, so I doubt they would sell at this time. I understand that for the financial analysts it’s easy to escalate the worries about Metro. But it's a fantastic company and in the long run it’s a good business model. There will always be setbacks in certain markets, there will always be changes in management, products that will not work, but what Metro has shown in the past is their ability to adapt, to kill products when necessary and that managerial skill is a key strength. The people around Pelle Törnberg are very much connected to him. It’s also important to stress that he has built up a kind of management school around him with his way of thinking, of working; that will pay now.
nt: Is the Metro concept aging, with the emergence of so many competitors?
Christopher Rosenqvist: Metro will continue to develop its concept in different platforms. I would not be surprised if they wanted to start local television, for example. They want to be stronger in the internet, in mobile television…they are very open, not stuck in the perception that it is a newspaper. Their concept is communicating with an audience -- whatever platform is necessary for that. That is their strength, in contrast with other newspapers, who are stuck in their tracks. Metro has never been limited and it is also important that it has the mindset to adapt to new communication platforms.
nt: Will the shareholders support the financial uncertainty due to increasing competition?
Christopher Rosenqvist: One must look long-term. Metro is only 12 years old. It is not a long time for those who believe that this concept is a fundamental change in the way you communicate with the market. For most new technologies, 10 years is the time it takes to break even; it took 10 years for mobile to become a commodity. If I was thinking ahead, it’s maybe more important for Metro to own the concept than to own all the operations in each market. I would probably think that it’s more interesting for them to sell the rights to the concept. It’s time-consuming and high-risk to be alone on each market. And they already started in some countries to find the right partners, like in France, Canada or Hong Kong. I would be looking to that, because you reduce the risk and build local connections. And it’s also a way to leverage cash. In some places they want to own the operations. There are some fortresses, here and there, that they want to control. But if you want to expand and invest in new technologies, your have to enter into partnerships. And I think they are aware of that.
Page first published: 10.05.2007