Pelle Tornberg - White Knight or Grim Reaper for Metro USA?
Metro USA has been sold by its Swedish owner to a company called Seabay Media, which is headed by Metro’s former CEO, Pelle Tornberg (Törnberg in Swedish) who’s widely regarded as the newspapers founder. Metro’s American newspapers have a week-daily circulation of 590,000 and supposedly snag 1.2 million readers in Philadelphia, New York, and Boston (where the Boston Globe owns 49% of the newspaper in a No-Win No-Lose partnership) who can’t be bothered to bring any reading material of their own to whatever public transportation they use (as much as I don’t particularly care for Metro I have to admit that the defunct Boston Now showed how surprisingly easy it is to make a newspaper that’s much, much worse).
Not much information about the deal is available other than what is in the announcement made by Metro and Seabay so we’ll have to resort to old-school Kremlology. The Seabay contact person listed in the press release has a Swedish cellphone number and works in Investment Management/Restructuring according to a partial LinkedIn profile. Not your typical newspaper PR flak, but more promising for Metro readers and employees than, say, a tax-shelter consultant or a debt collector from a biker gang.
Hardly anything has been reported about this Seabay Media company or how much capital it has at its disposal. Is Tornberg its lone investor, its main investor, or just the front person for a small or large gaggle of money men? I don’t know. Is the company loaded with cash or leveraged with debt? I don’t know. Nor is it known how much Seabay is paying for the Metro’s US operations, if anything at all. It could simply be that it is taking over obligations and liability, thus saving Metro from having to throw good money after bad. It has been rumored that Metro, which lost even more money in the U.S. in 2007 (8.9 million euro) than it did in the dreadful 2008 (5.3 million), has been unwilling to shut down its U.S. operations because of long-term contracts with printers that contain very costly early-exit fees.
(This lack of insider-information about the deal supports my hypothesis that while Americans take enormous pride in out-leaking each other Swedes prefer to stay mum.)
Tornberg did say in an interview on Monday that Seabay Media is not going to launch the Metro USA newspapers on the web as it will be enough work, according to Tornberg, to make and keep the printed papers profitable.
However, there is reason to believe that Tornberg is in it to win it rather than just perform some kind of financial alchemy for quick profit or tax-evasion purposes (perhaps something involving what would amount to a hostile handover of Metro Boston to minority-owner Boston Globe). In an interview last year he claimed to have a “positive” outlook on the future for newspapers, but allowed that the “business model must change” and added that paid-for newspapers “with exclusive content … must make themselves more expensive and live with smaller circulation.” The multiples mentioned in the interview are 3-5 times current subscription prices.
The interviewer concludes by asking “so there is a future for newspapers?” Tornberg’s one-word answer: “Absolutely.”
In another interview, held in Swedish, from late last year Tornberg made the same point about newspapers having to segment free versus paid-for content and charge the small number of readers willing to pay much more than they currently do. Tornberg also points to Rupert Murdoch’s purchase of Wall Street Journal as a sign that newspapers have a viable financial future (News Corp. shareholders are free to disagree). He says that the market’s winners will be companies that have enough money to weather the current rough times.
As an aside, trading higher subscription rates for a smaller circulation has been suggested for the Boston Globe by Boston-based media professor and former journalist Dan Kennedy as one part of a strategy to improve that fortunes of that newspaper.
And now for something completely different. Seabay probably sounds a bit odd to Americans. I’m guessing it’s a literal translation of the Swedish word havsvik, which Americans would know as “sea bay.” The typical Swede probably imagines a sea bay as deeper and more narrow than most Americans would, a tranquil place from where one can behold the majestic beauty of the sea without being exposed to its winds and currents. In other words, a nice place to be for a media company in these - here it comes - stormy times for the newspaper industry. I’ll be here all week!
