The future is digital for Mecom newspapers

Posted by Helena Humphrey on January 15, 2010 at 12:23 PM

Mecom, a 'content and consumer business' under David Montgomery, publishes 25 million newspapers per week across Europe; thrice as many as the UK's Johnston Press. In 2007 the company's share price plunged a disastrous 97 percent due to weak advertising and debt, an unfortunate turn of events the news publisher been struggling to recover from ever since.

Trading up yesterday however, revealed an altogether brighter outlook for the publisher of some 300 titles, its share price jumping 14.8 percent, topping the FTSE Small Cap .FTSC leaders board.

The majority of Mecom titles line the shelves of newsagents across Denmark, Norway, Poland and the Netherlands. Analysing the encouraging results, Chief Executive Montgomery said that: "Scandinavians and in particular smaller papers in Norway are making faster strides in online revenue development."

No doubt keen to cash in on a potential money-spinner/would be saviour, Montgomery has now promised a paid-for digital future for all Mecom publications. In an interview with the Guardian, Montgomery stated the company's new online payments strategy would be revealed alongside its annual results on 17 March. Without being specific, he signalled the group's intentions to charge for "much more specific content, unique content" as opposed to general news.

And it's a model the group has already tasted success with, charging for "high grade" legal and financial information as part of various newspapers in Poland and an online paid-for magazine in Denmark. Montgomery believes that the future of charging for online content involves capturing an audience for local news, a theory Mecom are currently attempting to put into practice in Norway.

But it's not going to be plain sailing for the group, a fact that Montgomery acknowledges. Merely implementing the very strategy that could save Mecom will also cause the company "major upheaval".

Does this turn to digital spell the end for newspapers however? Montgomery believes not, pointing the finger at the advertising downturn as the main perpetrator behind the print crisis, offering a significant glimmer of hope for print: "People who have written off newspapers have clearly done so far too soon." Though Mecom's publications may not be home and dry just yet, Montgomery is positive about the future. Despite the predicted 5 percent fall in print ad spend this year, the Chief Executive believes his new business model is strong enough to compensate.

Sources: Guardian, Reuters