Capital injections Essays

Capital injections Essays Capital injections Essay Capital injections Essay This regional newspaper was bought by Orkla in 1991 for 25m NOK (around   2m), and has with time proved to be a very good investment. The low price was due to the fact that at the time the newspaper was almost bankrupt and was suffering from a lack of advertising revenue. By 1995 the paper was making a huge profit, and Orkla received 1/3 of its invested capital in dividends. When the journalists failed to receive an increase in pay that reflected the situation, they went on a month long by-line strike, and in an open letter published in the paper they accused Orkla of being greedy, arrogant and with a huge appetite. The journalists claimed that the lack of capital remaining in the paper would lead to deteriorating standards, and these arguments were apparently given creed, as the profit from 1996 was left in the newspaper. 13 The last year however, the situation has changed. With the current recession in the world economy, the media companies, especially those dependent on advertising, are starting to feel the strain. Sunnmi rsposten is still operating with a profit, but this profit has not been big enough to satisfy Orklas demand of 15%. As a result, the paper had to cut 14 jobs this year. After negotiations with the trade unions, this was done through severance packages and early retirement, but the situation did cause the journalists to bring back the question of what kind of product Orkla actually wants. A-Pressen The first workmans newspaper Vort Arbeid was founded in 1884 and by 1928 there were 45 spread all over the country. 14 The majority of these papers were forced to close during the Second World War. This caused animosity towards the rest of the press, as newspapers with a more conservative line were allowed to continue publishing. In spite of this, the labour press resurfaced again after the war, and in 1948 they founded the company Norsk Arbeiderpresse AS. This centralisation proved to be very successful and helped the newspapers to get through the at times painful severance from its role as a mouthpiece for the Labour Party and movement in the 60s, 70s and 80s. 16 In the late 1980s, the co-operative was suffering from heavy losses, and was forced into reorganisation and cost cutting operations. This, together with capital injections from one of the main owners, the Federation of Norwegian Trade Unions (LO), helped to bring the situation around, and by 1992 it was operating at a profit again. In 1993 the co-operative went public, and in 1994 the name was changed to A-Pressen AS. A year later, it became independent of the Labour Party when the latter sold its shares (however, LO still owns 29,4%). 17 A-Pressen is today the third largest media company in Norway, and it holds a control stake in 45 local and regional newspapers, 42 of which are market leaders in their regions. It also owns 1/3 of TV2 as well as four local television companies18. In addition to this, it has small stakes in several other papers and local television stations, and states on its homepage that its goal is to become the major owner of local television. 19 In addition to its Norwegian operations, A-Pressen also owns printing and publishing facilities in Russia and in Ukraine. A-Pressen controls 20% of the daily print run, and looks for an 11% return from its assets. However, its papers are not faring too well at the moment. A consumer report published on the web site www. kampanje. com, showed that the company had lost 26 000 readers from 2001-2002. 20 Schibsted Schibsted was originally a family owned printing business, and is he oldest and largest of the three. Cristiania Adresseblad (later Aftenposten) was founded in 1860 as a means to exploit spare printing capacity, and soon became, and remains, the biggest selling broad sheet. It remained the familys only newspaper until 1966 when they took over VG, at the time a failing broad sheet, and turned it into a successful tabloid. By 1981 it was Norways biggest selling daily. 21 As the company grew in the 1980s, the need for reorganisation became evident. In 1988 it became a joint stock company and it went public in 1992. Schibsted was one of the instigators for the creation of TV2, and still owns 1/3 of this channel. It owns 100% of Aftenposten and VG, and has interests in most of the big regional papers, giving it a market share of 33% (however it also has strong links with other media groups, giving it a potential influence over 2/3 of the media). Other interests include publishing, printing, web portals, and the free newspaper 20 minutes. Their strategy is to strengthen and develop the established media, and at the same time ensure that new growth and development are achieved within the new media areas. 22 The Tinius Trust At Schibsteds annual meeting in 1996, the chairman of the Board, Tinius Nagell-Erichsen announced that he had founded the Tinius Trust, and put his 26,1% of the shares into Blommenholm Industrier AS to keep them together. He did this because he believed that the ownership of a newspaper was different from other kinds of industry ownership, and that the owners had a responsibility to ensure the values of their paper.