TMG hiring Bain & Co to justify something dramatic

Telegraaf Media Group (TMG) has hired Bain & Co to assist in developing a strategy. It should be presented early 2012.

So what is that, is the 100+ years old TMG hiring an outside firm to tell them how to run their company?

In fact, it is really quite commendable. TMG is a more or less diversified consumer-oriented local media firm, that is being squeezed on all sides: dwindling circulation, adverse advertising markets, Internet substitution and competition from global (i.e. US-based) Internet services. Hiring a few experts isn't such a bad idea. The point is: there are two very different skill sets involved.

When I started as a financial analyst at an investment management firm, I knew nothing of telecoms, but was appointed 'telecoms analyst' nonetheless. That's how it works in finance. My chief said: "In five years time, you will start to understand how the business works". Sometimes this model works, sometimes it doesn't. Analysts are usually very young and don't get the chance to develop some industry insight before moving on to a different job. Still, there is not much wrong with the model: the job requires two very different skill sets, finance and telecoms, and its fine if you more or less control either one of them. The other you will grow on the job. And importantly: arriving at an investment firm, there is lot's of infrastructure: not just financial models and decision making systems, but access to the best research there is out there. It's a perfect playground for any devoted analyst to learn a new trick.

The same model is applied to politics. Our current government consists of politicians. They have learnt the skill of politics. And one would wish that they would draw on experts for making sound policies. Alas, that appears not to be happening. Time and again, expert advice is completely ignored, as the stupidest of all, Halbe Zijlstra, is not ashamed of to share with the world.

Back to TMG. TMG know all about traditional media, and Bain & Co will tell them to integrate the firm, increase synergies, reduce costs and find new revenue streams. They have six months and will claim expenses to the order of millions of euros.

All that can of course be thought of by the TMG management. Hiring Bain & Co is only done for one obvious reason: drastic measures. Watch out for TMG to announce something big, early 2012 - justified by the Bain & Co suits.

Another free paper - but bringing quality content

The freesheet industry is getting an interesting twist in the Netherlands. Free newspapers aren't new, but 'De Pers' (yes, this would be 'the press' in English) adds something new. It bills itself as a 'quality' newspaper.

The paper launched in January and since doubled circulation (to 500k) and added a news website. It distinguishes from the usual free fare with its expanded distribution - not just via public transporation stations but at retail, petrol and office locations as well. Last week they started a home delivery trial.

Obviously, the Spits (owned by Telegraaf) and Metro freesheets will get hurt as they will have to share their section of the advertising market with the #3 player. The Wegener titles (regional newspapers) and the Telegraaf flagship newspaper (let's say, 'low brow' fare) seem to be pretty much insulated from this effect by virtue of their content. Privately owned PCM (producer of a range of 'quality' newspapers) seems to be at risk, especially the nrc.next paper after which 'De Pers' may have been modelled.

Still, I think 'De Pers' needs to expand some more to really have an impact: add a weekend edition; produce several editions a day (how about an evening edition delivered by email for workers to print out at the office and read on the train). I also believe an evening edition could be more worthwile for readers to bring home and share with family members.

Anyway, the focus on making a quality newspaper (for free, with expanded distribution) seems quite unique. Contrast that with this article, which states: "... that traditional newspapers will live or die based on the quality of their content -- an authoritative perspective that free papers cannot provide."

NEWSPAPERS://Another free paper to hit the Dutch market

Tomorrow a new free daily will hit the Dutch market, simply called Dagblad De Pers ('Daily The Press'). Obviously, they couldn't claim the 'De Pers' name for being too generic.

I posted before on this paper. The main characteristics are:

• Vis-à-vis existing freebies (Metro and Telegraaf's Spits): De Pers will be a 'quality' paper with more extensive distribution, i.e. not exclusively on public transportation (railway stations), but at 'retail, petrol and office' as well. In fact, my employer will allow the De Pers guys to drop of a bunch of papers every day. It seems that the people over at Telegraaf and Metro are pretty nervous over the new entrant. Metro has just made a smart move: they secured a deal with retailer Super de Boer (300 locations), which will extend their circulation to 535k (from 430k). On the other hand, Metro lost the exclusive right to distribute through railway stations, and it is rumoured that De Pers has already moved in at a cost of 1.2m EUR/annum.
• Vis-à-vis subscription papers: De Pers obviously has the advantage of having an advertising-based business model, but it has a substantial number of negatives: no door-to-door distribution, no weekend edition, no brand recognition (even worse: despite its ambition to be a 'quality' newspaper, being free puts it in the low quality Metro/Spits market). Originally, entrepreneur Marcel Boekhoorn (who made his fortune buying Telfort for EUR 25m and selling it to KPN for almost a billion) planned the paper as a joint venture with PcM (which publishes a set of quality newspapers, including NRC, Trouw and Volkskrant, combined circulation 720k). PcM changed its mind (Boekhoorn is now trying to squeeze some funds from PcM for exiting discussions at a late stage), but now appears to be interested in starting its own free paper.