Bonnier Group, the Swedish owner of Scottish financial newspaper Business am, is looking for a partner to help fund the costs of its future development. Having spent over &£20m since the launch of the pink, tabloid-format daily in September 2000, Bonnier is unwilling to shoulder the running costs alone any longer.
The newspaper’s original five-year business plan set an initial target of 15,000 daily sales, rising by the end of the plan to 25,000 – the break-even point. Unfortunately, not everything goes according to plan. The last audit figures showed circulation fairly stagnant at 11,276 – at least 19,000 would be required to be on track to reach the break-even goal by 2005. Consequently, the paper has cut ten per cent of its workforce, increased its cover price to 95p in return for &£8m additional funding, and appointed London-based financial adviser Lazard to find a suitable partner willing to inject the &£10m thought necessary to bring the paper to break-even point.
What will be the attraction for a partner? The publication itself is undoubtedly a quality product, winning numerous awards for its design and editorial content. Although it is available in newsagents throughout Scotland, 90 per cent of its sales are subscription-based, purchased at a discounted price (75p). Uniquely placed as Scotland’s only daily financial newspaper, Business am has become an important read within the Scottish business scene. But that is the problem: it is a great read but not a great buy. The readership of the paper, within its target market is an incredible five readers per copy – equating to 56,000 people daily.
While this should make the paper an attractive platform from which to sell advertising, it is a difficult push – most media buyers prefer to trade on circulation, not readership. Despite having more than 80 different advertisers, both local and national, present throughout September, Business am needs more. Noting the current slump in advertising, any potential partner would also face the necessity of increasing sales by a further 5,000 every year, just to balance the books. Who would undertake such a challenge?
The drawn-out disposal of Scottish Media Group’s (SMG) newspaper portfolio – the Herald, Sunday Herald and Glasgow Evening Times – has increased interest in the Scottish media landscape, but might also hinder Business am’s hunt for a co-owner. SMG’s publications are certainly a good-looking proposition, making &£8.5m profit on a turnover of &£38.8m in the first half of 2002, and they are rightly receiving all the attention from both venture capitalists and trade. Business am can only wait and hope to find a partner quickly, perhaps from among the ranks of those that fail to buy SMG titles. Failing that, Bonnier may consider a management buyout. Unfortunately, I fear the paper could be in for some lonely times ahead.
Paul McGarr is regional press manager at Zenith Media