"We are not looking for a partner at all"
20-Min-Holding CEO Sverre Munck denies sales negotiations with Tamedia
20 Min Holding CEO Sverre Munck denies sales negotiations with TamediaBy Stefano Monachesi 20 Minuten is only on the home straight to break-even in Switzerland, says Sverre Munck. The CEO of 20 Min Holding AG defends himself against rumors that the commuter newspaper is up for sale.
Mr. Munck, at the Interactive Publishing Conference in Zurich in 1999, you emphasized in a presentation: "Secure profits after two or three years are a matter for wimps who are afraid of aggressive business plans." Does that also apply to free newspapers?
Sverre Munck: Every 20-minute project has a three-year horizon until break-even. You have to be prepared to spend money. The cost side can be predicted fairly well. What is uncertain is how quickly you can increase revenue. The uncertainties are less than they were for websites in the Internet era, but you always have to be able to invest something.
Will 20 minutes fulfill the three-year plan?
Munck: Just three or four months ago, I was convinced that we would see many profitable months this fall. In the current market environment, of course, I see things differently, but we will still get very close to our goal. We grew very quickly last year. Our net revenue increased by around 20 percent. There are always economic cycles. At some point, the wind will change again and we will be there.
According to Wemf figures, free newspapers have achieved 8.6 percent less advertising volume in the current year. Does this also apply to 20 Minuten?
Munck: That was the case at the beginning of the year, mainly due to the decline in job advertisements. But the situation has developed very well in recent months. We were able to compensate for the decline in the job market with brand advertising and are now above the previous year's level.
20 Minuten increased its readership this year from 314,000 to 526,000 people. Has this increase also increased the value of the company?
Munck: Of course. We were very pleased with the new Wemf figures. It would have been especially nice if we had only just
had slightly more readers than the Tages-Anzeiger. But one percent difference is within the statistical margin of error. We are the number three daily newspaper in German-speaking Switzerland and are on the way up. That also helps our advertisers a lot.
These figures only just reflect the past.
Munck: That's how the newspaper business works: It takes a lot to prove to advertisers that you have enough and interesting readers. We know from the distributed circulation that we already have more readers today - but we can only prove that with Mach 2003.
So the difference between your position in the reader market and the advertising market is quite normal?
Munck: We are a new media phenomenon. But the advertising industry is pretty conservative. It took some time for them to become familiar with our concept. As a free newspaper, you always have to convince the industry that "free" is a distribution concept, not a quality feature.
Ringier published a calculation last year according to which 20 Minuten posted a loss of CHF 20 million. Is this figure correct?
Munck: One of the advantages of being a private company is that you don't have to comment on such statements. This year the losses are much smaller, and next year they will be very, very small - if there are any at all.
With Apax and the Müller-Möhl community of heirs, 20 Minuten also has purely financial investors alongside Schibsted who want to see profits from their investment at some point. Will they continue to wait patiently?
Munck: Our investors are very smart investors. They know that we are in a difficult market situation, so they remain patient.
There are rumors in the industry that one or two partners could pull out at the end of the year.
Munck: That is completely untrue. Our company has very solid investors. There have been several financing rounds that have been approved and we have enough money to reach break-even according to our plan. There is no need for new investors and no reason for an investor to withdraw.
There is talk in the industry that a Swiss partner could get on board. Tamedia is considered a candidate.
Munck: We are not looking for a partner at all, and we will not sell 20 Minuten to anyone. We run an international brand with 20 Minuten. We have investors at the top level and, as far as I know, there are no plans to discuss the individual subsidiaries.
So press reports that Tamedia's CEO Martin Kall met with Schibsted print director Birger Magnus for negotiations are false?
Munck: Yes, they are wrong. I also read the reports and called Birger Magnus straight away. He assured me that he had never seen Mr. Kall and had never spoken to him. There are no talks or negotiations with Tamedia about 20 Minuten - it will stay that way.
How is spending developing in Spain and France?
Munck: In Spain, we have almost one million readers, with a circulation of 300,000 copies in Madrid and 200,000 in Barcelona. In the first half of 2002, we achieved a 68 percent increase in sales compared to the same period last year. I am pretty sure that we will break even before the end of the three years. In France, we reached our target of 450000 copies distributed in June and our readership is 967000. As we only started this year, there are no comparisons with the previous year, but we are very satisfied.
What does further expansion look like?
Munck: We are currently concentrating on the three existing areas of Switzerland, Spain and France. There are certain cities in Switzerland, Spain and France that we have our eye on.
Mr. Munck, at the Interactive Publishing Conference in Zurich in 1999, you emphasized in a presentation: "Secure profits after two or three years are a matter for wimps who are afraid of aggressive business plans." Does that also apply to free newspapers?
Sverre Munck: Every 20-minute project has a three-year horizon until break-even. You have to be prepared to spend money. The cost side can be predicted fairly well. What is uncertain is how quickly you can increase revenue. The uncertainties are less than they were for websites in the Internet era, but you always have to be able to invest something.
Will 20 minutes fulfill the three-year plan?
Munck: Just three or four months ago, I was convinced that we would see many profitable months this fall. In the current market environment, of course, I see things differently, but we will still get very close to our goal. We grew very quickly last year. Our net revenue increased by around 20 percent. There are always economic cycles. At some point, the wind will change again and we will be there.
According to Wemf figures, free newspapers have achieved 8.6 percent less advertising volume in the current year. Does this also apply to 20 Minuten?
Munck: That was the case at the beginning of the year, mainly due to the decline in job advertisements. But the situation has developed very well in recent months. We were able to compensate for the decline in the job market with brand advertising and are now above the previous year's level.
20 Minuten increased its readership this year from 314,000 to 526,000 people. Has this increase also increased the value of the company?
Munck: Of course. We were very pleased with the new Wemf figures. It would have been especially nice if we had only just
had slightly more readers than the Tages-Anzeiger. But one percent difference is within the statistical margin of error. We are the number three daily newspaper in German-speaking Switzerland and are on the way up. That also helps our advertisers a lot.
These figures only just reflect the past.
Munck: That's how the newspaper business works: It takes a lot to prove to advertisers that you have enough and interesting readers. We know from the distributed circulation that we already have more readers today - but we can only prove that with Mach 2003.
So the difference between your position in the reader market and the advertising market is quite normal?
Munck: We are a new media phenomenon. But the advertising industry is pretty conservative. It took some time for them to become familiar with our concept. As a free newspaper, you always have to convince the industry that "free" is a distribution concept, not a quality feature.
Ringier published a calculation last year according to which 20 Minuten posted a loss of CHF 20 million. Is this figure correct?
Munck: One of the advantages of being a private company is that you don't have to comment on such statements. This year the losses are much smaller, and next year they will be very, very small - if there are any at all.
With Apax and the Müller-Möhl community of heirs, 20 Minuten also has purely financial investors alongside Schibsted who want to see profits from their investment at some point. Will they continue to wait patiently?
Munck: Our investors are very smart investors. They know that we are in a difficult market situation, so they remain patient.
There are rumors in the industry that one or two partners could pull out at the end of the year.
Munck: That is completely untrue. Our company has very solid investors. There have been several financing rounds that have been approved and we have enough money to reach break-even according to our plan. There is no need for new investors and no reason for an investor to withdraw.
There is talk in the industry that a Swiss partner could get on board. Tamedia is considered a candidate.
Munck: We are not looking for a partner at all, and we will not sell 20 Minuten to anyone. We run an international brand with 20 Minuten. We have investors at the top level and, as far as I know, there are no plans to discuss the individual subsidiaries.
So press reports that Tamedia's CEO Martin Kall met with Schibsted print director Birger Magnus for negotiations are false?
Munck: Yes, they are wrong. I also read the reports and called Birger Magnus straight away. He assured me that he had never seen Mr. Kall and had never spoken to him. There are no talks or negotiations with Tamedia about 20 Minuten - it will stay that way.
How is spending developing in Spain and France?
Munck: In Spain, we have almost one million readers, with a circulation of 300,000 copies in Madrid and 200,000 in Barcelona. In the first half of 2002, we achieved a 68 percent increase in sales compared to the same period last year. I am pretty sure that we will break even before the end of the three years. In France, we reached our target of 450000 copies distributed in June and our readership is 967000. As we only started this year, there are no comparisons with the previous year, but we are very satisfied.
What does further expansion look like?
Munck: We are currently concentrating on the three existing areas of Switzerland, Spain and France. There are certain cities in Switzerland, Spain and France that we have our eye on.
