Penman predicts further Bonnier backing; Doubts over Business AM's

0 Comments | Sunday Herald, The, Oct 21, 2001 | by Kenny Kemp

SCOTLAND'S newest daily paper will know its fate next week after asking its Swedish owners for a cash injection of nearly (pounds) 9 million.

The 13-month old pink political and financial tabloid, Business AM, has been the topic of much media speculation since the departure of its managing director Jim Chisholm several weeks ago.

But the new managing director and founding editor John Penman is cautiously optimistic after a meeting of the company's newspaper group in Stockholm last week approved his budget plans. The staff at the Edinburgh-based paper were expecting D-day last Friday but Penman's proposals now go to the main board on Thursday. And Penman has promised to report back to his staff council after the meeing.

In the face of the advertising downturn, there have been question marks over Business AM's survival as projected revenues collapsed. Business readers with an eye for accounts have marvelled at how the paper's economics have been stacked up. But Penman told his staff at a meeting last Friday morning that he was getting positive signals from Sweden about future support for the paper.

"Hasse Olsson, the chairman of the Bonnier business papers' board which represents all 10 European business papers, has approved Business AM's budget proposals for 2002. I have high hopes of acceptance next week by the full board," said Penman.

Olsson, who is managing director of Dagens Industri, will address the six-strong main Bonnier board, which includes managing director Bengt Braun - who devised the Scottish project along with Penman and Chisholm - and chairman Carl-Johan Bonnier, a family member.

Penman had prepared a plan which set out strict targets for circulation and revenue and budgetary plans on the understanding that the Bonnier Group could inject another (pounds) 8-9m.

The original projections for the paper were that they would spend (pounds) 16-20m getting the daily off the ground in the first five years. But because of the advertising slump, Penman now expects that figure to be nearer (pounds) 29m. The aim is still to be profitable by its fith year.

With a circulation of around 11,000, Penman will be forced into an aggressive readership drive next year to hit Bonnier's target of 35,000 by the end of the fifth year. The bulk of the sales are now through subscription delivered by the postal service, while newsstand sales have been disappointing.

The Bonnier Group has been hit by the downturn but remains Scandinavia's most successful media organisation with a host of interests including film, television and newspapers in 17 countries. The privately-owned company's strategy has been to expand into new markets, particularly Poland and the Baltic states. But Business AM is its first venture into the English-speaking market.

Last year the company made (pounds) 100m profit but that is expected to be severely cut by more than half this year. Bonnier does not have to satisfy City shareholders and the company's philosophy has been to invest most of the profits back into media development and publications.

Bengt Braun has said that he sees Business AM as a long-term project which must be given time to develop its market but there is no doubt that the board will tell the Edinburgh outfit to keep a strict control on future costs. Penman could not comment on whether the staff roster of nearly 120 would be cut back.

Penman says: "We all understand the strategic importance of the paper as it can't go much further in the Nordic countries. If Bonnier is looking for expansion, it has to be in the English speaking market.

"There remains a commitment to the project and to maintaining the quality that we have set out. We cannot afford to skimp on the quality of what we have been producing but we are making our budgets work much harder."

Penman said that the market conditions were worse in Sweden, where the downturn in technology had hit companies and advertising badly. The original Bonnier business publication, Dagens Industri, had experienced 39 consecutive six-months of growth but the last six months had been hit very badly. Advertising revenues have dropped by 50%.

The conditions in Austria were also bad and in Denmark the business daily had dipped badly in the first half of the year, but was showing signs of recovery.

One insider said: "The atmosphere is one of optimism, although we have been expecting job cuts. It has been spelled out clearly to us that we have to make budget cuts. We've been well prepared for what its ahead."

Apart from the editorial staff, Bonnier is also running a call centre in Ayr which handles subscriptions and has been backed by Scottish Enterprise.

Meanwhile, SMG, owner of Sunday Herald, The Herald, Evening Times and Scottish and Grampian Television, is expected this week to announce how many staff will be taking voluntary redundancy. A management meeting with the National Union of Journalists' representatives last week discussed proposals for job cuts. Already a number of SMG editorial staff have taken voluntary severance.