Major media consortium in the making

Several large newspapers have decided to press ahead with merger talks to create a new media consortium in Norway. The merger process has been marked by controversy, partly because of the potentially dominant role of the largest Norwegian media group, Schibsted. The employees involved also fear the consequences of a merger, in particular the possible outcome of cost saving measures.

Media Norge

On 6 September 2006, four of the five large Norwegian newspapers deliberating a possible merger decided to continue talks to create a joint media consortium, Media Norge. The newspapers involved in the talks are the national newspaper Aftenposten, and the three regional newspapers Bergens Tidende, Fædrelandsvennen and Stavanger Aftenblad. The fifth newspaper, Adresseavisen, which was part of the initial round of talks, decided at that stage to opt out of the process.

Later, on 21 September, the four remaining newspapers concluded an agreement (in Norwegian, 32Kb PDF) regulating the ownership structure of the new group. The main objective of the merger is to pool resources through coordination of important activities such as advertising and digital media publishing. In the process, the newspapers involved will retain their editorial independence. If and when established, the media group would have over 2,200 employees, making it the largest newspaper consortium in Norway.

The most difficult issue during the process seems to be the potentially dominant ownership position of the largest Norwegian media group, Schibsted. In the latest agreement, however, Schibsted has accepted that it will reduce its ownership share to 50.1%, and not exceed this level in the course of the first two years following the merger. In the subsequent five years, Schibsted’s ownership share is further limited to 65%.

After further deliberations, the board of the fifth newspaper, Adresseavisen, decided to rejoin the merger process. A formal decision is still pending, but it now seems likely that the proposal for a merger will be submitted before Adresseavisen’s General Assembly in November 2006.

Trade union position

Trade unions in most of the newspapers involved have voiced concerns about the planned merger. The ownership issue has also worried the employees and their unions. Union branches in Bergens Tidende and Stavanger Aftenblad, as well as Adresseavisen, stated early on in the proceedings that they opposed any merger that would entail awarding Schibsted a majority ownership in the new consortium. The employees of Aftenposten – which is fully owned by Schibsted – and Fædrelandsvennen took the opposite stance, emphasising the importance of Schibsted acquiring a majority position in the group structure.

Trade union collaboration between companies has helped to mitigate potential conflicts during the process. In late August 2006, the union branches affected by the merger met to discuss and exchange information. Following the meeting, the organisations agreed to continue the merger talks, but called on management to provide greater transparency with regard to the decisions made, as well as to allow for greater participation from employees. Various trade unions have also highlighted that the merger must not undermine existing rights and working conditions of the employees affected by the merger. Moreover, a merger, and the emphasis on resulting synergies, must not lead to personnel cuts in any of the companies involved.

It seems that the new agreement, which restricts Schibsted’s ownership in the first few years, is more acceptable to the unions of the regional newspapers, although the union branches of journalists remain relatively sceptical of the consequences of the merger. However, the unions involved welcome the emphasis in the revised agreement on retaining each newspaper’s regional profile and that the principle of editorial independence will be established in the organisational rules of the new company. The agreement also underlines that all existing employee rights are to be maintained.

Commentary

The latest merger initiative follows the more general development in the Norwegian media sector towards ownership integration and concentration. Today the sector is dominated by a handful of larger media groups, slowly incorporating smaller newspapers within their midst (see national report on Industrial relations in the print media sector (112Kb MS Word doc) as part of an EIRO comparative study). Cost cutting measures and downsizing to counteract decreasing newspaper circulation have been an intrinsic part of the industry for some time.

Although the national authorities have so far refrained from interfering in the merger process, indications suggest that both the government and regulatory authorities are monitoring developments closely. The Minister of Culture and Church Affairs, Trond Giske, has expressed his reservations about the merger, partly because increased coordination of activities across regions may lead to a narrowing of the editorial orientation of the regional newspapers involved. In any case, the merger must be approved by the Norwegian Media Authority (Medietilsynet), which will among other things consider the ownership of Schibsted. According to the legal framework in Norway, no single owner may have more than 33.3% of the newspaper market in Norway.

Håvard Lismoen, Fafo Institute for Labour and Social Research