Incorporated: 1995
NAIC: 511110 Newspaper Publishers
SIC: 2711 Newspapers
Metro International S.A. is one of the world's leading newspaper publishers. The Luxembourg-based company controls the Metro chain of free dailies, producing more than 70 editions in 23 countries worldwide. The company distributes more than eight million copies each day, and claims a daily global readership of over 23 million. Its distribution model, primarily through mass transit systems, assures it one of the youngest readerships in the world. Nearly 75 percent of the company's readers are under the age of 50, and more than 40 percent fall within the elusive and advertiser-coveted 18- to 35-year-old segment. Metro also claims a female readership of more than 50 percent, as opposed to just 15 percent for mainstream "paid" newspapers. As a publisher of free dailies, Metro generates all of its revenues through sales of advertisements. These typically account for 40 percent of the content of an average Metro. In 2006, the company's sales topped $416.5 million. In that year, the company posted its first annual profit since its founding in 1995. Major stockholders include former parent Modern Times Group, and its parent, the Swedish industrial and investment giant AB Kinnevik. Per Mikael Jensen was named CEO of Metro International in 2007.
Newspaper Revolutionary in 1995
Metro was the brainchild of three Maoist-oriented Swedes, Pers Anders Anderson, Robert Braunerhielm, and Monica Anderson. In the early 1990s, the trio had developed an idea to launch a free daily newspaper and went in search of financial backers for the project. The search proved difficult, however.
Their fortunes changed when the idea of a free daily attracted the attention of Pelle Tornberg, then in charge of AB Kinnevik's growing television operations. Tornberg had been studying the idea of extending the group's media operations into the newspaper publisher market. Yet Tornberg was discouraged by the Swedish newspaper market's poor climate. As he told Business Week: "Newspaper readership had been declining for many years, and the typical reader was more than 50 years old. The advertising demographics were terrible."
Tornberg quickly recognized the potential of giving away the newspaper, and attracting a younger, more active readership. The restructuring of AB Kinnevik provided the opportunity to pursue the idea. In 1995, Kinnevik spun off its media operations into a new company, the Modern Times Group. Led by Jan Stenbeck, the Modern Times Group agreed to back the launch of the free daily, called Metro. The name captured the company's targeted distribution channel--Stockholm's mass transit system.
The first edition of Metro appeared in 1995. The launch of the new newspaper was greeted by a great deal of criticism and skepticism from the outset. Media critics complained about the newspaper's digest format, which featured condensed articles, generally drawn from wire services. Metro also avoided taking up any political position, and adopted a no-editorial policy. While many in the industry remained skeptical that a free newspaper would be able to operate at a profit, the traditional newspaper sector greeted the new title with alarm.
The Stockholm edition soon proved the skeptics wrong. By the end of its first year, Metro had become profitable. The new daily was able to attract a strong advertiser base. This was particularly true among smaller local firms eager to tap into the newspaper's relatively young and affluent readership. In this way, Metro provided advertisers with access to a market that typically eschewed traditional paid newspapers. Indeed, far from draining readership from Stockholm's other newspapers, Metro claimed to have the effect of increasing interest in newspaper readership on a general level.
Building a Chain
Tornberg, who became CEO of the Metro operations, also recognized the possibility of developing a full-fledged chain of Metro-formatted newspapers. The company's first extension came overseas, with the launch of a Metro edition in Prague in 1997. The success of that launch encouraged the company to begin preparations for a wider rollout of the Metro title, starting with Budapest and Göteborg in 1998. The following year, the company added a new Metro for the Malmo market, as well as editions for Helsinki and for the metropolitan region of the Netherlands. Metro's operations outside of the Nordic region were placed into a dedicated subsidiary, MTG Publishing AB, created in 1996.
The Modern Times Group had, in the meantime, begun acquiring other publishing interests. These included a major stake in Sweden's Finanstidningen business daily and the monthly business magazine Kapital. Yet Modern Times Group's expansion targeted especially its media holdings, including television stations. As such, the company began preparations for the spinoff of its free daily operations. The first step toward this came in 1999 with the incorporation of a new holding company, Metro International. That company was registered in Luxembourg and took over all of the Metro operations. The following year, the Modern Times Group spun off Metro International as an independent, publicly listed company.
Metro launched a number of new editions in 2000, including in Milan, Rome, Warsaw, Athens, and Poland. In that year, the company added its first editions outside of Europe, targeting Santiago, Chile, and Toronto. The year 2000 also marked the company's entry into the United States, with the launch of its Philadelphia edition.
The company's expansion efforts were not without their difficulties. Its entry into the United States faced opposition from a number of major newspapers, including USA Today, the Philadelphia Inquirer, and the New York Times. Metro's rivals countered the company's entry plans with lawsuits challenging the right to distribute newspapers at mass transit locations. Metro's slow start in New York City in the meantime allowed others, and notably the Tribune Company, to beat the company to the punch with their own free dailies.
Metro's high-speed expansion drive also brought its own financial burdens. The company remained unprofitable, in part because of the high debt load required to fuel its expansion. At the same time, not all of the group's international editions proved viable. Such was the case with its Zürich edition, launched in 2000. That edition failed to achieve the group's requirement that each edition achieve profitability within three years of its launch. By 2002, the Zürich edition was shut down.
Competing Against Its Imitators
Metro also lost the race to enter some of Europe's most important newspaper markets. In the United Kingdom, for example, Associated Newspapers, publisher of the Evening Standard, rushed its own free daily to the market. Worse for Metro International, the new London newspaper was called Metro. The Llatter's strong success with British commuters presented Metro International with a major obstacle for its plans to enter the United Kingdom.
Metro also failed to find a formula for an entry into Germany. In France, the company faced widely held protests by that country's newspaper unions for its planned entry. The company pushed ahead with its Paris edition, only to suffer a new setback when members of the French unions broke into its distribution center. The Paris edition finally debuted in 2002.
Yet the company was faced with stiffening competition as a number of new rivals appeared. Chief among these was Norway's Schibsted and its free daily, 20 Minutes. The success of 20 Minutes in Zürich was largely responsible for Metro's pullout from that market. The more elaborate 20 Minutes format also proved highly popular with French and Spanish commuters, forcing Metro to adapt its own format for these markets.
While doing battle with its imitators, Metro also continued adding new markets. In 2001, the company added editions in Boston, Copenhagen, Barcelona, and Madrid. The following year, the company added editions in Marseille and Lyon in France, as well as in Aarhus, Sweden, and moved into the Far East with Hong Kong and Seoul editions.
Moving Toward Profitability
The year 2003 saw the continued rollout of the Metro "chain," with editions in La Coruña, Pusan, Zaragoza, and Seville. The following year, Metro added new editions in Bordeaux, Lille, and Toulouse in France, as well as in Valencia, Lisbon, and Alicante. By the end of that year, Metro had added its New York City edition as well. By then, Metro had grown into the world's fourth largest newspaper, by circulation.
The company continued to face financial troubles, however. Metro was forced to turn to major shareholder Kinnevik for a capital injection of $16 million in 2003. In 2005, the company raised an additional $16.5 million through the sale of 49 percent of its Boston edition to the New York Times. The added capital served only to fuel the company's continued expansion, as it neared its goal of 70 editions, for a total of 100 cities, across 20 countries. New locations for the company in 2005 included editions for three new French cities, Rennes, Strasbourg, and Nantes. The company also teamed up with CanWest and Torstar to fill out its Canadian presence, adding editions for Vancouver and Ottawa. Metro and Torstar later bought out CanWest in 2007.
By the middle of the first decade of the 2000s, Metro had made progress toward becoming profitable as well. At the end of 2006, the company celebrated its first full year of profits, posting $13 million on sales of $416 million. Metro was forced to remain on its guard, however, as the financial health of a number of its editions remained quite fragile. Indeed, by 2007 the company had been forced to shut down its Polish edition. Despite the launch of its first Brazilian edition, in São Paulo, that year, Metro's financial picture once again appeared bleak. In November 2007, the company announced a third-quarter loss of nearly $33 million.
Part of Metro's difficulties were linked to the poor economic climate. In the United States, for example, the credit crisis resulted in a significant drop in advertising spending. At the same time, Metro continued to lose out to rivals in a number of key markets, particularly in France. The company continued to be hurt by its absence from the U.K. and German markets, as well.
Nonetheless, the company remained optimistic. New CEO Per Mikael Jensen, formerly Metro's global editor-in-chief, took over from Pelle Tornberg in November 2007. Jensen promised to revisit the format of a number of Metro editions, seeking better to tailor the daily to specific local markets. The company also appeared to be making headway in its ability to attract advertisers seeking to develop pan-regional marketing campaigns. Among its major clients the company included Nokia, Microsoft, Canon, and British Airways. With a readership of more than 23 million each day, Metro had revolutionized the global newspaper market in the new century.
Principal Subsidiaries
Clarita B.V. (Netherlands); Edizione Metro Sarl (Italy); Everyday Distribution AB (Sweden); Metro Ceska Republika a.s. (Czech Republic); Metro Holdings Inc. (U.S.A.); Metro Holland B.V. (Netherlands); Metro International Luxembourg Holdings S.A.; Metro International UK Ltd.; Metro InternationalAB (Sweden); Metro Nordic Sweden AB; Metro Publication (Schweiz) AG (Switzerland); Metro Sweden Holding AB; Metro Xpress Denmark A.S. (Denmark); Metronews S.L. (Spain); Metrorama Publishing Ltd. (Greece); MTG Metro Gratis Kft (Hungary); OY Metro Lehti Ab (Finland); Publication Metro France S.A.S.; Rally Television AB (Sweden); TidningsAB Metro (Sweden); Tiempos Modernos S.A. (Chile); TPP Sp.zo. o. (Poland); Transjornal Edição de Publicações SA (Portugal).
Further Reading
"CEO of Global Free-Paper Publisher Metro International Stepping Down," Editor & Publisher, February 13, 2007.
Fishbein, Jennifer, "Free Dailies King Dethroned?" Business Week Online, October 25, 2007.
------, "Free Papers, Costly Competition," Business Week, November 19, 2007, p. 94.
Hjelt, Paola, "What's Black, Green and Read All Over," Fortune International, June 28, 2004, p. 16.
Johnson, Branwell, "Free Press Empire Goes on Offensive," Marketing Week, November 27, 2003, p. 14.
Levine, Joshua, "Paper Tiger," Forbes, April 29, 2002, p. 64.
"Media Lifeline: Metro International," Campaign, November 2, 2007, p. 15.
"Metro International Edges Towards the Black," Campaign, August 19, 2005, p. 13.
Orr, Deborah, "Business Biscotti," Forbes Global, February 17, 2003, p. 20.
"Pelle Tornberg, President and Chief Executive, Metro International, Sweden," Business Week, June 7, 2004.
Smith, Adam, Ulla Plon, Jonathan Shenfield, and Jane Walker, "The Rise of the Free Press," Time International, May 23, 2005, p. 44.
"Will Afternoon Freesheet Work?" Campaign, April 2006, p. 8.
— M. L. Cohen
