Summary:

Mecom is to introduce digital pay models across its top newspaper titles, slash costs by €70m and potentially close or sell 65 free titles…

Stack Of Newspapers On Table
photo: Corbis / Dirk Rees

Mecom is to introduce digital pay models across its top newspaper titles, slash costs by €70m and potentially close or sell 65 free titles, following a wide-ranging strategic review by new chief executive Tom Toumazis.

Toumazis, the former Endemol senior executive hired in May to plot the future of the pan-European publisher, has told investors he expects the broad package to improve earnings per share – effectively profits – by 10% per year up until the end of 2014.

Under the plan Mecom intends to introduce a digital pay model with its top 10 newspapers – the group owns hundreds of titles in Scandinavia, Poland and the Netherlands – to receive paid-for apps by the end of the first quarter of 2012.

Mecom claims the top 10 titles in the group accounts for about 85% of its profits, meaning the launch of a paywall is a fundamental shift in strategy and potential revenue opportunity.

The review also includes a major restructure of the business with €70m in cost cutting by the end of 2014. Savings will come from a reduction in staff and integration of businesses and outsourcing functions where it is feasible. Mecom has already outsourced services in some markets to India.

In addition Toumazis has launched a review of Mecom’s “low margin” businesses, and has designated its portfolio of free titles as “non-core” to the publisher’s strategic vision. Mecom has revealed it has closed 15 free titles and is reviewing the future of a further 65.

The cutbacks will free €10m in cash every year until the end of 2014 for innovation in new products. Mecom has seen huge success with its online group buying business Sweetdeal.

Toumazis is also keen to make better use of the data it has on the 1.2 million paying subscribers to its newspaper titles and also aims to reinvigorate Mecom’s ad sales business, which has struggled to pull out of the downturn. Ad sales is an area he is well-versed on given his previous role as commercial director at Big Brother producer Endemol.

A critical symbolic move is shifting the “centre of gravity” of Mecom, which is listed on the UK stockmarket, to the Netherlands.

Mecom’s Dutch business, Wegener, is its flagship asset, accounting for about 45% of total revenues and 80% of operating profits.

While Toumazis and Henry Davies, Mecom’s group finance director, will not permanently relocate to the Netherlands it is expected that the pair will start spending a significant amount of time in country.

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This article originally appeared in MediaGuardian.

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