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309-003-1

Edipresse: Responding to a Strategic Innovation (A)


From his office in Lausanne, Switzerland, Tho Bouchat, had a breathtaking view of Lake Geneva. The magnificent sight was a true source of inspiration, and despite his long tenure in the publishing business and the numerous turbulences he had successfully weathered, Bouchat knew he would need inspiration to confront the major strategic challenge he now faced. Tho Bouchat was head of Le Matin, one of the newspaper divisions of Edipresse Group, the largest periodical company within the French part of Switzerland. It was June 2005 and he had been watching developments in the German-speaking, Zurich newspaper market with alarm. Several free daily newspapers had begun operations there and he knew that it was a matter of time before one of them invaded his region, the French-speaking market around Geneva and Lausanne. To pre-empt such a move, Bouchat had begun earnest talks with Tamedia, a Swiss German-language publisher that wanted to co-publish a French version of its Zurich daily free newspaper, 20 Minuten, with Edipresse and distribute it in Geneva and Lausanne. Despite weeks of intensive negotiation, Bouchat was concerned that an agreement would not be reached and that Tamedia would seek to launch on its own. Bouchat had to assess carefully the competitive situation and decide how to react. Edipresse CEO Tibre Adler asked Bouchat to prepare a presentation for the next meeting of the board of directors and recommend a course of action.

Company background
In 2005, Edipresse was an international media and communications company whose

main activities were newspaper and magazine publishing. Edipresse operated in the French part of Switzerland where its head office was located, as well as in Spain, Portugal, France, Russia, Ukraine, Poland, Romania and in several Asian countries, including China and Hong Kong. Edipresse published more than 160 titles and employed around 3,800 workers. In foreign markets, Edipresse mainly published magazines. In the early 2000s, the group had begun to expand aggressively beyond

Professors Daniel Oyon, University of Lausanne and Costas Markides, London Business School and Senior Case Researcher Laura Winig wrote this case. London Business School cases are developed solely as the basis for class discussion and are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright 2008 London Business School. All rights reserved. No part of this case study may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without written permission of London Business School.
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309-003-1 print into digital media, primarily by offering online versions of their newspapers on the companys Website. For fiscal 2004, the Groups revenue was US$751.9 million, 7.1% higher than 2003 revenue. (See Exhibit 1 for Edipresse consolidated income statements, 2000 through 2004.) This increase was due largely to the revenue generated by new products and acquisitions. Edipresses revenues and profitability varied significantly by market. Though the Group as a whole enjoyed an increase in revenue, in Switzerland, where the economic environment that had been unfavorable for several years, Edipresse reported revenue of US$418 million, a decrease of 4.7% from 2003. The decline largely resulted from a drop in advertising revenue (-4.4%) and a decline in contract printing. The organizations Swiss operation accounted for 52% of the Groups total revenues. In the newspaper business, Edipresse held a dominant position in French-speaking Switzerland, which was the heart of its activities. It published three paid daily regional newspapers (issued from Monday to Saturday), Le Matin, 24 heures and Tribune de Genve, the only Sunday newspaper, called Le Matin Dimanche, as well as other local newspapers (see Exhibit 2 for circulation and readership figures for newspapers serving the French part of Switzerland). The Group also held a 47% stake in Le Temps, an up-market daily that it owned jointly with Ringier, the largest Swiss multi-media group in Switzerland. (See Exhibit 3 for Ringier consolidated income statements, 2001 through 2004.) In the magazine business, Edipresse offered a wide range of publications including celebrity and womens magazines, news, business and entertainment titles. As a market leader, Edipresse ascribed great importance to the quality of its magazines, continually striving to enhance their editorial content and graphic design. The publisher also gave high priority to launching new magazines in promising markets those with high circulation potential, significant advertising revenues and weak competition.
Although the company also offered contract printing services, newspaper publishing

was Edipresses main business, comprising 42% of Group revenue in 2004 and all of the organizations operating profit. (See Exhibit 4 for selected Edipresse financials by business and geographic segments for 2004).

The media landscape in Switzerland


Switzerland, located in the heart of Europe, had long been seen as a protected country with a reputation for being inhospitable to outside businesses. After 1992, however, the pressures of globalization and the construction of a political and economic European community, caused most of the business sectors to open to foreign competitors. The media sector was no exception and experienced an increase in competition, especially in the traditional print media. Compared with that of neighboring countries, the Swiss newspaper market was saturated with a large number of regional titles, though, notably, no national newspapersowing largely to the plethora of languages spoken in the country. In 2004, Switzerland counted approximately 7.5 million inhabitants. Despite its modest size, the country had four official languages: French, 21%, German, 74%, Italian, 4%

309-003-1 and Rumantsch, 1%, effectively segmenting the media market by language, as well as by region.1 Increasingly, small and medium size newspapers had been forced out of the market or had been acquired by large publishing companies. Indeed, most daily newspapers in Switzerland with a circulation greater than 100,000 copies were owned by one of the three dominant multimedia playersRingier, Tamedia or Edipresse. Ringier, the market leader, owned the largest tabloid newspaper, Blick (255,000 copies) and Sonntagsblick, the leading Sunday newspaper (272,000 copies).2 Tamedia published Tages-Anzeiger, a daily newspaper in Zurich and maintained other newspaper, magazine, radio and television holdings. (See Exhibit 5 for Tamedias consolidated income statements, 2000 to 2004.) By 2005, only about 30 fully staffed daily newspapers (dailies) remained in the market.3 Switzerland as a whole experienced a 2% drop in circulation in 2004, however this was not unique: newspaper circulation dropped in many European countries, ranging from Iceland to Norway. The cumulative five year decline in Swiss circulation6.7%was demonstrative of a troubling trend, particularly since global advertising revenues were on the riseup 5.3% in 2004 alone.4 As a result, traditional daily regional newspapers in Switzerland were becoming increasingly dependent on advertising fees, which in some cases, comprising as much as 75% of total revenue.5

The free daily newspaper business model


The distribution of free newspapers could be traced back to 1962, when Dean Stanley Lesher financed a daily newspaper, Californias Contra Costa Times, entirely with advertising revenue and distributed the paper free of charge to consumers.6 At first, the model was successful and Lesher added other free newspapers to his companys roster. Eventually, Lesher converted his free newspapers to paid circulation, to boost revenue.7 In the decades that followed, other publishers within the
Switzerlands Four National Languages, All about Switzerland web site, http://www.all-aboutswitzerland.info/swiss-population-languages.html, accessed 25 January 2008.

Media LandscapeSwitzerland, European Journalism Centre, http://www.ejc.net/media_landscape/article/switzerland/, accessed 25 January 2008. Media LandscapeSwitzerland, European Journalism Centre, available http://www.ejc.net/media_landscape/article/switzerland/, accessed 25 February 2008. World press trends: Newspaper circulation and advertising up worldwide, 30 May 2005, World Association of Newspapers, available http://www.wan-press.org/article7321.html, accessed 28 February 2008.

Media LandscapeSwitzerland, European Journalism Centre, available http://www.ejc.net/media_landscape/article/switzerland/, accessed 25 February 2008. California newspaper hall of fame: Dean Lesher, California Newspaper Publishers Association, available http://www.cnpa.com/CalPress/hall/lesher.htm, accessed 26 February 2008. California newspaper hall of fame: Dean Lesher, California Newspaper Publishers Association, available http://www.cnpa.com/CalPress/hall/lesher.htm, accessed 26 February 2008.

309-003-1 United States launched free dailies which were delivered to consumers homes or left stacked in piles in schools, shops and other public areas for consumers to help themselves. Europes first free daily was the Birmingham Daily News, introduced in 1984 and distributed to 300,000 households.8 The newspaper was profitable for a time, but advertising revenue declined during the recession of the early 1990s and distribution was cut to weekly for the balance of the decade. In 1995, Sweden-based Metro International launched an advertiser-funded free daily newspaper that was distributed through Stockholms public transportation system during the peak morning commute. The newspaper was stacked in racks near bus and train stationsa privilege for which Metro paid a modest stocking feeand also handdistributed by Metro employees to commuters as they entered the stations. Metro offered a mix of national and international news as well as local information such as entertainment listings, travel and lifestyle news. Designed to be read during the span of a commuters trip, Metro's news stories were brief and tightly written, so that a reader could take in all the key facts quickly. Indeed, the color, tabloid-format newspaper avoided publishing editorials and claimed to be opinion-free. After the successful launch of its first free daily in Sweden, Metro rapidly expanded internationally. By 1998, Metro had launched papers in Prague, Budapest, Chile and Philadelphia and by the end of 2004, it had become the fastest growing and largest global newspaper with 14.5 million daily readers across 65 cities in Europe, the Americas and Asia.9 (See Exhibit 6 for Metro consolidated income statements, 2000 to 2004.) By then, other publishing companies were trying to replicate the Metro modelincluding an identically-named publishing group in the United Kingdom and Schibsted, a Scandinavian media group that published throughout Europebut none yet matched Metro for its breadth of distribution. Although the companys rapid expansion meant it had yet to achieve profitability, its advertising sales had grown at the enviable compound annual rate of 47% since 1995 to US$302.4 million.10 Of particular interest to advertisers were Metros national editions. In 2004, the company published national editions in the Netherlands, Italy, Hungary, Chile, Sweden, Denmark and Poland, which allowed advertisers to reach a broad readership with a single advertising purchase. Indeed, Metro was able to offer advertisers the opportunity to run national brand campaignsthe most lucrative for Metro since they were sold for the highest pricesas well as multi-national advertising packages.

8 History of British newspapers, The Newspaper Society, available http://www.newspapersoc.org.uk/Default.aspx?page=304, accessed 25 February 2008. 9 2004 Metro International SA Annual Report, available Capital IQ, http://www.capitaliq.com, accessed 26 February 2008. 10 2004 Metro International SA Annual Report, available Capital IQ, http://www.capitaliq.com, accessed 26 February 2008.

309-003-1 As Metro and other free dailies gained in prominence, Metros chairman concluded that free papers were more than just a passing fad: Metros rise marks a shift in the balance of power in the newspaper industry. In most of the countries where we operate, the incumbent paid-for newspapers have seen circulation and readership fall for many years. Consequently they often carry costs that their declining advertising and circulation revenues find difficult to support. Meanwhile we are able to increase sales, increase readers and I think that the Metro concept is so compelling that this trend is likely to continue and even strengthen going forward. By being a pioneer in free newspapers we can exploit immature markets before the incumbent media companies can act.11

Free dailies in Switzerland


Like most developed markets, Switzerland did not remain protected against the invasion of free daily newspapers, and in December 1999, Schibsted, a US$1.6 billion Norwegian media conglomerate12 and Metros main competitor, launched Switzerlands first free daily German newspaper, 20 Minuten, in Zurich.13 Industry analysts noted that the cost to publish a free paper was high: US$9.3 to US$11.7 million per year.14 The company faced tough competition: there were already three large daily newspapers published for German-speaking Swiss. Still, the population was comprised of 3.8 million, highly-literate adultstwo-thirds of whom lived in urban areasand Schibsted was gambling they would make room for one more paper.15 Schibsted declared 20 Minuten a success almost immediately, claiming the largest daily newspaper circulation2nd only to Blick by July 2000. Despite reporting losses of US$11 million in September 200016, later that year Schibsted expanded into other Swiss German regions such as Berne, Lucerne, Basel and St. Gallen, so that it could

11

Pelle Tornberg, Chief Executives Review, Metro International SA Annual Report 2004, available Capital IQ, http://www.capitaliq.com, accessed 3 March 2008. In 2004, 90% of Schibsteds operations were in Norway and Sweden. Source: Capital IQ. Schibsted launched a German-language free daily of the same name in Cologne, Germany on the same date.

12 13

14

Maike Telgheder and Hans-Peter Siebenhaar Handelsblatt, Big German publishers score against free foreign papers --- Schibsted delays expansion after nasty battle --- are Norwegian upstart's 20 Minuten of fame about to end? The Wall Street Journal Europe, 12 April 2001, available Factiva, http://www.factiva.com, accessed 3 March 2008.

15

2000 Metro International SA Annual Report, available Capital IQ, http://www.capitaliq.com, accessed 26 February 2008. Losses grew to US$17 million by February 2001. Source: 2000 Metro International SA Annual Report, available Capital IQ, http://www.capitaliq.com, accessed 26 February 2008.

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309-003-1 benefit from printing, distribution and overhead economies of scale while offering advertisers a larger coverage area.17 In the meantime, Metro launched its own free daily, Metropol, in January 2000, distributing the paper via railway stations in Zurich. Metro, too, quickly expanded to other German-speaking cities and by January 2001, was distributing 300,000 copies by hand as well as via racks at bus and train stops.18 But Metro remained one step behind Schibsted; each city that Metro entered already had a Schibsted daily free paper by the time Metro began publication.19 20 Minutens success forced Metro to pull the plug on Metropol in 2002, after only two years of publication, citing its own profitability standards: We are closing down our Zurich operation because we do not believe that it will reach a satisfactory level of profitability in the target time frame. As a result of this group-wide discipline, we believe that shareholders' funds are better focused on other markets where we are growing strongly, taking market share and moving rapidly towards profitability. . . All of our operations that were launched more than three years ago are profitable, and we remain focused on driving our new ventures, which were launched less than three years ago, towards profitability.20

The threat to Edipresse: how to respond?


At the beginning of 2005, Schibsted sold 20 Minuten to Tamedia, Switzerlands largest media company. By then, the tabloid had become the most widely read daily in Switzerland with an audited distribution of 329,000 copies and a readership of 782,000surpassing the paid daily tabloid Blick.21 Tamedia immediately let it be known that it planned to expand the paper into the French part of Switzerland in the second part of the yearwith or without Edipresses help. Although Metro had abandoned Zurich, it was unclear if the publisher had further ambitions in other parts of Switzerland; many felt it would be unwise to count Metro out of the game. We saw 20 Minuten doing very well and we knew we had to get ready, said Bouchat. We knew they would comeor at least, someone would. It seemed to Edipresse, then, that one way or another, daily free newspapers would soon be published in the French part of Switzerland at least around Geneva and

17

Schibsted Annual Report, 2001, available Schibsted Web site,

http://www.schibsted.com/eway/default.aspx?pid=275&trg=MAIN_5816&MAIN_5816=5820:0:10,190

9:1:0:0:::0:0, accessed 3 March 2008.


18

2000 Metro International SA Annual Report, available Capital IQ, http://www.capitaliq.com, accessed 26 February 2008.
2000 Metro International SA Annual Report, available Capital IQ, http://www.capitaliq.com, accessed

19

26 February 2008.
20 Zurich edition discontinued, Waymaker, 13 February 2002, available Factiva, http://www.factiva.com, accessed 28 February 2008. 21

Free newspaper outstrips the competition, Swissinfo.org, 6 September 2004, available http://www.swissinfo.org/eng/index.html?siteSect=105&sid=5196122, accessed 25 July 2008.

309-003-1 Lausanne. Although Edipresse was conducting negotiations with Tamedia, it was becoming clear that Tamedia was primarily interested in taking advantage of Edipresses position in the French-speaking marketnot in creating a true partnership. They want us on the Board and as an investor, but they are primarily interested in our infrastructure for distribution and printingeven our journalists, said Bouchat. In addition, Tamedia was expressing concern that Edipresse would be hesitant to fully support a new free daily. They dont think we will be willing to challenge our paid newspapers. They want to charge the same advertising rates here as they charge in ZurichUS$17 to US$26 per thousand readers. We range from US$35 to US$105 for our paid dailies, depending upon the paper. They just assume we would move to protect our rates, said Bouchat. For the Board meeting, Bouchat planned to present a set of strategic alternatives for dealing with the free daily newspaper threat. Co-publishing with Tamedia was still on the table, of course, but if they could not reach an agreement, Edipresse could consider negotiating a deal with another Swiss publisher. Ringier was a possibility, though Bouchat noted that it has failed to react to 20 Minutens entry into its own primary market. Metro, of course, was an obvious choice but after its withdrawal from Zurich, Bouchat doubted the company was quite ready to come back to Switzerland. Another possibility was for Edipresse to use the opportunity to reinforce the value proposition of its existing daily paid newspapers and launch a high-end (paid) daily newspaper as a strategic alternative. Doing so would require a significant investment in journalists and editorial staff, though; Bouchat was concerned that the regional market alone might not be large enough to support such a paper. Moreover this market segment was already occupied by Le Temps, the daily newspaper co-owned by Edipresse and Ringier which had its own difficulty to be profitable.. Alternatively, Edipresse could invest in building a content-rich Web site that would allow Le Matin to reach the younger readers who were most interested in free dailies. As with the rest of the developed world, Switzerlands internet usage was growing rapidly: the number of regular users (more than once per week) grew from 700,000 in 1998 to 3.7 million in 2006. There were 2 million broadband connections by end of 2006 and more than 75% of households owned a personal computer.22 Still, could Le Matin convince readers to shift their reading habits from paper to computer? Would this address commuters needs? Deliberately ignoring the threat was also an alternative. So far, free daily newspapers had not been able to generate profits and the small size of the Frenchspeaking market, with a potential readership of 1.3 million people spread over several
mid-size and small cities, could make such a venture barely sustainable. In that respect,

it might be preferable for Edipresse to let Tamedia publish 20 Minuten in the cities of
Geneva and Lausanne; surely after a few years of losing money they would withdraw.

In some ways, this was a most attractive option but it had risks. Tamedias experience in Zurich with 20 Minuten gave it an understanding of what Swiss readers

22

Statistical Data on Switzerland, 2008, Federal Statistical Office, http://www.wemf.ch/de/pdf/WEMF-Report_3-07_d.pdf, accessed 20 April 2008.

309-003-1 wanted and would draw readers away from the paid dailies. Even if Tamedia did ultimately fail, it would likely succeed in putting downward pressure on advertising rates. Another plausible alternative was to let Tamedia launch its free daily and prepare a serious counter attack with a product that would provide additional value attributes to the customer segments targeted by the first mover. Given the composition of Edipresses board of directors, Bouchat felt certain that somebody would play devils advocate and suggest that Edipresse abandon the paid daily newspaper business altogether to adopt a free daily business model for the whole French-speaking part of Switzerland. Though it was a farfetched ideait was not a response to a market need; it was nothing more, really, than lowering the price of an existing productBouchat thought the option should be included in his analysis. Lastly, Bouchat planned to offer the option of trying to beat Tamedia to market and publishing a free daily alongside Edipresses paid newspapers. The idea of targeting non-customers with a free paper designed for their commuting time was an appealing challenge for Edipresse but Bouchat knew that publishing a free daily newspaper was very different from publishing a paid newspaper: the design and editing was different, distribution did not rely on the traditional channels, and the concept of journalism based on a detailed investigation and analysis did not exist in free dailies. Even so, Bouchats experience was telling him that playing two conflicting games at the same time would not be easy for strategic and organizational reasons, not to mention the pressure such a move would put on his organization to sell advertising at a time when advertising markets in Switzerland were sluggish. Edipresses staff had assembled an impressive collection of data with which to prepare his presentation. One report stood out from the group: a study Edipresse had commissioned in late 2004, analyzing the potential for a free daily newspaper in Geneva. The results were not promising. They revealed a few major obstacles to the launch of a free daily in the French part of Switzerland: the potential readership was not concentrated, the number of daily commuters using public transportation amounted to only 220,000 and could not support a free daily paper, and the distribution costs were very high. Still, Bouchat knew that free daily papers were soon to be a fact of life around Lake Geneva and Edipresse needed to settle on a course of action soon.

309-003-1 Exhibit 1 Edipresse consolidated income statements, 2000 to 2004, in US$ millions

Net sales Cost of production Gross income (loss) Selling, general and admin. expenses Other expenses Operating income (loss) net income (loss) Market capitalization Price-earnings ratio Sales per segment Newspaper and magazine publishing Advertising Printing services Sales by geographical segment Switzerland Europe Rest of World Number of employees

2000 439.0 (82.5) 356.5 146.2 (179.5) 30.8 24.7 797 n/a
134 228 63 297 177 12

2001 415.1 (84.6) 330.5 150.4 16.9 9.2 742 28.88


126 227

2002 510.2 (91.3) 418.9 182.7 (215.3) 20.9


9.8

2003 649.8 (108.5) 541.4 230.9 (294.6) 15.9


9.5

2004 740.2 (343.0) 397.2 250.6 (99.5) 47.1


9.1

710 25.89 159 258 74 325 164 20 3,485

1150 42.95 523


94 33

1376 72.94
602 118 34

60 287 131
10

399 251
n/a

420 335 n/a 3,636

3,849

3,000

3,734

Source: Compiled by casewriter from various sources.

309-003-1 Exhibit 2 Circulation and readership of paid newspapers in the French part of Switzerland, 2002 to 2004
Circulation (000) % Change 20022004 6% 16% -5% 13% -10% 0% 3% -14% -12% -19%
0% -8%

Readership (000) % Change 20022004 2004


601

Title Le Matin Dimanche (Sunday) 24 Heures La Tribune de Genve Le Matin Le Temps le Nouvelliste La Libert L'Express le Quotidien Jurassien L'Impartial La Gruyre Le Journal du Jura La Cte* Total

2002
204

2003 2004
208 217

2002
625

2003
604

89 75 67 52 43 38 29 25 21 15 13 14 685

86 73 69 49 44 39 28 25 20 15 13 14 683

103 71 76 47 43 39 25 22 17 15 12 12 699

241
189

243
193

245
187

-14% 2%

299 117 101 89 65 48 44 35 25 33

310 120 106 87 61 50 46 30 28 39

331 128 105 82 65 49 39 35 26 28 1,921

-4% 2% -1% 11% 9% 4% -8%


0%

2% -11%
0% 4%

-15% 1%

1,911 1,917

*Circulation and/or readership data for an additional nine paid newspapers were not available. Source: REMP.

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309-003-1 Exhibit 3 Ringier consolidated income statements and selected financials, 2001 to 2004, in US$ millions
2001 640 241 399 320 59 21 21 n/a n/a 361 129 138 41 18 161 55 526
87

Net sales Cost of production Gross income (loss) Selling, general and admin. expenses Other expenses Operating income (loss) net income (loss) Market capitalization* Price-earnings ratio* Sales per segment Newspapers and magazines Newspapers Magazines "Betty Bossi" brand (cooking) Electronic media Services Other Sales by geographical segment Switzerland Europe Asia Number of employees

2002 747 271 476 378 70 28 28 n/a n/a

2003 797 295 502 404 63 35 35 n/a n/a

2004 976 344 632 517 66 49 49 n/a n/a 654 see above see above 35 30 212 44 651 281 45 6,081

430 513 146 see above 160 see above 27 31 19 22 195 191 74 60 594
121

23 6,079

31 5,419

598 184 36 5,439

* Ringier was a privately held company.

Source: Compiled by casewriter from various sources.

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309-003-1 Exhibit 4 Edipresse selected financials by segment, 2004, in US$ millions

Business segments Revenues Newspapers Magazines Print Facilities Other Total Revenues Operating Profit Before Tax Newspapers Magazines Print Facilities Other Corporate Total Operating Profit Before Tax Assets Newspapers Magazines Print Facilities Other Corporate Total Assets Depreciation & Amortization Newspapers Magazines Print Facilities Other Total Depreciation & Amortization Capital Expenditure Newspapers Magazines Print Facilities Total Capital Expenditure

312.1 306.2 120.9


0.9

Geographic Segments Revenues Switzerland Iberian Peninsula Eastern Europe Total Revenues Assets Switzerland Iberian Peninsula Eastern Europe Total Assets Capital Expenditure Switzerland Iberian Peninsula Eastern Europe Total Capital Expenditure

411.7 237.3
91.2

740.2

740.2
303.5 153.3 53.6

32.5 9.7 (2.2) (8.4) (9.7)

510.3

21.9

(31.9)
(11.9) (1.2)

135.0 177.0 202.9 51.2 74.9

(45.0)

641.0

6.8 5.5 23.0 0.4

35.7

(15.5) (4.3)
(25.2)

(45.0)

Source: Capital IQ

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309-003-1 Exhibit 5 Tamedia consolidated income statements and selected financials, 2000 to 2004, in US$ millions

Net sales Cost of production Gross income (loss) Selling, general and admin. expenses Other expenses Operating income (loss) net income (loss)

2000 505 (112) 393 (157) (135) 101


72

2001 456 (103) 353 (158) (132) 63 (7)

2002 463 (112) 351 (188) (145) 18 26

2003 464 (105) 358 (197) (160) 1 (14)

2004 495 (104) 391 (178) (160) 54 44

Market capitalization Price-earnings ratio Sales per segment Newspaper publishing Magazine publishing Electronic media Services Sales by geographic segment Switzerland Number of employees

1033 n/a n/a n/a n/a n/a 505 1,924

615 n/a 313


75

433 20.81 290 79 20 74 463 2,007

1044 n/a 277 79


41 66

920 21.09 301


78 56 60

8
60

456 1,982

464 1,825

495 1,518

Source: Capital IQ and compiled by casewriter from various sources.

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309-003-1 Exhibit 6 Metro International consolidated income statements and selected financials, 2000 to 2004, in USD millions
2000 92 -95 -3 -57 -4 -64 -71 2001 2002 110 143 -107 -115 -3 28 -80 -5 -83 -86 -82 -9 -63 -72 2003 204 -128 76 -93 7 -11
-7

Net sales Cost of production Gross income (loss) Selling, general and admin. Expenses Other expenses Operating income (loss) net income (loss)

2004 302 -185 117 -16 -4 -12


-11

Market capitalization Price-earnings ratio Sales per segment Newspaper publishing Sales by geographical segment Sweden Europe United States Rest of World France Number of employees

331 n/a
92

146 n/a 110 50 46 0 14 n/a 988

60 n/a 143 48 70 15 10 n/a n/a

905 n/a 204 57 96 16 21 14 1,027

1211 n/a 302 94 131 22 29 26 1,132

60 25 0 7 n/a 765

Source: Metro International SA annual reports and compiled by casewriter from various sources.

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