Berlingske Media cuts fuel media monopoly fears

While rumours of its possible sale continue to swirl, the media icon trims its staff for second time this year

Employees of Berlingske Media have endured the brutal scythe of layoffs for the second time in just over six months. A total of 66 employees will lose their jobs this time around: 35 administrative, 13 editorial and 18 managerial jobs will be cut and 17 currently vacant positions will be permanently axed.

The cuts, most of which will come this month, will add 16 million kroner to the company’s bottom line this year. Along with other cost-saving measures, they will help Berlingske reach its goal of ending 2012 in the black.

In January, Berlingske cut 87 positions in a round of layoffs that included the shutdown of its free newspaper, Urban. At that time, journalists walked off the job to protest the cuts.

News of the layoffs came via a lunchtime email to staff citing disappointing summer sales and calling the action a “regrettable, but necessary step".

The paper’s management admitted in the email that the redundancies are in direct conflict with editor-in-chief Lisbeth Knudsen's promise in January that there would be no more major cuts in 2012.

“It was not in the cards at the time that more cuts would be necessary following the January belt-tightening,” read the email. “There were no plans for any additional major budget cuts this year, only minor structural adjustments.”

The firings come at a time when rumours are flying concerning the imminent sale of Berlingske Media. The JP/Politikens Hus conglomerate – which operates Jyllands-Posten, Politiken and Ekstra Bladet, the nation's three most-read newspapers – has been mentioned as the most likely buyer, but Knudsen denied vehemently that the layoffs were related to any possible sale.

“Regardless of the rumours of a sale and new owners for Berlingske Media, cost-cutting measures must still be implemented,” Knudsen wrote in the email. “We still need to show a profit and everyone at Berlingske needs to fight to achieve that goal.”

Mogens Blicher Bjerregård, the leader of the Danish journalist’s union, Dansk Journalistforbund, had harsh criticism for the current round of cuts.

”This is absurd,” he told the website journalisten.dk. ”You do not strengthen your company by cutting it again and again.”

He advised that Berlingske would be better served by investing in growing various forms of media rather than continuously cutting its numbers.

Lars Munch, the director of JP/Politikens Hus, told the website mediawatch.dk that the option to buy Berlingske remains very much open for his company.

"We are investigating the possibilities, and then we will assess the outcome of the investigation,” he said, adding that Berlingske needed a "professional, stable and long-term owner."

JP/Politiken’s possible purchase of Berlingske Media has opened a debate about a national media monopoly, where one company controls and decides the editorial content, and cost, of the day’s news.

An attempt by Munch to create a single group with Berlingske, Jyllands-Posten and Politiken under the same roof may find itself on the wrong side of the country’s anti-monopoly laws.

With Politiken, Jyllands-Posten and Ekstra Bladet already under the same management, a purchase of Berlingske's papers would bring Berlingske, Weekendavisen, BT and a number of regional and local papers into the fold. Concern has been expressed that the merger will create an undue concentration of ownership and control of the Danish newspaper industry and place too much editorial power into too few hands.

"It is clear that putting all of the papers in a single house creates the possibility of standardisation,” Aarhus University media researcher Frank Mortensen told Politiken. “It might be better if a foreign investor like [Swedish media group] Bonnier purchased Berlingske.”

A recent Forbes article downplayed the idea of media monopolies. Writing about Columbia Law School professor Tim Wu’s book, 'The Master Switch: The Rise and Fall of Information Empires', Forbes questioned Wu's argument that "we are living in an age of large information monopolies" by noting that he spoke of "information monopolies" in a plural sense and pointed out that the vast amount of information available via the internet and other sources like radio and television make the creation of a true media monopoly virtually impossible.

In a paper entitled, 'Financing of Media Firms: Does Competition Matter?', researchers Hans Jarle Kind, Tore Nilssen, and Lars Sørgard from the University of Copenhagen argue that having all of the newspapers on the same flagship could raise the cost of reading the daily news. They point out that if two or more papers are actually competing, when one paper drops its prices, the others will usually follow suit. A single media conglomerate allows that company to decide what they will charge for both subscriptions and advertising minus any outside pressure to be competitive.

Any merger of Berlingske with JP/Poilitikens Hus would have to be examined by Konkurrence og Forbrugerstyrelsen, the nation’s competition and consumer authority, to see if the risk of a monopoly exists.