Schibsted Widens Net for Online Revenue With Tabloid IPad App

Schibsted ASA (SCH), Norway’s largest media company, plans to put more online content behind paywalls as its readers increasingly get their information on the Web.

The publisher of Norway’s Aftenposten and free papers 20 Minutes in Spain and France will charge 50 kroner ($8.84) to 100 kroner a month for the Apple Inc. iPad version of the tabloid Verdens Gang, Chief Executive Officer Rolv Erik Ryssdal said.

“I’m a careful optimist when it comes to user payment online, but we will certainly start experimenting with it,” Ryssdal said in an interview in Oslo. “The big challenge for all our media houses is to increase digital revenues. Good quality content should be charged for.”

Schibsted, which plans iPad versions for all its newspapers, is mirroring moves by newspapers such as the Wall Street Journal, owned by Rupert Murdoch-controlled News Corp. (NWSA), and the Financial Times, in charging for online content as circulation and ad sales from their print versions slide.

The Norwegian company’s Aftonbladet in Sweden already charges for some Web content, while VG Online has a forum for paying members focusing on nutrition and dieting.

“The consumer has become very accustomed to not paying for online content on news sites and it is hard to change consumer behavior,” said Christer Roth, an analyst at DnB NOR in Oslo.

Schibsted shares have fallen 7.6 percent this year, after adding 32 percent in 2010 and almost doubling in 2009. Of the 16 analysts tracking the stock, 12 recommend buying it, three rate it “hold” and one “sell,” Bloomberg data shows.

Curbing Costs

Because the paywalls will take time to have a “significant” impact on profit, the company will work on stabilizing circulation while managing costs, the CEO said. Schibsted also publishes Sweden’s Dagbladet, Norway’s Stavanger Aftenblad and Bergens Tidende as well as the free Russian paper Moi Rayon.

The company’s financial targets were set in a “conservative manner” in September, the CEO said, adding that he will seek to increase dividends in the years to come. Schibsted predicts a margin for earnings before interest, tax and amortization of 10 percent to 12 percent for the coming three to five years, and expects growth in operating revenue of about 5 percent.

Schibsted, Europe’s second-largest publisher of online classifieds after EBay Inc. (EBAY), will expand sites in Europe, roll out new sites this year and consider acquisitions, said Ryssdal, who became CEO in 2009.

War Chest

Publishers are buying online classified-ad sites, mostly for real estate, jobs and cars, to regain ground in a market they once dominated and that has been taken over by websites where posts can be placed for free.

While the company has the ability to spend $200 million to $300 million or more on acquisitions, it has so far seen the highest returns from organic investments, the CEO said.

“We would certainly have the war chest to do an acquisition like that, but we have not put a limit on it,” Ryssdal said. “If there’s something that is real attractive then we have high capacity.”

Schibsted will look at potential bolt-on and acquisitions smaller than Germany’s Axel Springer AG’s 634 million-euro ($887 million) purchase of French property site Seloger.com, the CEO said. Its 140 million-euro investment in French site leboncoin.fr, an online marketplace for cars, apartments and other sales, was “more attractive,” he said.

The lion’s share of Schibsted’s growth will come from existing sites in Norway, Sweden, Spain and France, while its Austrian and Italian sites will also become “important growth drivers,” he said.

The Italian, Austrian and Malaysian sites are set to break even during the fourth quarter this year or first quarter of 2012, he said. The company, whose main focus will remain Europe, has no imminent plans to enter the U.K. or Germany, the biggest markets in Europe. It has a joint venture with Singapore Press Holdings, while its Spanish unit is eyeing Latin America.

To contact the reporter on this story: Meera Bhatia in Oslo at mbhatia2@bloomberg.net.

To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net

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