Digital initiatives that are not a part of the core brands and printing plants will not form a part of the core business. Scenarios will be developed for the future of all business units that are not a part of the core activities, whereby cooperation with other parties is not excluded.

Back to the core

Geert-Jan van der Snoek, CEO of Telegraaf Media Groep explains: "The traditional strength of the company lies in the development of quality content coupled with strong brands.The strategy whereby consumers and brands are central will continue unabated. However, the large number of initiatives that have been developed in recent years that are not related to the core brands have clouded the focus and the results of the company. If you exclude non-core activities, a strong core business remains that has the potential to make a real difference in the Dutch media landscape. Developments in the market and insights gained during recent months have shown that a rapid transformation of the company is necessary and needs to be implemented without delay. A number of new directors were recently appointed as a first step towards a healthier business. In the coming year, reduction of staff and achieving greater flexibility in the workforce will also be a part of the transformation process."

Analyses lead to focus

The Supervisory Board decided earlier this year to renew and reinforce the Executive Board to ensure the ability to respond decisively to rapidly changing consumer behaviour and shifts in the media landscape.Based on market developments and findings of recent months the strategic choices for the future have been determined. The key word for the future course is focus.

The main findings are showing that results are disappointing in many parts of TMG, butthe core activities of TMG are still profitable. The number of unique visitors to the digital exponents of the core brands is rapidly growing, but the company is not succeeding in properly commercialising this success. Virtually all other digital initiatives of recent years, including acquisitions in that domain, are only marginally profitable or even loss making. They are also not complementary to the core business. The merger of the titles Metro and Sp!ts (free daily newspapers) into one newspaper has so far not led to improved results. Many of the free local weekly papers (distributed door-to-door) are also loss making. The Board strongly believes in the importance of distinctive regional and hyper-local content, but it should be provided in a more innovative manner.

With Sky Radio Group the audience share and the profile of Radio Veronica have dropped to an unacceptable level.The brand Sky Radio also needs to be strengthened and adjusted to safeguard its strong position in the future.

Many people have left the company in recent years because of cost reduction programmes.Partly as a result thereof, the internal organisation and business processes did not keep pace with the continuously and rapidly changing market conditions. As a consequence results did not improve. Stagnation has occurred in the area of talent development, internal flow of staff and career opportunities within the company. Too few new revenue models were developed during the last few years that could have resulted in a reversal of the declining returns.

The costs of restructuring have been high for a number of years already. By eliminating these costs and by steering on normalised results there has been insufficient insight into performance and cash flows of the underlying business units.In order to improve transparency the costs of restructuring will not be eliminated in future.

Outlook

The Executive Board expects to close the 2014 financial year with a negative result. Turnover and revenues are disappointing due to persistently declining circulation- and advertising revenues. The conversion from print to digital has delivered less than what had been estimated earlier. Moreover, the company also will have to depreciate fixed assets, mainly in the Sky Radio Group.

The 2015 financial year will be a year of transition. Changes in the organisation will lead to a leaner, more flexible and stronger core business.From early 2015, the Executive Board expects to regularly announce changes in the organisation, which must ultimately lead to a sustainable return in all business activities.