The strange death of liberal "Diena"

NOTE: Corrected the spelling of the British family to ROWLAND in a few places.

October 10 turned into a day of written and video/audio soundbites amounting to obituaries for Latvia's (once?) leading daily "liberal" newspaper Diena (The Day). It was no wonder, as the chief editor of the Diena media group, Nellija Ločmele, the editor-in-chief of Diena, Anita Brauna, the editor of the editorial and op-ed page, Pauls Raudseps and several senior reporters announced their resignations after it was disclosed that Diena (along with Dienas bizness, a business daily) had been sold to the British Rowland family.

The Rowlands are said to have financed the transaction when the Swedish Bonnier publishing group and agreed to convert their loan into shares in a mutual fund that became the owner of both Latvian media companies. However, there are contradictory reports as to whether this was the actual sequence of events.

The departing editors said they could not work together with the new managing director of the Diena publishing group, a former executive at the company who returned to engineer and execute the transfer of Diena and Dienas bizness from the Bonnier group to the new owners.

Founded as a government-owned but independent newspaper in 1990, while Latvia was still a Soviet republic, Diena was "liberal" in the classic sense of standing for individual rights, freedom, Western-style democracy and values.

In July, it was announced that the Swedish Bonnier publishing group, the owner of Diena and the business daily Dienas bizness (this blogger worked for Dienas bizness for 11 years) since the early 1990s, was selling both newspapers to a Luxembourg-based company owned by Aleksandrs Tralmaks, a former executive with Diena (some years earlier) and Kalle Norberg, an Estonian financier. The transaction was financed (temporarily) by undisclosed lenders as part of a scheme to set up a Luxembourg based media mutual fund.

The transaction, with so many unknowns, set off a frenzy of speculation, much of it verging on paranoid fantasies that Latvian oligarchs, Russian intelligence services and other evil powers bent on destroying Diena or using it to brainwash the population were actually behind the deal.

To be sure, the transaction was hasty, largely because the Bonnier group was eager to get rid of their Latvian assets as quickly as possibly, while keeping their business newspapers in Estonia and Lithuania. It was going to take Tralmaks and Norberg a few months to set up their mutual fund, longer than the Swedes were ready to wait. In a move that would later be one of several reasons for things unravelling as they have, Tralmaks and Norberg raised funds for the purchase from undisclosed lenders. Tralmaks said the real owners of Diena and Dienas bizness would be disclosed on October 1, but later delayed the announcement until October 9.

By then, three months of secrecy, contradictory hints (at one point, the transaction was said to be financed by some of the founders of Skype)and internal recriminations and arguments about future business strategy had taken their toll. There was, in all likelihood, an irreparable rift between the top editors and Tralmaks by mid-September, when rumors of Ločmele's and Brauna's resignations first appeared.

Tralmaks had proposed drastic cuts in production expenses for Diena of around 55 %, which would have led to considerable staff reductions and salary cuts. Diena's editors proposed a less painful solution (according to a blog Cita Diena/A Different Diena set up to communicate about the breakdown of the newspaper as run by them) and at one point even proposed a management buy-out of sorts. Ločmele jas told Latvian media she had found potential investors to buy back Diena from Tralmaks and Norberg, but was rebuffed. That move also sealed her fate -- it was seen as disloyal to the owners of the moment.

The situation at present is that everyone seems to be standing at a smashed trough (pie sasistas siles) to use a Latvian expression (sort of meaning that the instrument by which all of the barnyard creatures could have been fed has been foolishly destroyed). Tralmaks (now merely the CEO of the Diena group, with no ownership stake) has seen his brand value walk out the door -- indeed, he had some of the top editors escorted away by lawyers and security guards who first searched boxes and briefcases of "the departed" to see that no confidential company documents were taken.

"The Departed" have strongly hinted that they will start a new media outlet, most likely an internet portal and some kind of print publication, but with the Latvian economy collapsing, this is a daunting task, no less than the challenge of keeping the "old" Diena afloat, with Tralmaks speaking of drastic drops in advertising spending already at the time the deal was announced in July.

Finally, Jonathan Rowland, the Rowland family member apparently most involved with the investment in Latvia, has seen his admittedly risky investment turn -- very risky. Rowland appears to have been a bit of a high-roller in the past, so three years from now, he'll probably be at his club and hear something like "Good on you with that Shanghai deal, pity about that...where was it... Latvia or someplace? Odd isn't it, it was some Latvian lads who put the new roof on my country place. Great job. You know, Colin got burned for about as much on that Swedish game console thing...win some, lose some."

Swedes pull out of Latvian print media

The Swedish Bonnier Group, pioneers in setting up business newspapers in the Baltics (Estonian Aripaev was set up before independence in 1989/?/), have sold the the Latvian daily Diena and the business daily Dienas bizness to a local company called Nedeļa, which is run by a former executive of Diena.
My quick take is that both papers (which have been losing money) were sold for a song in a move that basically takes Swedish investors out of the Latvian print media market. It is noteworthy that neither the Estonian business paper, nor the one in Lithuania were sold and remain among the subsidiary Bonnier Business Press priority investments.
It is also a significant signal that the owner of an authoritative business newspaper in Sweden, Dagens industri, is getting out of Latvia. If this is so, perhaps other Swedish investment may follow or at least slow down any plans to expand here. To my mind, regretably but rightly, the Swedes are labeling Latvia as the basket case of the Baltics and Eastern Europe.
On a personal note, I worked for Dienas bizness from 1995 to 2006 and enjoyed that time very much. It is sad to see the paper, developed under Swedish guidance and as part of a group of business newspapers owned by the Bonnier Group, is now cut loose and left on its own. Dienas bizness has been taking increasing desperate staff cuts and salary reductions as advertising revenues have declined.

Added later:

The buyer, Nedeļa, is owned by a Luxembourg finance company owned, in turn, by an Estonian entrepreneur Kalle Norberg and other private investors.

Casten Almquist, CEO of Bonnier Business Press, told this blogger that the sale was mutually advantageous, but the Swedish company, under present economic conditions, saw a somewhat greater potential for developing its assets in Estonia and Lithuania.

John Hedberg, a former Bonnier executive, who advised Nedeļa on the transaction, said that there would be no short-term changes at both publications. Measures to cut costs and restructure both businesses were showing some results, though one would have to wait and see how this played out in the medium to long term. He said Diena and Dienas bizness both were good brands with a good reputation

Latvia: IMF! IMF? ...I'M F **KED??

The last day of April was a merry one for my one time journalist rival from Diena, Baiba Rulle, who broke a story that, according to  "unofficial sources", the International Monetary Fund (IMF) had agreed to let Latvia get away with a 7 % public sector budget deficit this year, retreating from earlier demands that the deficit be cut to 5 % or less.

The story appeared in Diena's internet portal -- the print rag (all due respect, that's journalist slang) carried a hockey (what else) story on page one. Within hours, the Minister of Finance, Einārs Repše, was 1) denying the Diena story and calling it journalistically irresponsible and 2) announcing that the budget, having cut most public services to ribbons and tatters, would have a deficit of 7 %.  What a coincidence!

As for 1) what journalist doesn't go over the top at one time or another or as Latvians say -- to whom does it not happen? (kuram negadās?). But 2) --without the sanction of the IMF-- is saying that the government will be bankrupt by the summer and all bets are off. In other words, woo-hoo, I'm driving the whole f**king economy over a cliff and flying back to my own planet!

UNLESS... Baiba's story is true, and our minister from the Red Planet did, in fact, get a very strong but possibly informal nod from the IMF that this time, we can get away with 7 %, get our billion (EUR?) from the IMF and keep the wolf away from the door for a few more months.

I think Baiba was right. I don't cover this stuff day to day, but some of my "channels" indicate that is what happened---the IMF, preferring to see a state collapse later rather than soon (I think the cuts needed for 7 % will destroy public services like medicine and education anyway, and hey, what did a police officer look like?) said to Repše -- go ahead, make a budget based on 7 % and assume we will look the other way and sign the check.

But that is not the end of the story, there is allegedly a bigger story, one that is not really a plan B, but follows from the " 7 % solution" which, (like Sherlock Holmes, was it, 7 % solution of cocaine, or am I wrong?) will only keep the collapsing state alert for a short time.

That is the one in which all bets are off, we do the d-word, print cash to make it through the night, and then maybe not pass Maastricht and go straight to Euroland.  Likely or unlikely??