Business Segments 2012

Alma Media’s internal structure was rearranged in the beginning of 2012. The Group’s new reporting segments are: Newspapers, Kauppalehti Group, Digital Consumer Services and Other Operations. Six operating segments were combined into reporting segments based on the similarity of products and services.

Alma Media's business segments

Alma Regional Media and Iltalehti are reported as part of the Newspapers segment. Alma Regional Media includes all regional and local newspapers published by Alma Media. In 2012, this comprised five regional newspapers, 18 local papers and 10 town papers, or altogether 34 Finnish newspapers and their online services. The national daily tabloid Iltalehti and its online media are also part of the Newspapers segment.

Kauppalehti Group specialises in producing business and financial information as well as in providing marketing solutions in Finland. In addition to the business paper Kauppalehti, the Group includes Kauppalehti Information Services, the custom media and communications house Alma 360 and the news agency and media monitoring unit BNS Group, which operates in the Baltic countries.

Digital Consumer Services includes Marketplaces and Alma Diverso. Marketplaces comprises Alma Media’s digital classified advertising services.  Classified advertising is focused on three main sectors: housing (Etuovi.com, Vuokraovi.com, City24 and Bovision), recruitment (Monster.fi, CV Online, jobs.cz, prace.cz, topjobs.sk, Profesia.sk, MojPosao.net) and cars and heavy machinery (Autotalli.com, Mascus). Objektvision.se, an online service for advertising business premises that was part of the Marketplaces segment in 2012, was transferred to the Kauppalehti Group in the beginning of 2013. 

Alma Diverso manages five digital services (Telkku.com, Kotikokki.net, Suomenyritykset.fi, nytmatkaan.fi and e-kontakti.fi). 

The Other operations segment reports on Alma Manu and the operations of the parent company. Alma Manu is responsible for Alma Media’s printing and distribution operations. The Group’s support functions such as human resources management, financial administration and ICT administration are consolidated in the parent company.  The role of the Other operations segment is primarily to support Alma Media’s other segments.

Online advertising sales increased

Alma Media’s primary sources of revenue are:

  • the advertising sales of printed newspapers and various online services,
  • the circulation sales of printed newspapers and
  • content and service sales

In 2012, revenue from advertising sales grew by 3.5%. Advertising sales for printed papers declined by 12.2% but online advertising sales grew by 43.4%. Circulation revenue declined by 4.4%. Contents and service revenue increased by 10.8%.

In publishing, which includes regional, local and city newspapers, the daily tabloid Iltalehti and the financial media Kauppalehti with their respective online services, business is based on a relationship with readers built through good journalistic content. As media develops, the reader relationship becomes a multidimensional customer relationship with a media brand. The strength of this relationship can vary from an occasional website visit to an ongoing newspaper subscription and the use of online services as a paid and registered user.

The reader relationship and the resulting coverage of the desired target audience, in turn, is the foundation of advertising sales.  The combined reach of Alma’s media brands has increased in recent years as a result of strong growth in website visitors. Media brand reader relationships and strong regional brand awareness also enable the extension of media brands to new areas such as digital services. In 2012, the combined reach of Alma Media’s various media grew by 5% compared to the previous year to a total of approximately 3.1 million users.  

* Including Aamulehti, Satakunnan Kansa, Lapin Kansa, Pohjolan Sanomat, Kainuun Sanomat, Iltalehti ja Kauppalehti. The calculation method ofonline visitors changed in 2012 and the date from 2005 to 2009 has been adjusted from unique visitors. Additionally, the study has changed.

The revenue of Alma Media’s digital services (such as Etuovi.com, Autotalli.com, Monster.fi, City24, Mascus, Prace.cz, Telkku.com and e-kontakti.fi) is based on fees charged for classified advertising, display advertising, service sales as well as revenue streams from service content and/or advertising targeted at the users of the service. Service sales grew in 2012 particularly as a result of acquisitions, but also due to the launch of new service products. The customers of digital services include both businesses and consumers.

In the competition for market share, brand appeal is of crucial importance. Alma Media’s digital services are the best-known brands in their segments in Finland, the Baltic States, the Czech Republic, Slovakia and other countries the Group operates in. The popularity of these services among users is based on a high level of usability, unique content and, in many cases, the importance of the social or communal dimension.  For an advertiser, this opens up valuable opportunities to specifically target the businesses or consumers in a particular category.

Newspapers

  • At the beginning of the year, Alma Media’s regional and local newspapers were combined into a single business unit, Alma Regional Media
  • The sales and profitability of regional papers were weakened by sluggish advertising sales as well as the imposition of value added tax on newspaper subscriptions at the start of the year
  • Iltalehti renewed its products and services in a number of ways and achieved strong media sales, particularly online 

Financial performance 2012

The Newspapers segment’s revenue decreased to MEUR 206.6 (218.3). Advertising sales were MEUR 98.0 (104.4), down 6.1% (up 1.7%). Advertising sales in print media decreased by 8.3% (increased by 0.3%). The segment’s online advertising sales increased by 14.9%, totalling MEUR 11.3 (9.8). Circulation revenue in January–December was down 4.6%, totalling MEUR 104.8 (109.9). Online business accounted for 5.6% (4.6%) of the segment’s revenue.

The segment’s operating profit excluding non-recurring items was MEUR 25.6 (30.7) and operating profit MEUR 22.1 (29.7). Operating profit excluding non-recurring items declined due to the decreases in circulation revenue and print media advertising sales.

Regional media: consolidation while maintaining a focus on locality

The structural reforms implemented by Alma Regional Media in 2012 were aimed at increasing cooperation while eliminating duplications of effort. The most significant operational change was the partial consolidation of content production, which began in the spring after the new business unit was formed.  The majority of the jointly produced content is created by joint editorial teams working together virtually. Joint editorial teams for sports, culture and weekend content began operations in 2012. The cooperation between regional editorial units has been strengthened by the formation of joint editorial teams. As a result of the reorganisation and renewal of the operating model, Alma Regional Media’s total employee hours were reduced by 105 man-years.

Alma Regional Media’s comprehensive renewal and new operating model are unique in Finland.

Despite the extensive renewal processes, locality remains a key strength of Alma Regional Media’s newspapers. This means that local editorial teams will continue to play an important role, and even after the changes the majority of the newspapers’ content will consist of local and locally produced quality content. The purpose of the joint editorial teams is to share resources more effectively and to provide quality content for regional newspapers on national and international topics that concern all readers.

The commercial operations of local and regional newspapers were also made more consistent, with circulation sales, media sales, customer service, advertising production and marketing communications combined to form new units that serve all of the newspapers. The format of printed newspapers saw a further step towards a consistent model with Satakunnan Kansa implementing the tabloid format in January, following the lead of Alma Media’s regional newspapers in northern Finland. Aamulehti is considering a move to the tabloid format at a later date.

Cooperation with other media companies

Alma Regional Media’s new operating model has also attracted interest outside the company. An agreement on content and development cooperation was signed with the Ilkka and Pohjalainen newspapers in December. Launched in early 2013, the cooperation is aimed at improving the newspapers’ journalistic quality, boosting operational efficiency, expediting development measures and increasing editorial reciprocity.

The cooperation began with international news and there are plans to extend it to a national Helsinki-based editorial desk, weekend pages as well as culture, sports and online journalism. The parties have also agreed on extensive cooperation on training and development, covering the product development of both printed newspapers and online services. The cooperation will be implemented to its full extent in 2014.

There have also been discussions with other media companies on increasing cooperation. There is potential for future cooperation with newspapers published by Keskipohjanmaan Kirjapaino, Kaleva and TS Group.

The content and development cooperation agreements do not involve changes in ownership.

Iltalehti continued on the multimedia path

Iltalehti had a strong focus on product and service development throughout 2012, with a number of special publications published in both the digital and printed formats. This was supported by a significant background move involving the renewal of content and technology for mobile services, particularly targeting smartphones. Originally launched in 2007, IL-TV was made available on all terminal devices in December. Readers may also purchase or subscribe to Iltalehti’s digital edition, either as a single issue or a long-term subscription. In 2012, nearly 20% of Iltalehti’s revenue came from digital media, with digital services representing over half of total advertising sales. 

Kauppalehti Group

  • Kauppalehti took deliberate steps on the path to multimedia
  • In 2012, Kauppalehti made a leap towards an increasingly extensive offering of digital media and information services
  • The comprehensive renewal of the subscription model and content was the first step in the Finnish media field towards paid digital media content
  • The Group’s information service business grew both organically and through acquisitions    

Financial performance 2012

The revenue for the full year 2012 of the Kauppalehti Group was MEUR 56.9 (56.7). The revenue increased by 0.4% (decreased by 2.1%). Online business accounted for 26.3% (24.9%) of the segment’s total revenue. Advertising sales were down 10.9% (down 3.2%) and were MEUR 15.2 (17.1). Online advertising sales increased by 0.9% (decreased by 2.3%) from the comparison period. The segment’s circulation revenue declined by 2.7% to MEUR 14.6 (15.0). Content and service revenue grew by 10.2% to MEUR 27.1 (24.6).

The operating profit of the Kauppalehti Group excluding non-recurring items was MEUR 5.7 (7.4) and operating profit MEUR 4.7 (7.4). The operating profit excluding non-recurring items was 10.1% (13.0%) of revenue. 

Pioneering paid digital content and adding more mobile content

In May, Kauppalehti launched a new subscription model restricting visitors’ free access to online content to 25 news items per month. With a focus on customer relationships, Kauppalehti’s new approach makes it a forerunner in the Finnish market. The change was well received by customers, with the website’s visitor numbers remaining largely unchanged after the soft paywall was implemented.

As the use of smartphones becomes increasingly widespread, Kauppalehti has also targeted touch screen phones with a broader range of services. In June, Kauppalehti launched a new application that makes the mobile use of its website smoother and easier. The new website was one of the first HTML5-based mobile applications in the Finnish market. It allows users to conveniently read the news on any touch screen smartphone regardless of the manufacturer or operating system. In the beginning of 2013, Kauppalehti Group also launched an application designed specifically for the Windows operating system, including the daily newspaper, online news content and the most important news from the stock exchange. 

Content differentiation and more subscription options for customers

The contents of Kauppalehti’s print and digital channels were differentiated from each other in conjunction with the renewal of the subscription model. Online readers are offered a daily news stream, while the content of the daily newspaper is focused more on the editorial team’s articles, commenting on the day’s most important news items and providing background information on the news. The approach of the printed news is now more analytical and forward-looking.

With the implementation of the content renewal, customers now have a broader range of subscription options available to them. Kauppalehti now offers digital-version-only subscriptions. 

“Kauppalehti customers now have even more opportunities to enjoy quality business journalism regardless of the time, place and terminal device used,” says Kauppalehti’s new Editor-in-Chief Arno Ahosniemi, who took his post at the beginning of 2013.

Strong growth for Alma360 and Kauppalehti Information Services

Approximately 26% of Kauppalehti Group’s revenue in 2012 was derived from online services. The majority of this came from information services for professional use, a unit which was named Kauppalehti Information Services in November. The information services business grew during the year both organically and through acquisitions. Balance Consulting, a part of Kauppalehti Information Services, saw particularly strong growth as a result of the popularity of its Achiever certificates targeted at enterprises. In October, Alma Media acquired a 20% stake in JM Tieto Oy and began a partnership with the company focused on information and multi-channel marketing services.  JM Tieto’s special expertise lies in building marketing and sales concepts for corporate customers as well as in customer acquisition and customer relationship management technologies. In November, Alma Media acquired a 20% share in Locatia Oy, a start-up specialising in purchasing and procurement services.

Likewise, Alma360, a corporate communications service provider that is part of Kauppalehti Group, is also focusing increasingly on digital communications services. The unit won several contracts during the year and expanded its customer base, gaining customers such as SEFE - The Finnish Association of Business School Graduates and Saarioinen.

In the beginning of 2013, the Sweden-based business premises marketplace Objektvision.se was transferred to Kauppalehti Group in an internal restructuring move. This was a natural step as, like Kauppalehti, Objektvision primarily serves corporate customers. Going forward, Kauppalehti Business Premises will provide a marketplace for business premises in both Finland and Sweden.

Digital Consumer Services

  • Acquisitions in 2012 made a significant contribution to the company’s strategy of digital growth
  • Marketplaces grew and became increasingly international through acquisitions of recruitment services in Eastern Central Europe
  • Another move towards the same strategic objective was the establishment of the development and service unit Alma Diverso

Financial performance 2012 

In the full year 2012, the revenue of the Digital Consumer Services segment was MEUR 56.5 (42.1), up 34.2% (15.8%). Revenue from businesses acquired in 2012 was MEUR 20.8. The segment’s advertising sales totalled MEUR 49.2 (36.4).

The operating profit for the Digital Consumer Services segment excluding non-recurring items increased by 17.5% to MEUR 7.4 (6.3). The operating profit was MEUR 4.9 (6.4). The operating profit from businesses acquired in 2012 was MEUR 2.9. The non-recurring expenses in the amount of MEUR 2.5 were due to reorganisation measures and impairment losses for capitalised R&D costs. The non-recurring income during the comparison period, MEUR 0.2, was due to corporate restructuring. The segment’s operating profit excluding non-recurring items grew, thanks to the businesses acquired. 

A year of international growth

The Marketplaces business unit, which is reported under the Digital Consumer Services segment, is at the heart of Alma Media’s digital growth strategy. A total of 9 acquisitions were concluded in 2012 in order to grow the unit’s business, particularly in Eastern Central Europe. The majority of the acquisitions involved electronic recruitment services, which is now the Marketplaces unit’s largest sector of classified advertising by a notable margin. Over the past year, Alma Media has achieved market leadership in electronic recruitment services in Finland (Monster), the Czech Republic (LMC), Latvia and Lithuania (CV Online), Slovakia (Profesia) and Croatia (Tau-online). CV Online is also tied for first place in the Estonian market. Recent acquisitions have also given the company a foothold in the growing markets of Hungary, Serbia and Bosnia-Herzegovina.

Recruitment portals benefit from each other through the sharing of technology, expertise and services.  The roles of product and service development can be shared between different countries of operation. The knowhow brought to Alma Media by the personnel of the newly acquired companies is beneficial to the entire network.

The acquisitions saw Marketplaces increase its revenue outside the Finnish market to just over 50%. Also services to consumers were expanded.

In addition to recruitment portals, the acquisitions also saw Alma Media purchase Autovia, the second-largest used car marketplace in Slovakia, as well as a 25% stake in Infostud, which operates a used car marketplace in Serbia.

Mascus, Alma Media’s international marketplace for heavy machinery, also grew through acquisitions in 2012. In June, Alma Media purchased a majority stake in its US-based licensing partner Adalia Media Inc. The transaction solidified the position held by Mascus in the United States, the world’s largest market for used heavy machinery. Mascus also grew in Finland through an acquisition of Suomen Hankintakeskus Oy and its online group-buying service for businesses.

The acquisitions saw Marketplaces increase its revenue outside the Finnish market to just over 50% (compared to approximately 15% in 2011). The number of personnel doubled from 180 to nearly 360 employees, of whom some 70% are based outside Finland in a total of 12 different countries.

Consumer services expanded

Etuovi.com refocused its strategy in response to changes in the competitive landscape in 2012. One of the strategic changes saw Etuovi.com expand its customer base to consumers. Advertising by consumers got off to an excellent start, as Etuovi.com achieved Finnish market leadership in online advertising by consumers at the turn of the year 2012/2013.

Of the Marketplaces services, autotalli.com and myyjaosta.com were already open to advertising by consumers even before the strategic changes.

Alma Diverso improves the entire Group’s capacity for digital business operations

Tasked with strengthening Alma Media’s digital expertise and resources, the digital service and development unit Alma Diverso began operations at the start of 2012. The unit is responsible for five digital services targeted at the consumer market, three of which are Finnish market leaders in their respective categories (Telkku.com, Kotikokki.net and e-kontakti.fi). The unit’s operations also support the digital growth strategy of Alma Media Group as a whole through the provision of services for managing visitor traffic, web analytics, online advertising and the maintenance and development of technology platforms. Over the past year, the unit focused particularly on online advertising and the development of various network products. Autumn 2012 saw the launch of the unit’s first network product for online advertising, offering advertisers digital advertising space across the full range of Alma’s services. 

Alma Diverso also introduced new products for consumer customers. In November, Finland’s most popular television listings portal Telkku.com launched Nauhuri, a recording service that allows users to record TV programmes on 13 different channels. In August, Alma Diverso’s service portfolio was expanded to include Finland’s largest paid online dating service e-kontakti.fi, which uses a business model based on membership fees. The online dating service Neffit.fi was discontinued in conjunction with the acquisition.

Other operations

  • One of the most significant events in 2012 included an investment in a printing facility in Tampere
  • Piloting new business opportunities in distribution operations
  • Consolidation of support functions into the parent company continued

Financial performance 2012 

The revenue of the Other operations segment in 2012 was MEUR 84.8, of which MEUR 6.3 was generated by sales to customers outside Alma Media Group.

Investment in new printing facility in Tampere opens up new business opportunities

The investment in the new printing facility in Tampere progressed rapidly in 2012. While the construction of the new printing facility had begun in autumn 2010, the printing machine and other equipment were delivered in 2012. The printing machine was supplied by manroland web systems GmbH and the mailing equipment by Ferag AG. The actual test runs of the equipment and the gradual transfer of production to the new printing facility takes place in the first quarter of 2013.

The total value of the investment in the new printing facility in Tampere is approximately 70 million euros, of which building facilities represents some 24 million. Of the investment, 24 million euros was invested in 2012 and 46 million will be invested in 2013.

The new production facility will boost the efficiency of operations and produce improved quality. The new machinery will allow the printing of three newspapers simultaneously, compared to only two before. Through improved efficiency and speed, the investment will also increase printing capacity. It will also offer other benefits, such as the ability to use a broader range of materials. These features will provide greater opportunities for increasing the external revenue of printing operations. The new printing facility will also be more environmentally friendly, and Alma Media will seek LEED environmental certification for the building.

The new production facility will boost the efficiency of operations and produce improved quality.

An example of increasing printing operations for external customers is the letter of intent on printing cooperation concluded with Hämeen Sanomat in September. The printing of Hämeen Sanomat is tentatively scheduled to be transferred to Alma Manu in the beginning of 2014.

Alma Manu’s printing facility in Pori was closed down in January 2012. The printing of certain newspapers, such as Satakunnan Kansa, was transferred to Tampere. The closure of the facility saw six of the 23 full-time employees of the printing press in Pori transferred to Tampere.

In 2012, Alma Manu’s printing presses in Tampere and Rovaniemi used some 26,400 tonnes of newsprint (2011: 30,000 tonnes). 

New operating models tested in distribution

Starting in October 2012, Alma Manu piloted the morning delivery of magazines in Nokia. The positive early experiences led to the pilot being extended and deepened later in the year. Electronic distribution tools provide opportunities for various targeted deliveries. The distribution function made postal deliveries, classified according to region or recipient, on a weekly basis in 2012.

Over the course of the year, Alma Media assumed greater control of the distribution network for its newspapers. In Lapland, the distribution of Lapin Kansa and Koillis-Lappi newspapers was transferred to Alma Manu in January 2012. In Pirkanmaa and Satakunta regions, the efficiency of distribution operations was improved in response to a decline in distribution volume. This resulted in cutbacks in distribution operations corresponding to approximately 25 man-years. 

Continued consolidation of support functions

The consolidation of Alma Media Group’s support functions, which began in 2011, was continued in 2012. The consolidation of support functions such as ICT administration, financial administration and human resources management at the parent company level is part of a Group-wide organisational renewal project to ensure the efficiency of Group services and their ability to serve the Group’s business functions in a changing operating environment.

As part of the streamlining of the Group’s administration, Alma Media implemented a project in 2012 to simplify the Group’s legal structure by reducing the number of subsidiaries through internal mergers. The changes resulted in improved administrative clarity and cost savings. The savings arise from reduced intra-Group billing, decreased use of external expert services and lower tax expenses. The efficiency of operations and decision-making was also improved by the reduction of administrative boundaries.

Several information system development projects were launched in 2012 in response to the development needs of financial administration, customer relationship management and digital business operations.