Metro International has announced that it will no longer publish in seven Spanish cities as the economic crisis has caused its advertising income to shrink.
Metro in Spain was successfully launched in 2001 and by 2004 had achieved profitability. However, with increased competition and a steadily declining advertising market the operation has been experiencing losses during the last years. Several merger opportunities have been investigated during 2008, however, the size of the combined losses of the Spanish free press market made it extremely difficult to find an alternative that would have improved the future financial performance of Metro Spain.
Metro International has invested € 25.5 million in Metro Spain up until the closure of the business announced on 29th January 2009. The closure is expected to give rise to a book loss of between € 5-6 million which includes non-cash items. The cost of closing Metro Spain will be accounted for in Metro International’s results for the first quarter 2009.
Per Mikael Jensen, CEO and President of Metro International said: “Despite dedicated efforts from our Spanish management team and staff, it is with deep regret that we have taken the difficult decision to close down our operations in Spain. Even though Metro in Spain has been losing less money than its Spanish free competitors, the worsening Spanish economic down turn, which during the beginning of 2009 has resulted in a collapsing advertising market, has now resulted in unsustainable losses. The stiff competition coupled with a forecasted continued weakening advertising market for Spain, makes the closure of our operations the only rational decision at this time. A continued investment in Spain cannot be justified at this point and we are therefore focusing our resources on growth areas where we can create long term shareholder value.”
Martin Alsander, Executive Vice President of Metro International said: “I would like to thank our staff in Spain for their great efforts and hard work during these difficult times. Thanks to this group of excellent people we have managed to produce a highly regarded newspaper throughout Spain. Despite the very best efforts of Metro Spain’s capable employees we deemed the obstacles they faced to be insurmountable.”
The Metro group publishes free dailies in more than 150 cities, 22 countries, and claims a global readerships of more than 22 million people a day.