Metro International, publisher of 100 free newspapers in 20 countries, reported its first annual profit today and announced that president and chief executive Pelle Törnberg (left) will step down this year. In 2006, Metro reported net income of $16.9 million in U.S. dollars -- its first annual profit since Metro started in 1995 -- although $12.3 million came from the sale of its money-losing paper in Finland. In 2005, Metro lost $2.5 million (including $2.5 million from the sale of a minority stake in Boston Metro to the New York Times Co.).
The company said it reduced its debt in 2006 from $23 million to $16.7 million.
The report said sales were up in the United States, where Metro has papers in Philadelphia, Boston and New York. But there was no indication that any of those papers were in the black.
An exact date for Törnberg's departure wasn't given. Nor was there any indication of the size of the severance package he will receive.
His exit comes three months after Metro announced a management shakeup that saw the elevation of Chris Spalding to executive VP of operations and the departure of Steve Nylund, who made headlines for telling a racist joke at a company get-together.
However, the report did note: "Competition increased sharply in 2006. 230 free daily titles are published in 41 countries with a combined circulation of 34.8m daily copies (including Metro), up 43% year-on-year."
- COMMENTARY: Törnberg's leadership has been a mixed bag. On one hand, he's led the company's worldwide expansion, but Metro has been an underperformer, losing money from 1995 through 2005. Why did it take 10 years to turn the corner? Could another CEO have done better?
What's more, his papers have always been heavy on wire copy, making them vulnerable to competitors that provide quality news coverage and local appeal. With more free dailies starting, quality is only going to become a bigger problem for Metro.
Take New York, where Metro launched the first free daily but has drifted as AM New York has come to dominate the free daily market both in terms of readership (again, editorial quality) and ad billings. AM New York's former publisher, Russel Pergament, thinks Boston's Metro is vulnerable too because he's going to launch a free daily there this summmer, with backers from Iceland.
It's also been embarrassing to hear Törnberg and Metro falsely claim over the years that they invented the free daily. The lie popped up again in today's news release about Törnberg's exit. "Under Pelle's leadership Metro has invented and dominated the free newspaper industry," it said. As we have stated before, free dailies started in Northern California (Walnut Creek, California) in the late 1940s and a second strain emerged in Colorado in the 1970s, with free dailies in Boulder (1971), Aspen (1979) and Vail (1984) all starting well before Metro was ever conceived. The Palo Alto (California) Daily News launched in 1995, the same year Metro claimed to have invented the business.
Hopefully Metro's next CEO won't engage in resume fabrication.
