[Research] Schibsted Primer

More classifieds, and other things

Not held. No position.

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Usually when several connections bring up the same name, independent of each other, it’s a good sign. I’ve been taking a look at Schibsted less for the potential opportunity, but more so for its interesting corporate history. They are, however, often one and the same.

Schibsted is a former traditional media holding company, primarily operating in Norway, that now operates a number of online classifieds businesses across Europe, and formerly a collection of online marketplaces internationally, amongst many other things. Multi-faceted.

The company is the one-time nemesis of Naspers, and it resembles (in some ways) their one-tim subsidiary Baltics Classifieds Group. On the spectrum of Hemnet (pure simplicity in the form of an under-monetised asset in a single category and vertical) to BCG (holdings across borders and categories broadly within the same business model) Schibsted formerly superseded the latter in its pure breadthe of operations. There have been, however, some recent corporate developments that are intrguing.

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History

The original publishing house, which would later become Schibsted Forlag, was founded by Christian Schibsted and Johan Jørgen Krohn in 1839. Krohn exited the business less than 5 years later. Christian Schibstead never edited any of the textbooks, periodicals, or magazines that the early publishing house printed. He was a printer by trade and training. It wasn’t until 1860, however, that Schibsted began printing the newspaper Christiania Adresseblad, that was later renamed (at first colloquially in 1861 and then officially in 1865) Aftenposten - which, for the vast majority of the 20th century, was Norway’s largest newspaper by circulation.

Christian was succeeded by his son Amandus in 1879, who has been widely credited with tilting Aftenposten toward conservative political commentary. Ownership of Schibsted passed to Amandus’s wife Susane Adolphine Cathrine Schibsted in 1913. In 1966 Schibstead acquired Verdens Gang (VD) - a tabloid - which became the leading newspaper in Norway by circulation in 1981. The company remained family owned until 1992 when it began trading on the Oslo Stock Exchange under the influence of Tinius Nagell-Erichsen, a great-grandchild of Christian Schibsted. By the time of the public offering Schibsted was controlled by the Nagell-Erichsen (descedants of the original Schibsteds), Riddervold, and Huitfeld families. In 1996 Tinius Nagell-Erichsen placed 26.3% of Schibted’s shares into an irrevocable trust (the Tinius Trust) in a move that would make any foreign acquisition of the company all but impossible - an interesting titbit that we’ll come back to later.

Mass media consolidation was a phenomenon of the 20th century, for which the internet had enormous consequences. From the early 1990s certain luminaries (Buffett for example) were calling out the long term decline of traditional print media. Schibsted’s new life as a public company coincided with this and the company moved to aggressively diversify into additional media verticals. In March 2000 Schibsted (technically) re-launched Finn.no, which had begun operating almost 4 years earlier when an alliance of newspaper publishers created an online channel for their traditional classifieds business. By the mid-2000s Schibsted owned interests in TV 2 (Norway), and TV 4 (Sweden). Post the mid-2000s the company began to expand into (read acquire) international online classifieds and marketplace markets. The most significant of these was the 2010 acquisition of France’s leading classifieds property leboncoin.fr. This acquisition preceded a JV with Telenor Group that kicked off a wave of related business ventures in Latin America and Asia

Without a doubt, the pre-2018 Schibsted is my idea of conglomerate purgatory. There were many different businesses, at various stages in their corporate lifecycle, with starkly different economic profiles. This excerpt from their 2017 Annual Report is emblematic of the confusion inherent in such a circumstance:

Schibsted’s two divisions, Marketplaces (online classifieds) and Media are both leading players in their fields. To continue to be at the forefront when it comes to products and technology, we will increasingly leverage our global scale in order to improve quality of service and reduce time to market. At the same time, our strong local market positions and brand are among our most valuable assets. A key to Schibsted’s success is to be more global than local competitors and at the same time more local than the global platforms.

That last sentence might very well be the most garbled, tortured corporate double speak I have ever had the displeasure of reading.

Since 2018 a number of significant corporate actions have taken place which have radically simplified this broader picture, although not to the same extent as some of the other companies I have written about. By the start of fiscal year 2018 over 71% of Schibsted’s revenue was derived from online sources. The traditional media segment had been in decline for well over a decade. With a collection of online businesses across Europe, Asia, and Latin America that straddled the breach between classifieds and marketplace (these are distinctly different businesses despite the fact that they are often conflated), as well as a literal logistics enterprises, the rationale for corporate simplification was strong (and logical):

If one goes back and reads the annual reports from the early 2010s you’ll be struck by the pure breadth of corporate activity that the company engaged in every year. A veritable feast for the crows (investment bankers and lawyers forgive me) if you’ll allow me.