STOCKHOLM — Swedish newspaper group Metro International S.A. said Monday it has agreed to sell its loss-making U.S. papers, with a combined circulation of 590,000 daily copies reaching some 1.2 million readers, to a company run by a former Metro CEO.
The deal, signed with Pelle Tornberg's newly-formed Seabay Media, includes the free daily newspapers in New York and Philadelphia, as well as the Boston Metro which is published through a partnership with the Boston Globe.
The Metro daily, which is financed entirely by advertising and handed out for free to commuters, was launched in Stockholm in 1995. It now has more than 81 editions in 22 countries, including those in the U.S.
Chief Financial Officer Anders Kronborg said the sale of the loss making U.S. operations was part of the company's strategy to get through the economic and financial crisis.
This also includes the closure of Metro's Spanish operations, which was announced in January and savings made from relocating the head office to Stockholm from London.
"The New York Times just disclosed their first quarter results with a 27 percent drop (in advertising revenue). We are doing better than that, but we are still loss making and I don't see any growth in the market this year or in 2010," Kronborg told The Associated Press.
He said Metro is focusing on growing in Latin America, Asia and Russia, where the prospects for the advertising market are better than in the U.S. and Europe.
The company said it would record a loss of $2 million from the sale of the U.S. operations, which will be completed by June 1. The three newspapers will continue as franchises under the new ownership.
Separately Monday, Metro said it plans to raise 528 million kronor ($69.1 million) in a new share issue to pay off outstanding debt and keep the remaining business running.
"Due to a higher than expected downturn in the global economy and its impact on the advertising market, Metro was unable to reach a break-even operating result for 2008," the company said in a statement.
Seabay Media's Tornberg said he recognized the challenges for Metro in the U.S., but said he was confident that the Metro brand is attractive to advertisers.
Shares in Metro International rose 5.43 percent to 0.97 kronor in early Monday trade in Stockholm
