Wanted: Turnaround specialist

Aslak Berge

A steady bleed of readers, slumping sales, sky-high costs and still higher debt loads. The clean-up at IntraFish Media might be demanding.

Yesterday it became known that managing director and editor-in-chief, Paal Korneliussen, was resigning from his post at IntraFish Media. The media outfit owns Norwegian-language, Fiskeribladet (66.6 percent) plus online newspapers, IntraFish.no and IntraFish.com, and turnover-wise, it’s the undisputed market leader for seafood news in the trade-press world.

High Street: Intrafish’s address on Wood Street in London

Korneliussen is stepping down just two-and-a-half months after his close ally and superior, Gunnar Bjorkavaag, left his top post at parent company, NHST (a Norwegian media house). Bjorkavaag had to go after making some controversial remarks. Korneliussen maintains that he’s leaving of his own free will, but the timing is odd.

Series of losses
The sum of Korneliussens 18-year IntraFish reign is an accumulated operational deficit of GBP 6.4 million. Sales have fallen since 2008, and the slide doesn’t seem to have stopped. A business strategy of Rolls-Royce-priced news in a segment extremely exposed to competition didn’t work in 2001, and it doesn’t work in 2018. The largest stand-alone product, Fiskeribladet, still isn’t earning money (if you factor out a stately media subsidy).

High salaries
Media companies are by nature labour-intensive, and salaries normally represent the highest cost factor. IntraFish has the industry’s highest journalist salaries — higher, for example, than some of Norway’s regional dailies.

The company’s most acute problem is too much staff with high salaries doing things you can’t make money on. There’s been an absence of cost controls, over time. Staff travel the world-over and blog about everything there is to find at a fisheries trade show. They arrange investor fora and events; they play videos and they produce podcasts. Earnings are absent in all that.

If that isn’t bad enough, the InfraFish company maintains offices on four continents. That’s not exactly free. The company earned nothing for its investments overseas in 2001, and it still isn’t earning on them.

The world locations of IntraFish Media

So, can you not just close a few foreign bureaus and cut a handful of staff? No. The crux of it is that it’ll soon become even more difficult to service that debt. Total debt in the company has surpassed its sales by a good margin and was 45-times higher than its EBIT in 2016.

Refinancing is clearly what’s needed, but that would be so high that you can just forget a bank loan. The debt’s so steep, that it’s hard for owner NHST to find prospective buyers should a sale be considered as part of restructuring.

There’s obviously little elbowroom to tidy up, incur more loss, write down values and move forward. That paltry equity of just GBP 560,000 just won’t serve as life-saver.

Company car
After some recent belt-tightening, IntraFish’s leadership has managed to cut losses in recent years. A continued thinning out of the company’s staff is expected to continue. But, the cost-cutting has impoverished the company.

The time has also come to make cuts at the top. First to go ought to be the director’s salary of GBP 145,000. Once Paal Korneliussen returns the keys to the company car this summer, a formidable task will await the new director. There won’t be much room for fat salaries and company cars.