Irish newspaper investor gets frosty Berlin welcome

Berlin's Alexanderplatz is filled with striking communist-era landmarks and, this week, David Montgomery from Bangor bought one of them.

On the roof of a communist-era tower, the Berliner Verlag sign rotates day and night, just like the Daily Planet sign in Superman.

This is the home of the Berliner Zeitung, the daily flagship newspaper first published in the ruins of Soviet-occupied Berlin in May 1945. Now the newspaper that started under tight communist control is controlled by undiluted capitalism: private equity investors.

Employees launched an energetic "no locust" campaign, drawing on a German politician's comparison of investment fund managers to "swarms of locusts" who descend on German companies, pick them clean and move on.

But on Tuesday morning, the locust landed. "Guten Morgen meine Damen und Herren," said Montgomery to his new employees.

The ascetic Ulsterman was not the monster they expected, hungry for the profits they have managed to generate since they turned around the Berliner Zeitung during three years of ownership limbo.

But their surprise doesn't conceal their hostility either. When he told them through a translator how he plans to turn the Berliner Zeitung into a "serious newspaper of high quality," the staff snorted and asked each other: "What are we now?"

"Can you even read the Berliner Zeitung?" asked the newspaper's political editor, Bettina Vestring, in an interview.

"I learned German in school. That's a long time ago, but German isn't alien to me," said Montgomery. "When I see the paper, then I kind of understand what's going on."

This vagueness goes to the heart of Berliner hostility towards David Montgomery. He says he is not interested in a quick profit and wants to invest in new technology and quality journalism.

But the Berliners say he can hardly be interested in quality journalism if he cannot speak or read German, admits knowing little of Germany and confesses that he is "no expert" on the German newspaper market.

Montgomery has been in newspapers for 40 years, starting as a trainee in the Daily Mirror and editing the News of the World and the defunct Today. But it was as an executive in the Mirror Group and the Independent, that he earned the cost-cutter notoriety that preceded him to Berlin.

"Where I come from, we have a tradition of just getting on with things," he said in Berlin, brushing off the criticism.

Like his newspaper acquisitions in Northern Ireland and elsewhere, Montgomery bought his way into Berlin through his investment company Mecom and an American equity investor.

He has vast experience in the fiercely competitive British newspaper market, but the German newspaper market is vastly different in form and content.

German journalism is generally of a much higher, if more staid, standard than British journalism, without the same concept of national newspapers. Just five quality newspapers as well as broadsheet-tabloid Bild are considered national or "über-regional" in Germany.

With a circulation of 180,000, the Berliner Zeitung is one of the best-known and widest-read papers in the regional market. It is this second league, filled with 350 regional newspapers, that interests Montgomery.

He says he will pursue a five-year "buy and build" strategy. Staff at Berliner Verlag, which also publishes the Berliner Kurier tabloid and listings magazine Tip, fear that this means that they will be made cash cows for a newspaper spending spree that may not stop at Germany's borders.

Despite their fears, there is a grim satisfaction in the company that their "no locusts" campaign appears to have made its mark on Montgomery.

"His statements are different to what we would expect from a finance investor just interested in yields and nothing else - more reserved and aware of responsibility," said Uwe Vorkötter, editor of the Berliner Zeitung.

Montgomery's consortium are not the first private equity investors in the German newspaper market. US investors Hellman & Friedman own 19 per cent of Axel Springer, Germany's largest media company that publishes over 150 newspapers and magazines in 27 countries.

Ironically, complaints from market leader Springer to the competition authority forced the sale of Berliner Verlag to Mecom.

Montgomery plans to shake up the German newspaper market, but it remains to be seen whether the Bangor man knows better than German newspaper barons.

In the last years, they have expanded abroad more than at home, partly to spare them the competition authority headaches that plague newspaper purchases in Germany.

German media observers are predicting that Montgomery may stumble on the same competition rules that brought him here.