Annual Review 2009

*

Net sales per country

Sweden

Denmark

U.S.

Finland

Norway

Germany

Other

5 %7 %

10 %

13 %

7 %8 %

5 1%

Net sales by revenue stream

Ads

Subscriptions

Direct sales

Retail

Box office

Other

6%3 %

25 %

10 %25 %

3 1%

Net sales by business areaMSEK

10,000

8,000

6,000

4,000

2,000

0

Books

Mag

azines

Broad

casti

ng &

Evenin

g Pap

er

Enterta

inm

ent

Busines

s Pre

ss

Morn

ing P

aper

Books

Mag

azines

Broad

casti

ng &

Evenin

g Pap

er

Enterta

inm

ent

Busines

s Pre

ss

Morn

ing P

aper

EBITA by business area MSEK

1,000

800

600

400

-400

200

-200

0

Bonnier at a Glance

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From its humble beginnings as a small book shop and publisher in 1804, Bonnier has grown into an international media conglomerate working in all forms of media, within 175 companies in 16 countries. Bonnier is wholly owned by the Bonnier family, which has been running the company for seven generations.

From Jan. 1, 2010, operations are divided into the following business areas: Books, Broadcasting & Evening Paper, Business Press, Digital, Entertainment, Magazines and Morning Paper.

Corporate headquarters are in Stockholm, Sweden.

Key Figures 2009

Revenues 30,867 MSEKEBITA 1,185 MSEKProfit after financial items –228 MSEKReduced net debt 193 MSEK Employees (year average) 10,905

44

55

2009 in Black and WhiteAt last: the year that shook up the media industry and put us back on the right track.

For a few months this past spring, our advertising sales in the U.S. dropped by 30 percent from the previous year. In August the advertising volume in our Swedish business newspaper was just half the vol-ume of the year before. These figures were hard to swallow at the time. We spoke of a paradigm shift and painted the world in black and white. But now that 2009 has come to a close, we can once again con-firm: It’s not black or white, but black and white.

The year 2009 was when the high tide of an economic boom receded, suddenly and dramatically revealing truths we had al-ways known but had managed to repress. At the increasingly frenzied pace of the first decade of the millennium, we ran ever faster, and in ever tighter circles, until suddenly, our conclusions about the future were obvious:

1. The audienceThe media have traditionally aimed to give the public what it wants. Paradoxi-cally, at the same time the assumption has been that the public didn’t really know what it wanted, and that the media should provide what it thought would be appro-

priate – and profitable. Today we can no longer pretend we don’t know what our audience wants. They tell us – every day, every minute – exactly what they think of what we produce. And we have to listen, not reluctantly but eagerly. It’s still about the element of surprise, about creative de-velopment and refinement. But clearly the starting point is our audience’s demands.

2. EfficiencyGood years create bad habits. And many good years create a host of bad habits, which, added together over time, become increasingly difficult to escape. By neglect-ing to adapt cost structures and working methods for a new age, we posed risks to our operations, brands and business opportunities. Thankfully, 2009 finally presented us with a chance to correct our course.

3. DigitizationAccording to rough estimates, more than 100 million consumers purchased our books, read our magazines and news papers, and saw our films and TV programs last year. Tens of thousands of advertisers used us as a channel to convey their messages. Practically all of these buyers, viewers, readers and advertisers were connected to the Internet for much of the year. The digitization we spoke of for so long had already happened, and it

was time to stop speaking of it as some-thing new. The business models we had searched so long for were actually the same business models we had always used: We get paid for producing products that people like. It’s as simple as that. But it took a year like 2009 for us to realize this.

In numbers, 2009 was a year of extremes.

Several of our print media recorded some of the worst figures of the past decade. For SF Bio and our combined book publishing operations, 2009 was the best year of the companies’ 100- and 200-year histories, respectively.

Reality is seldom only black or white.

Jonas BonnierPresident & CEO, Bonnier ABStockholm, March 2010

6

Business IdeaWe Create, Select and Refine a World of Knowledge and Stories.

To Continously Reinvent the Art of Publishing.

Vision

7

Core Values

Prioritized strategic objectives (0–10 years)

Commitment of a Family Company

Passion for Publishing

Power of the Individual

Freedom of Speech

We are the most attractive employer in the market to entrepreneurial, skillful indi-viduals who want to work in media.

We always seek profitable growth. Development and improvement of existing activities are part of the mission.

We believe that a close rela-tionship and understanding of our customers’ needs and behavior are critical to our success.

We plan for generations, not for quarters.

We’re in media. Adapting to changing market conditions is our inherited strength, innovation is our focus.

We’re creating businesses and organizations around people, not the other way around.

We believe that a public ongoing, pluralistic conversation is the foundation of a democracy.

Strategic Statements

88

At less than 2 percent of the total Ameri-can book market, the number of digital books is still relatively low. But with 200 percent growth, it is expanding quickly. After taking the lead in 2009 with its e-reader, Kindle, Amazon reported it had sold more e-books than printed books on Christmas Day. Greater digitization has also meant that print-on-demand books have taken off on a global scale.

These technological developments pose challenges to current copyright laws. The strongest such challenge in 2009 was Google’s legal settlement with American authors and publishers allowing Google to scan books with the aim of making all published and unpublished works digi-tized. Originally the settlement legally bound all copyright owners worldwide who had sales in the U.S., but after enor-mous pressure from interested parties, the settlement now applies only to Anglo-Saxon countries.

The global recession had a strong impact on book publishing in 2009. The economic downturn dealt serious blows to consumer markets, such as in the U.S. and England, where retail sales declined sharply. Even in countries such as Sweden and Finland, where sales are normally strong in part due to the pricing pressures of high-vol-ume sales channels, book publishing mar-kets have seen negative growth. In Norway and Germany, on the other hand, markets performed well.

Globally, several long-term trends contin-ued in 2009: Children’s books registered strong sales, fiction sales remained stable and non-fiction sales declined. Despite the recession and growing digitization, the supply and consumption of books re-mained relatively stable.

The growing trend towards fewer, domi-nant bestsellers also continued, with Stephenie Meyer’s Twilight series, along with Dan Brown’s The Lost Symbol, con-quering the world.

Bonnier Books registered its largest profit ever thanks to the success of publishing groups in Germany, Sweden and Norway. This was due to a strong and more con-centrated publishing calendar, and to increased efficiency in production and organization.

The Swedish Bonnierförlagen group re-ported very positive results following its extensive restructuring in 2008, includ-ing enormous successes with titles such as Lars Kepler’s The Hypnotist and Dan Brown’s The Lost Symbol. Herta Müller, winner of the 2009 Nobel Prize in litera-ture, was also among the year’s highlights. Together these contributed to a growth in market share for Bonnierförlagen in a market that contracted in comparison with the previous year. The strong growth of the online bookstore Adlibris continued through 2009, while new operations in Finland, Norway and Denmark were able to meet projected targets.

In the two years following its merger, Cappelen Damm secured its position as Norway’s largest publishing group. The Norwegian market remained stable, with Cappelen Damm by far the most success-ful publishing house. The group continued its successes within educational materials, increasing its market share while develop-ing new digital learning tools.

In Germany, Carlsen Verlag achieved enormous success with Stephenie Meyer’s Twilight series, which sold more than 5.4 million copies. Even the publishing houses

Ullstein, Piper, and Hörbuch Hamburg registered record profits. Taken together, this enabled the German publishing group to report its largest profits ever.

Bonnier Publishing experienced the im-pact of the recession in the U.S. and the U.K., where bookstores were restrained in their purchases. Under the direction of the group’s new CEO, Richard Johnson, strong cost-saving measures have been imple-mented as the publishing houses have increasingly coordinated their production and sales organizations. Autumn in the U.K., Piccolia in France and Five Mile Press in Australia, with the mass market as their primary distribution channel, have each been affected by the weak mar-ket, though to a lesser extent.

In 2009 Finland-based Tammi expe-rienced a shrinking book publishing market, along with cutbacks in education spending. Despite significant cost-saving and efficiency measures, new ventures have been launched, and the newly ac-quired readmi.fi has become an important addition within the world of non-fiction.

Books

Breakthrough for Digital BooksRapid digitization and its unavoidable consequences, including growing pressures on copyright laws, were prominent themes of 2009 within the book publishing industry. After a quarter-century of progress, 2009 was a breakthrough year for digital books, above all in the U.S. For Bonnier Books, profits were the best ever.

Net Sales Bonnier BooksMSEK

10,000

8,000

6,000

4,000

2,000

02007 2008 2009

See pages 40–41 for more financial information.

99

* According to industry analysts, some 300 to 500 different e-readers will be launched in 2010. In order to meet the content demand, Bonnier launched the e-reader and web store Letto in February.

1010

1111

Pär Svärdson

The Enthusiast

“I guess I’ve always seen Adlibris as a kind of sport,” says Pär Svärdson, CEO of Adlibris, the Nordic online bookstore and an avid sailor. “And like any sailing race, we’ve always had very clear competitors.”

The rest of the world may be talking about crisis and recession. But not Svärdson.

“In 2009 we had our greatest profits ever: an increase of nearly 20 percent over the previous year,” he says. “In fact, we’ve per-formed better with every succeeding year, both in terms of sales and profits.”

This success can be attributed in part to extreme cost consciousness. At least once a year, Adlibris implements an extensive set of cost-saving measures. This could mean anything from changing suppliers of pens to compelling executives to pres-ent their ideas on ways to operate more efficiently. And while the rest of the in-dustry checks into expensive hotels when the next book fair comes around, Adlibris stays in a youth hostel.

“We have our fingers in everything,” Svärdson says. “I confess that Ikea and H&M serve as role models in this respect. They also manage to keep costs very low.”

Ikea and H&M are successful Swedish companies that have in some ways always behaved as if the economic crisis was al-ready under way. Like Adlibris.

“On the one hand, it’s always negative for us if fewer books are sold,” Svärdson says. “On the other hand, the crisis has caused an accelerated change in consumer be-havior, and when the market recovers we hope more people will have discovered the advantages of shopping online. I think the recession will prove to be good for us.”

In February of 2009, Adlibris moved into Bonnier’s historic publishing house in Stockholm.

Can you preserve your unique corporate culture after moving in with Bonnier-förlagen?

“I definitely think so. Naturally we col-laborate with the publishing houses in the building, but we keep to our own area and have substantially lower gross margins than those within the publishing opera-tions. It’s a delicate balance, but I’d say that despite having nicer offices now, we’re still Adlibris.”

Today Adlibris is present in four coun-tries: Sweden, Norway, Finland and since mid-2008, Denmark. How is business?

“Books sales have dropped dramatically in Finland over the past year, whereas Denmark and Norway have performed strongly. But 80 percent of our sales still come from Sweden.”

Adlibris used to say: “Satisfied customers are our only form of marketing.” Does this still hold true?

“According to one survey from a few years ago, we received the most customer rec-ommendations of any Swedish company after Ikea. And I still believe that satisfied customers who recommend us to their friends are an unbeatable marketing chan-nel. But clearly we do market ourselves, especially in other Bonnier press publica-tions. We’ve also had advertisements on TV4 and will soon do the same with MTV3 in Finland.”

Is the long-tail economic model – selling large numbers of single items – still work-ing for Adlibris?

“Definitely. We have 3.5 million titles to choose from. Of these we sold about 550,000 in 2009, which is just over 15 per-cent. Half of these sold only a single copy. It’s a strange thought that a huge number of the books we sell will never be sold by us again.”

Five years have passed since Bonnier be-came a majority shareholder in Adlibris. The day after the agreement was signed, Svärdson took a test run and bought the boat of his dreams: a 40-foot Arcona. It was in November. In a raging snowstorm. That’s an enthusiast.

A fierce competitor with a passion for sailing, Pär Svärdson has a knack for knowing which way the winds will blow. The CEO of Adlibris, the Nordic region’s largest online bookstore, his enthusiasm has taken him far, both as a sailor and a leader.

Books

1212

In the U.K., several large Web TV projects are under way. There, as in Scandinavia, public service has had a powerful influence (BBC Iplayer had more that 100 million viewings in December 2009). Elsewhere, the Web TV service attracting the most admirers is U.S.-based Hulu, owned by the media giants NBC, News Corporation and Disney. The number of Hulu visitors is nearing the 50 million mark, a growth level that resulted in demand for more than 1 billion viewings per month — an increase of 400 percent in one year). And most signs point toward increasing com-petition over the coming years. We are now taking the next step in the evolution of media, into a truly digital decade. Have we reached a true paradigm shift at last?

In early autumn of 2008, the financial crisis and recession were already unavoid-able facts. So the dramatic loss in advertis-ing revenues for TV4 Group, MTV Media and Expressen in January of 2009 was no surprise. However, significant questions remained: How far could they fall, and how long would the recession last? Though difficult to predict, the answers were cru-cial to revising our original plans for 2009.

All three business units implemented cost-saving measures in relation to their original budgets, but a decision was made that this would not happen at the expence of viewership and circulation targets. The TV channels maintained their relatively aggressive programming schedules, although it was clear early on that we would not be paid in full for all our viewers. In total, average TV viewership increased both in Sweden and Finland, primarily among younger viewers. TV4 Group increased its viewer share and for the first time captured 30 percent of view-

In the U.K. and the U.S., as well as in France, Germany, Italy and Spain, TV advertising markets experienced one of their toughest years ever. Within the EU, estimates show the TV industry lost nearly 12 percent of its revenues in 2009. But de-spite sagging advertising sales and a his-torically weak overall economy, new chan-nels showed promising growth. Some 245 new channels emerged in Europe alone.

The companies performing best in 2009 were likely those with multiple sources of revenue, thanks to different types of TV content offered via different distribution channels. While advertising sales remain key despite the crisis, consumer and dis-tribution revenues have become increas-ingly important. And new services are ex-pected to further increase these revenues in the future. What the industry called a “year of crisis” was the opposite in the eyes of consumers. Never before had consum-ers watched so much TV.

In parallel with increased access to Web TV and IPTV, more people will naturally shift away from traditional TV. This is likely to be the next major transition for media companies, despite the fact that, with the Winter Olympics and the World Cup in soccer, 2010 has the potential to be an extremely strong year.

“Crisis” was the word on everyone’s lips when describing 2009. But this was not due to any lack of innovation. In 2009 non-linear TV grew from oddity to mass-market phenomenon, from threat to op-portunity. Today 55 percent of viewers watch Web TV. All major companies have launched on-demand services and hopes for advertising revenues are on the rise.

Fewer Ads, More Channels

Broadcasting & Evening Paper

In 2009, people watched more TV than ever before. Despite a decrease in revenue from advertising, the industry benefitted from expansion – 245 new channels launched in Europe alone. TV4 Group saw an increase in viewers during the year.

Net Sales Bonnier Broadcasting & Evening PaperMSEK

10,000

8,000

6,000

4,000

2,000

02007 2008 2009

See pages 40–41 for more financial information.

ership in the age 12-59 demographic. MTV Media, meanwhile, maintained its share of just over 40 percent of viewers aged 15-44.

C More, a provider of sport and film chan-nels in the Nordic countries, was acquired at the end of 2008. Its operations have exceeded expectations, entering 2010 with more than 1 million subscribers.

Thomas Mattsson took over in March as editor-in-chief of Expressen. During his first year he has gradually renewed and developed the newspaper’s editorial con-tent. Although the circulation of evening newspapers has declined the past several years, Expressen has exceeded projections in terms of both readership and circula-tion. On weekends it now has more read-ers than its competitor, Aftonbladet.

A collaboration between Expressen and TV4, including shared ventures and opera-tions within mobile and Internet-based services, along with events and sales, was also launched during the year.

1313

* Microphone used for Swedish Idol on TV4. With viewer-ship of 58 percent among 12–59 year olds for the final program, Idol is Sweden’s biggest music contest in all categories.

1414

1515

Michael Grimborg

The Risk-taker

“With Idol, we’ve worked to extend and deepen our channels toward different customers,” he says. “It could be Läkerol breath mints, which has the rights to use the brand in retail stores, Viking Line, which has Idol boat cruises featuring the competition’s artists or telephone opera-tor Tele2, which offers its subscribers the chance to download the winning song. And we can offer our customers exposure via TV, Internet, mobile phones, shopping center tours and live performances.”

What was the biggest development in tele-vision in 2009?

“TV4 Play and other media players brought multi-platform TV to life. What viewers miss on TV, they watch online now.”

What was significant about TV4’s collabo-ration with Expressen?

“That we can allow our customers to offer additional products through the 13,000 retailers of Expressen. In terms of adver-tising, TV4 and Expressen also helped each other to serve new customers.”

What is your next joint-venture project?

“To collect old refrigerators and replace them with more environmentally friendly ones. In this case, we’ll collaborate with one manufacturer, one retailer and one waste-management company.”

everyday affairs for Grimborg and his col-leagues in 2009.

“The reason we work with these types of companies is that we believe their sales could increase with a bit of incentive,” he says. “And in every case where we help to increase their sales, we become deeply involved in their businesses. I get text messages from the Swedish clothing chain Dressmann telling me how many pairs of underwear they sold yesterday.”

While TV advertising revenues decreased dramatically during the past year, TV4 managed to increase its total share from 53 to 55 percent. At the same time, the number of new domestic customers grew from 135 to 150. How did this happen?

“We’re great at holding client meetings,” says Grimborg. “In 2008 our sales staff held 27,000 client meetings; in 2009 it came to more than 32,000. On top of this, we have great sales tools and methods, and not least, passionate salespeople.”

It wasn’t for nothing that Grimborg was named Sweden’s Most Influential Media Sales Executive of 2009 by industry news-paper Resumé. TV4, for its part, received the distinction of Best Media of the Year for its comprehensive solutions for adver-tisers on various platforms. TV4’s Idol con-cept is perhaps the best example.

Crisis breeds creativity. The question is whether the need for creativity has ever been as acute as in 2009. Within the TV market, advertising revenues dropped by 15 percent as large customers nearly ceased to advertise altogether.

“That’s just how it was,” says Michael Grimborg, director of sales at TV4. “A number of customers, who would have accounted for SEK 300 million in revenues in our budget, paid us nothing.”

Something had to be done. This is where electric bicycles enter the picture.

“I constantly read about two things: health and the environment,” says Grimborg. “From there it’s just a small step to bicy-cles. I ended up contacting Trend import, an importer of electric bicycles from China, and the pieces fell into place.”

Together with Trendimport, he created the brand Lifebike, today owned by TV4. He signed a three-year contract with the com-pany that gives Trendimport exposure on television and TV4 in turn receives higher payments as more bicycles are sold.

“The first year was mainly focused on building the brand and its distribution network,” he says. “But in a few years’ time, it may turn out to be quite lucrative.”

Similar types of joint ventures became

Broadcasting & Evening Paper

Director of Sales at TV4, Michael Grimborg thrives on challenge. An avid photographer with a strong interest in people, he also happens to be Sweden’s largest seller of Chinese electric bicycles.

1616

Historic Ad Loss for Magazines

Bonnier Publications also carried out sev-eral cost-saving measures, partly through the elimination of certain licensed titles in Denmark. The advertising crisis in Russia was most challenging of all, while Finnish operations positively surprised the mar-ket with the launch of a new title: Evita. Idényt and Benjamin Media are now fully owned subsidiaries. Especially notable among the year’s bright spots is Illustreret Videnskab (Science Illustrated), which saw stable growth during the year.

Circulation figures for Bonnier Tidskrifter in Sweden exceeded those of 2008, while the decline in advertising was met with cost-saving measures and reorganiza-tion. Ownership in Spoon Publishing was increased, and contract-publishing opera-tions had a strong year. Even M-magasin and crossword publishing operations surprised positively. Stockholm City was added to Bonnier Tidskrifter’s portfolio in August, and a plan implemented in au-tumn will have the newspaper in the black within the near future.

in markets where readers have long been accustomed to paying just a few dollars for a yearly subscription. The solution that most publishers seem to envision involves expanding their assortment of events, websites, advertorials and other associ-ated ventures.

At this point magazine publishers have concluded that websites will not replace print magazines. Instead, websites are seen as just one of the new, minor sources of revenue that will support advertising revenues, or as a marketing channel for subscription sales. However, many have high hopes for the new e-readers that are now being released on the market, and for the opportunity they present for entirely digital magazines.

For Bonnier, 2009 was a year in which the recession gradually grew into a full-fledged print advertising crisis. The mar-ket for magazines suffered especially hard due to an overabundance of titles already on the market after several years of boom-ing magazine sales. During the year we began to see an expected purging of com-peting titles in our home markets, both in Scandinavia and the U.S.

We saw a decline of 25-30 percent in ad-vertising volumes from 2008. For the U.S. magazine publishing industry, which is significantly more dependent on advertis-ing revenues than Scandinavian markets, this had a big effect on total revenues. Nonetheless, Bonnier Corporation man-aged the decline by extensive cost-saving measures and by increasing market shares within a number of segments. Several key acquisitions of individual titles were made, expanding the overall portfolio with magazines such as Flying, Boating and Popular Photography.

The recent decline of global advertising is the most drastic change ever seen by magazine publishers. In the U.S., the world’s largest market for magazines, con-sumer magazines advertising decreased more than 25 percent. In many other countries, the decline was even sharper. even in countries whose GNP continued to grow, magazine advertising sales simply collapsed.

During the boom years leading up to the crisis, an unusually large number of maga-zines were launched in a multitude of mar-kets. For many publishers this increase in competition only compounded a number of growing problems. The magazine mar-ket, however, differs from other media markets in that several business models coexist, sometimes even within the same market segment. This means that certain publishing houses, which had established primarily subscription-driven titles, were hardly affected by the economic crisis, while those surviving on advertising rev-enues suffered dramatically. The effects of the crisis therefore vary significantly.

The big question for markets where advertising-based business models are dominant, as in the U.S., Russia and much of Asia, is whether advertising revenues will return, or whether the business model itself must change.

Many magazine industry analysts in the U.S. contend that publishers will have to cease basically giving away their maga-zines to readers and begin charging for subscriptions. There is almost complete consensus around the principle that publishers will need to charge for digital editions of their magazines as they are launched. But few believe it is possible to definitively begin to charge for magazines

Magazines

Magazines had one of their most difficult years ever in 2009. Not just because magazines are on their way to being wiped out by a digital tidal wave. A rapid economic decline also exposed flaws in a business model based primarily on one source of revenue: advertisements, something felt even by Bonnier.

Net Sales Bonnier MagazinesMSEK

10,000

8,000

6,000

4,000

2,000

02007 2008 2009

See pages 40–41 for more financial information.

1717

* In Scandinavia, Bonnier is a leading publisher of women’s and shelter magazines. The oldest is the Swedish Damer-nas Värld (Ladies’ World) which started in 1940, and the youngest is the Finnish Evita, launched in 2009.

1818

1919

“Our business has actually been changing for quite awhile,” says Sue Gilman, group publisher of Bonnier Travel Group, which includes ISLANDS, Spa, Caribbean Travel + Life and Resorts & Great Hotels. “With the advent of the Internet, people could suddenly control their own travel destiny, and they didn’t need print in the same way they once did.” The worsening economic climate added to the problem. “We saw a noticeable slowing down in the second half of 2008, due to the simple fact that people weren’t traveling,” she says. “Then, in 2009, our customers watched their business fall by double digits.”

The impact on the Travel Group was profound. “Print was hit first, and most dramatically. What was interesting was that the impact was felt across the board — from small destinations to big international hotel chains, everyone was affected.” Gilman had seen recessions before, but nothing quite like this. “After 9/11, we felt like there was leeway; after time went by, things would get back to normal. But this recession has been so protracted — here we are in 2010 and it’s still going on. There are no short-term fixes in this environment; people need something holistically different.”

To keep perspective on the market in a broader sense, well beyond individual clients’ needs, proved key to navigating the choppy economic waters. “I cannot

discount the importance of what we do editorially,” she says. “By continuing to make travel seem attractive, we’re deliver-ing a whole package to our partners. We’re not just selling an ad, we’re reinforcing the industry’s value to the culture as a whole.”

In 2009, Gilman put her focus on find-ing new solutions to the age-old issue of how to connect advertisers with readers. “Our primary aim was to create custom programs that intermix all sorts of media options — not just print but events, televi-sion, web offerings. This is the new reality: If you’re not bringing clients these kinds of options, you’re not selling, simple as that.”

And they’ve taken things even further, get-ting involved in client branding. “Before, we gave clients a platform for their mes-sage; now we’re helping them create and define that message in entirely new ways,” she says. “Viral marketing, social media — those terms didn’t exist five years ago. And there are things coming down the pike that we haven’t even thought of yet. Our challenge lies in teaching our clients how to cohesively market themselves across a new array of possibilities.”

Another challenge is keeping her team mo-tivated at a time when everyone is working harder for smaller results. “I try to remind my team about the importance of what we do, especially in tough times,” she says. “Tourism affects people’s livelihoods.

When we help bring visitors to a destina-tion, we bring economic life as well. It’s not just pretty, it’s important.”

Looking ahead, Gilman sees an industry that has irrevocably changed. “The fact is, our business will never be what it was five or ten years ago — things will be dif-ferent going forward. But I’m beginning to see light at the end of the tunnel. People are starting to travel again. When people are traveling, we will sell magazines and advertising; it’s when people don’t travel that our customers become paralyzed.”

“The important lesson we’ve learned from this is that we need to be responsive. We can’t set things in stone; we have to react to things that are happening, and create solutions quickly and efficiently,” she says.

“Selling used to be programmed: Budgets came out in the fall, and you’d sell in the fall. Now it’s an ongoing process — you sell year-round, and you create opportunities when customers need them. Our plan-ning cycle has become shorter because our customer’s forecasting cycle has be-come shorter. That’s what they need. And through all of this, we have stayed true to our niches, and will continue to do so. There is no substitute for that.”

Magazines

Few people have seen as much change as Sue Gilman, group publisher of Bonnier Travel Group – yet, 2009 took her by surprise. Now she begins to see light at the end of the tunnel.

Sue Gilman

The Traveler

2020

tured in the first quarter, ending the year profitably. Latvian daily newspaper Diena, Latvian business newspaper Dienas Biz-ness and business.hr in Croatia were sold during the year. A new CEO was appointed for the Bulgarian market in October 2009, while a number of acquisitions were car-ried out in Estonia and Poland.

The companies within Medicine Today International (MTI) have felt the impact of the economic recession, though to a considerably lesser extent than the busi-ness press sector as a whole. Advertising revenues decreased by just 6 percent from the previous year. A Slovenian medical newspaper was launched early in the year, adding a seventh country to the list of MTI publications. A substantial investment in event management also began during the latter part of 2009.

On January 1, 2010, all operations within CEE and MTI were unified under a com-mon management company, Bonnier Business Press International, with Anders Eriksson as CEO.

In 2009 advertising revenues for Bonnier Business Press suffered their largest de-cline in modern times. Thanks to vigorous cost-cutting efforts, along with extensive restructuring within Central & Eastern Europe (CEE) operations, the end results of these revenue losses were minimized enabling Bonnier Business Press to record a positive, if modest, profit margin.

DI Group in Sweden also suffered from dwindling advertising sales. Even di.se was affected but continued to deliver positive earnings with healthy profit margins. The year 2009 saw the launch of summer publications for DI Weekend and the launch of monthly magazine DI Dimension. Gunilla Herlitz was succeeded as editor-in-chief by Peter Fellman, for-merly managing editor, while the post of CEO was assumed by Casten Almqvist, also CEO for the business area.

In Denmark Børsen suffered as well, losing approximately 30 percent of its ad-vertising revenues. However, it managed to secure its market share in a shrinking market, and circulation continued to grow, to 74,000 by year-end. Cost reductions compensated somewhat for the drop in advertising revenues. Børsen, which pub-lishes no Saturday print edition, instead launched a digital Saturday edition re-stricted to subscribers, using technology previously used for digital magazines only.

For operations within CEE, the effects of the crisis were dramatic. Advertising rev-enues declined by 45 percent from the pre-vious year, and extensive organizational changes along with cost-saving measures were carried out in all companies. Estonia, Russia and Slovenia recorded profits for 2009 despite substantially reduced rev-enues. Operations in Poland were restruc-

The battle for business readers in 2009 was fought far and wide. The Wall Street Journal advanced its position in Europe with a new strategy that includes an inte-grated online and print editorial office, a clearer news focus on the web and fewer but higher-profile articles. The same mod-el was launched the past summer in Asia.

The Pearson-owned Financial Times countered by reducing its subscription price in the U.S. to half its U.K. price, a strategy widely seen to have produced positive results. Even the U.K.-based Economist reported successful American sales in the wake of the financial crisis.

In its second year under the ownership of Rupert Murdoch’s News Corpora-tion, The Wall Street Journal in the U.K. heavily reduced subscription price to 95 British pounds. The competition caused the newspaper heavy earnings losses. Total revenues for the Financial Times dropped by 30 percent during the initial nine months of the year and, by the turn of 2010, management was predicting sales of subscriber-based online and print content will outpace advertising revenues within two years.

In the U.S. Business Week suffered acute economic problems during the year, allow-ing Bloomberg to purchase the newspaper at a bargain price.

Online, 2009 was the year of pay walls. The signals sent by News Corporation were unmistakable, giving others cour-age to follow suit. Wall Street Journal walled off more of its content, followed by the Economist. At the same time skep-tics noted surveys showing 80 percent of respondents would consider abandoning sites that began to charge for content.

Lower Earnings for Business Press

Business Press

The trend was clear: Earnings dropped for business press, but readership rose in 2009, a time of economic uncertainty. At the same time, the industry’s two largest newspapers – the Financial Times and the Wall Street Journal – have been engaged in a war on several fronts. Meanwhile, Bonnier Business Press was hit by the biggest loss in ad revenues in modern times.

Net Sales Bonnier Business PressMSEK

5,000

4,000

3,000

2,000

1,000

02007 2008 2009

See pages 40–41 for more financial information.

2121

* With publication of business dailies and websites in 11 countries, Bonnier Business Press reaches more than 1 million readers daily and 2.1 million site visitors per week.

2222

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Tomasz Siemieniec

The Savior

The year that passed made it painfully clear that we live in a global economy. No country and no market remain unaffected by a weak or severed link in the chain. The fate of Sweden’s top banks is determined on the other side of the Baltic Sea, just as the country’s largest industrial corpora-tions are entirely dependent upon what happens in China, India and Brazil.

Poland, a market where Bonnier Business Press has operated since 1997, has demon-strated more plainly than any other coun-try in Europe that economies with sound national financial policies and a strong underlying demand are able to rebound most quickly from a recession.

“It’s true we live in a global economy, but what happened to Lehman Brothers last autumn happened on Wall Street – not here in Warsaw,” says Tomasz Siemieniec, managing editor of Puls Biznesu. “We’ve been affected by the crisis, but everything in Poland continues to grow despite this.”

In contrast to its neighboring countries in the Baltic, Poland’s economic growth was not inflamed by questionable interest rate policies. Not a single Polish bank has applied for a government bailout. House-hold and corporate debt are relatively low. Instead, economic growth is driven primarily by a flourishing export indus-try and a rise in living standards. Still, it would be impossible to claim that Poland

has remained unaffected by the global economic crisis.

In January of 2009 the editorial manage-ment of Puls Biznesu realized that the current economic situation was unstable. It began with the contraction of the con-struction industry, and a drop in private consumption followed. Advertising sales suddenly came to a halt.

“As journalists we understood the warn-ing signals early on and decided to act quickly,” says Siemieniec. “Within a week we’d begun cutting costs across the entire operation.”

In the restructuring that followed Siemieniec, who had worked as a reporter and news chief, stepped in as managing editor. His first task was to launch the most radical cost-saving program in the 13-year history of the newspaper.

When the dust settled, editorial staff had been slimmed down from 80 to 45 mem-bers, supplements had been combined or eliminated, contracts with printers had been renegotiated and prognoses revised with 30-percent reductions in advertising revenues.

The next step was to lead the way out of the economic crisis – both for employees and readers. In one article series, Puls Biznesu introduced the concept of “crisfit”

(as in “fit for crisis”) and gave concrete advice on how companies and private indi-viduals could manage the crisis.

“All crises come to an end,” says Siemieniec. “When revenues took their deepest dive we were able to convince employees, management and owners that we would survive the adversity together. It was just a matter of rolling up our sleeves, working harder and saving on all imagin-able expenses.”

One year later, Siemieniec can look back on a period when Puls Biznesu proved to its staff, readers, advertisers and owners that the newspaper could weather a severe storm. Competition is intense on the Pol-ish market for daily business newspapers: There are six, of which Puls Biznesu is No. 3.

But the editorial management is forging expansive plans. In the coming year they plan to increase the newspaper’s market share, to continue to target small business owners and to further enhance their edito-rial content. The market has rebounded quickly.

“2010 will be an eventful year for the Pol-ish market,” says Siemieniec. “Economic subsidies from the EU are on the rise, we’re having local and presidential elec-tions simultaneously, and the Warsaw stock market is planning several large IPOs.”

Business Press

Tomasz Siemieniec, managing editor of Poland’s Puls Biznesu, saw the warning signals of an approaching recession and reacted immediately. As advertising revenues began to fall, the newspaper was well prepared for a crisis.

2424

Big Moves for Movies

film of 2009, however, was not local but the Oscar-winner Slumdog Millionaire, to which SF owned the distribution rights for the Nordic markets. SF maintained its position as the Nordic countries’ leading distributor of DVD films.

Europe’s Intellectual Property Rights Enforcement Directive (IPRED) and the Pirate Bay trial in Sweden had positive effects on both rentals and sales of DVD films – not only for SF, but for the Home-enter film clubs and Discshop e-stores as well. But video-on-demand sales via SF Anytime’s PC platform failed to meet expectations despite IPRED legislation. Meanwhile, sales via IPTV (TV via broad-band Internet) showed strong growth.

The music industry has suffered more than the film industry in terms of illegal downloading. At the end of the year, af-ter several years of lost revenues and an overall contraction of the music market, ownership of the record company Bonnier Amigo Music Group was sold to the com-pany’s board of directors.

industry’s battle against illegal download-ing, and the Pirate Bay trial in Sweden sent ripples around the world.

Successful 3D releases require digitized cinemas, however. All Norwegian cinemas will become fully digitized within two years, and the transformation is under way throughout large parts of Europe. During the first half of 2009, the number of digitized cinemas increased by 43 per-cent in the U.K., 40 percent in Denmark, 79 percent in Russia, 129 percent in Italy, 136 percent in France, 150 percent in Sweden and by 224 percent in Spain. The largest percentage increase occurred in the Czech Republic, where the number of digital cinemas grew from two to 25 with-in the course of six months – an increase of 1,150 percent.

For Swedish cinemas, 2009 was a record year as well. A strong and broad selection, including an unusually successful year for Swedish films was largely responsible for the positive results.

Swedish films accounted for over 30 percent of total box-office sales, a unique phenomenon in modern times. Despite the biggest selection ever of films avail-able across different viewing platforms, audiences showed a growing interest in viewing films in their original screening format. The quality, accessibility and gen-eral film experience have all improved and must constantly be developed if cinemas are to maintain their powers of attraction. So far, SF Bio and SF Kino succeeded in meeting this challenge.

Svensk Filmindustri (SF) produces films in all the Nordic countries, releasing some 30 local films per year with SF as producer or co-financier. The most successful SF

In the 1930s Busby Berkeley’s showgirls sang “We’re in the Money” as an ironic juxtaposition to the long breadlines of the Great Depression. In 2009, movie bosses from the U.S. to Europe could have sung the same song. In the U.S., the year ended with record figures – USD 10.7 billion in recorded earnings made 2009 the indus-try’s best year ever. Ticket sales increased by nearly 10 percent and attendance by 3 percent compared to 2008.

And new films blazed across big screens the world over. After only three weeks James Cameron’s Avatar reported earn-ings of more than USD 1 billion. Other international box-office hits included Up, Harry Potter and the Half-Blood Prince, New Moon, Ice Age 3, 2012, and Angels and Demons.

Several of the year’s blockbusters were screened at select cinemas in 3D, which contributed significant earnings, since each ticket costs a few dollars more. In addition to Avatar, both Up and Monsters vs. Aliens were big 3D hits.

According to major industry players in-cluding James Cameron, Steven Spielberg and Peter Jackson, 3D is more than a trend – it is here to stay. A number of new films in 2010 will be shown in 3D as well as in the traditional format. And old favor-ites such as the original Toy Story films will be re-released in flashy new 3D attire.

Now 3D technology also has become part of a new strategy in the struggle against illegal downloading. Because it is impos-sible to download 3D versions of films, cinemas have found an effective way to attract audiences with an experience they can’t have at home on their sofas. In other respects 2009 was marked by the film

Entertainment

The film industry thrives in times of crisis, the saying goes. 2009 – the year 3D films proved they were here to stay – was no exception. Swedish movie theaters had a record year in 2009.

Net Sales Bonnier EntertainmentMSEK

5,000

4,000

3,000

2,000

1,000

02007 2008 2009

See pages 40–41 for more financial information.

2525

* The film Avatar was a breakthrough for 3D technology at the cinema. More than 31,500 3D filmgoers came to SF Bio movie theaters on the opening weekend alone.

2626

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decade’s technological revolution, the fate of the film industry has been determined mainly by illegal downloading, DVD sales and digital distribution.

But although these developments have pri-marily benefitted retailers and file-sharing pirates, the next chapter of the story may be to the advantage of the cinema: 3D film. For the film industry, physical distribution is costly and cumbersome. Most often, it requires copying and transporting up to 65 pounds of 30-millimeter film. But with digital films – burned on discs and pro-jected onto specially adapted film screens – the cinema experience is improved while costs are reduced.

James Cameron’s mega-production, Avatar, was the real breakthrough for 3D technology both in Finland and Sweden. 3D also means that fewer titles, such as small independent films directed toward niche audiences, will have a greater chance of appearing on traditional cinema screens.

“The new technology is going to transform the entire cinema industry for the better,” says Toiviainen. “An enhanced cinema experience offers yet another competi-tive advantage against downloaded and pirated films.”

For these films, FS co-finances the entire production process – from film proposal to marketing.

“Finland is a small market, but interest for domestic films is very high among audi-ences,” says Toiviainen. “It’s possible to make money on Finnish films, but it can be very risky. It’s critical to make the right decisions during the production process.”

One example of a local box office hit is Haarautuvan rakkauden talo, or House of Branching Love. Written and produced by Mika Kaurismäki, the elder of two filmmaking brothers who are legendary in Finland, it attracted droves of Finn-ish moviegoers. Audiences of more than 145,000 watched the story of a newly di-vorced couple who move back into a house together while waiting for it to sell.

The box-office success of the Indian Oscar-winner Slumdog Millionaire serves as further evidence of the maxim that quality always pays.

“But we shouldn’t underestimate the Ice Age effect,” says Toiviainen. “It was seen by as many as 390,000 people in Finland, a figure higher than the attendance for the final Harry Potter film. Ice Age 3 was in-credibly important for our business.”

Moviegoers who pay for their tickets re-main important, but in the wake of the last

Trends come and go. Technological revo-lutions turn our lives upside down. New competitors appear out of nowhere and instantly transform the market. Some things, however, remain constant. Like the fact that quality pays off. And that films are best seen at the cinema.

“In our business, we actually haven’t felt much of the recession, since 2009 was a year in which we distributed great films that attracted large audiences,” says Antti Toiviainen, CEO of FS Film Oy in Helsinki.

The Finland-based company, a wholly owned subsidiary of Svensk Filmindustri, is purely a film distribution company. Toiviain-en and his 30 colleagues annually distribute, co-produce and market some 350 films.

In 2009, 35 films distributed by FS were screened at cinemas in Finland, with 330 titles released on DVD. Distribution con-tracts between Fox and SF, together with locally produced Finnish films, make up the core of the company’s business.

“As a film distributor, it is crucial to divide the right films into the right channels,” Toiviainen says. “Recent years have been successful for FS because we’ve handled commercial risks wisely and constantly cut down on costs.”

One or two films a year are produced lo-cally for screening in Finnish cinemas.

Antti Toiviainen

The Bestseller

Entertainment

Antti Toiviainen, CEO of the Finnish film distribution company FS, looks back at the best year in the company’s history. After 12 months of large audiences drawn by high-profile, high-quality films, he and FS emerge from the economic crisis stronger than ever.

2828

Identity Crisis for Morning Papers

Negative advertising trends began to turn around toward the end of the autumn, and Sydsvenskan won an array of prizes and distinctions, including the Stora Journal-istpriset (Great Journalist Award), which it earned for the second consecutive year.

Bold Printing Group, Bonnier’s printing operations with facilities in Stockholm, Malmö and Borås, underwent a turbulent year in the wake of the recession. Cost-saving measures and personnel reductions took place with a continued focus on qual-ity production.

of the World, as early as middle of 2010.

As Google CEO Eric Schmidt attempted to calm Murdoch’s nerves, scornful com-ments were hurled at the billionaire by Arianna Huffington, founder of the Huff-ington Post and a symbol of the idea that online news can be profitable.

This mudslinging highlights a central question for the industry: Is it possible to earn a profit from traditional news papers at a time when their market share is shrinking and readers increasingly turn to free news articles online?

Already by the beginning of 2009 it was clear the year would pose extreme chal-lenges for Bonnier in terms of advertising sales. And this held true as the advertis-ing crisis spread throughout the market. Circulation however remained stable for our morning newspapers, and a great deal of energy was directed toward cost-saving measures throughout all operations.

The autumn was especially tumultuous for Dagens Nyheter, as comprehensive organizational changes were made under the leadership of newly appointed CEO and editor-in-chief, Gunilla Herlitz. An editorial reorganization process also was implemented, and suffering advertising sales began to rebound during the latter part of the year.

Sydsvenskan, Kristianstadsbladet, Ystads Allehanda and Trelleborgs Allehanda, were incorporated into a single publishing group, SDS, as of January 2009. Coordina-tion efforts continued throughout the year, in parallel with cost-saving measures. In the spring Richard Frank took over as editor-in-chief of Trelleborgs Allehanda.

In 2009, financially troubled morning newspapers around the world were being forced to lay off staff and make cutbacks.In the U.S. dozens of daily newspapers were dissolved during the course of the year, among them the Rocky Mountain News, which was founded in 1859.

Other dailies managed to avoid bankrupt-cy by completely revising their business models. The Detroit Free Press, for exam-ple, reduced the number of days of publi-cation while the Seattle Post-Intelligencer converted entirely to online publishing.

Not even the New York Times Company succeeded in keeping its head above water: Its losses in just the first fiscal quarter amounted to a full USD 75 million.

French president Nicolas Sarkozy took the crisis seriously early on, promising a bailout package worth EUR 600 million in order to save the French newspaper publishing industry. The country’s 18- to 24-year-olds were offered a one-year’s subscription to the daily of their choice – paid in full by the French taxpayers.

However, the powerbroker who will be most closely associated with morn-ing newspapers’ worst year within human memory is media mogul Rupert Murdoch. The billionaire behind me-dia conglomerate News Corporation, Murdoch repeatedly accused Google and other search engine operators of being “parasites” who “stole” the newspaper’s articles.

In addition to these accusations, he prom-ised to charge for access to online versions of the New York Post, along with British newspapers the Sun, the Times and News

Morning Paper

2009 was the year of crisis that broke the backs of several of the world’s oldest morning newspapers. It was the year that Rupert Murdoch promised to charge for online news sites and Nicolas Sarkozy gave away free subscriptions to French teenagers. For Bonnier, the year was a huge challenge for selling ads.

Net Sales Bonnier Morning PaperMSEK

5,000

4,000

3,000

2,000

1,000

02007 2008 2009

See pages 40–41 for more financial information.

2929

* Bold Printing Group is one of the Nordic region’s leading newspaper printers. It prints some 850 million news-papers yearly.

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No one in Sweden’s media industry could have missed the fact that the country’s big-gest morning newspaper appointed a new CEO and editor-in-chief last autumn. Nor did anyone fail to notice that she started by shaking up the organization, upsetting a sleeping lion of Stockholm’s newspaper-publishing district.

Anything else would have seemed strange. One of Herlitz’s first decisions was to make major layoffs. These opening moves in her new job followed a harsh but obvious logic: trim costs, cut back services and reduce freelance content.

“I discovered a paper in deep financial cri-sis,” says Herlitz, gazing through the glass doors into Dagens Nyheter’s main edito-rial newsroom. “I also saw an organization that had serious flaws.”

She describes Dagens Nyheter as an ocean containing hundreds of small is-lands with limited communication and no strategic awareness. Then a sustained economic low-pressure front blew in over the entire archipelago. In concrete terms, Dagens Nyheter lost SEK 277 million in advertising revenues during the financial crisis and recorded heavy earnings losses.

“But there are some enormous strengths,” Herlitz says. “Dagens Nyheter is Sweden’s largest and most important morning daily. What we need to do now is strengthen our

position as the country’s leading national newspaper and make the company profit-able again.”

There is good reason why Dagens Nyheter is compared to a lion. The paper has a daily readership of some 800,000, every week the website, dn.se, attracts 1.1 mil-lion unique visitors and the company earns billions of Swedish kronor. The lion that Herlitz is set to tame needs to be-come more efficient, more agile and more profitable.

Herlitz the organizer cut her teeth on the editorial floor of Dagens Industri – a working environment known for its direct decision making and entrepreneurial cul-ture. This is something Herlitz took with her to her new workplace. And when a decision needs to be made, she takes pride in setting a good example – swiftly and di-rectly. This is a prerequisite in a company where sudden events in the outside world can result in a rapid reworking of both the front page and the budget.

“Advertising revenues are important for the business model of a morning news-paper, but we must not underestimate the paid edition,” she says. “The willingness to pay remains strong, and subscription revenues are stable despite fluctuations in the economy.”

Herlitz’s financial challenge is clear. Her

editorial mission however is likely to be more complicated given the various edi-torial sections, departments and media platforms that make up Dagens Nyheter. Nonetheless, she focuses on keeping things simple.

The editorial product – both online and in print – must deliver comprehensive world coverage to its readers.

In practical terms, this requires a strong news organization with foreign correspon-dents around the world. An editorial page that speaks from a strong opinion-setting tradition; a culture section that is deep and wide in scope; a sports department that continues to build on its reputation as one of Sweden’s best and most knowledge-able; a business section that covers broad private financial issues. And a website that continues to compete for the title of Swe-den’s largest news site and differentiates itself from the newspaper’s print editions.

“The website should give readers the brev-ity and overview that the printed edition cannot provide,” says Herlitz. “I belong in the camp that thinks it is impossible to generate revenue for journalistic content online, even in the future. The challenge instead lies in increasing and commercial-izing online traffic.”

Gunilla Herlitz

The Lion Tamer

Morning Paper

Editor-in-chief and CEO Gunilla Herlitz is set to turn red ink to black. According to Herlitz, subscriptions are at the heart of business for Swedish daily Dagens Nyheter, and the biggest challenge is to commercialize web traffic.

32

Open StackThe ability to easily connect different services in a standard-ized way is in demand. New frameworks are being created.

Cloud Backups

As long as access to

connectivity remains

limited, we will need to

store virtual data locally.

Data

Learn your customers’

digital behavior in order

to offer better service.

Those who use their data best will be the clear winners.

The Quantified Self

Interest is growing for tools that help people measure, analyze and keep track of themselves.

Social Gaming

Digitally tend your

garden or feed your

pet – via social media.

Social gaming on web-

sites like Facebook is

exploding.

16 Media Trends

Real Time

Instead of relying on Google, we monitor and report on events in real time. Speed and variety take precedence over reflection.

Filters

In a world where a single search generates millions of hits, effective filters are key. Filters remove what’s unimportant for you.

Paulina Modlitba Söderlund and Björn Jeffery from Bonnier Research & Development identify 16 trends likely to shape the near future. With Twitter in mind, here they are in 140-character tweets each.

find meaning and structure in data flows

playfulness!

33

Augmented Reality

Mobile cameras combine

content from the web

and reality for new visual

experiences. Utility and

entertainment in one.

Mobile AppsWith 3 billion+ down-loads, Apple’s Appstore has changed use of cell-phones – for everything from a carpenter’s level to games.

Media Market 2.0

Competition from new players is forcing media to forge alliances to preserve their relevance and customer relation-ships.

Pay Walls

More companies will

attempt to charge for

digital media products.

New revenue models are

being tested.

Authenticity

Consumer values are

changing after the

financial crash: think

authenticity and cred-

ibility, locally grown

and fair trade.

Geo-servicesGeographical positioning in digital services is fast expanding. Reveal your location, you’ll be sent what’s happening there.

Internet of Things Physical objects are

being connected online,

making them smarter.

Like umbrellas that tell

you when it’s going to

rain.

Back to RealityIntensified competition means going back to basics: New products and services must cater to consumers’ genuine needs.

E-readers and Tablet

Computers

The market is awash with

new e-readers and tablet

computers, creating pos-

sibilities for new media

products.

new conditions for media companies

mobility

& seamlessness

physical Media Experiences

3434

The major American breakthrough for the e-reader came in 2009, when Amazon’s Kindle was said to have sold 2 million units since its introduction. Several com-petitors have since arrived on the scene, but this year the true battle over market share begins. In January, Apple finally released its iPad. For Bonnierförlagen, these developments will make it possible to release a wide selection of titles on the digital market.

The discussion so far has been more about the device than its content. What will Bonnier do to change this?

“We have the largest selection on the Swedish market, and in 2010 we plan to make it available in e-book format,” says Magnus Dimert, manager for Bonnier-förlagen Konsument. “This includes every thing from extremely niched titles to well-known authors. Starting this year, all of Bonnierförlagen’s fiction and textbook titles will be published in digital format. We’ve also developed digital versions of several hundred titles in our existing catalogue. And, of course, the e-book will evolve over time. So far, most e-books are only read in text format, but textbooks can also be illustrated with moving images and sound. It will be incredibly exciting to follow developments in this area.”

In February 2010 Bonnier-owned Adlibris launched its e-reader, Letto. That Bonnier would suddenly launch a hardware device for the first time in 200 years came as a surprise to many. According to Dimert, however, it was a natural move.

“By offering the combination of an e-reader and content, we’ll have greater possibilities to give users a high-quality experience,” he says. “We’ve gotten a lot

of questions about this: ‘Okay, so you have the books, but which device should I buy?’ And we shouldn’t hide the fact that this is a way for us to fuel the rise of a new market.”

In terms of charging for content, some fear a repeat of the mistakes made by the film and music industries. How can the same mistakes be avoided?

“There are differences. For one, music and films already existed in digital formats and were therefore easily spread online, as op-posed to printed books which require a lot of extra work to be displayed as e-books,” says Dimert. “Also, authors and publishers have a lot more experience now than they had ten years ago and are less afraid that e-books will ruin the market. That said, we need to be quick to develop flexible so-lutions, for example digital watermarking technology. We need to make our books easy to find, buy and read. The worst thing we could do is add loads of digital rights management protection, which makes it much more difficult to get started reading. We need to have legal alternatives that are better than illegal ones.”

One common question is why people should have to pay for content in the first place, especially since publishers can avoid the costs of printing, storage and distribution.

“The largest costs are related not to print-ing and distribution, but to development of content. Certainly, some costs are elimi-nated, making it possible for us to offer lower prices for e-books than for printed books. But the value-added tax in Sweden is currently higher for e-books – 25 per-cent, instead of 6 percent – which adds to the price.”

A paperback book is cheap, lightweight, durable and can be read anywhere with-out worrying about batteries. Why would anyone buy an expensive e-reader?

“If I’m waiting for a bus or plane and can buy, download and begin reading the exact book I want, right then and there – it gets very interesting. Another advantage is that anyone can have all their reference litera-ture collected in a single device instead of carrying around a pile of books.”

What is the biggest challenge?

“To make e-books available in a format that readers want, on the e-readers, smartphones and computers they want to read them on, and for a price they’re will-ing to pay,” says Dimert. “We need to find a

2010 – Year of the E-reader?If 2009 was the year of the mobile app, then 2010, according to all predictions, will be the year of the e-reader. But what does this mean for Bonnier?

Magnus Dimert is Bonnierförlagen’s manager of digital book develop-ment and the driving force behind the e-reader Letto.

3535

business model that will properly compen-sate authors over time. We have long ex-perience in publishing printed books and cooperating with authors and bookstores, but this is an entirely new product for us. The market is exploding right now – near-ly all hardware suppliers are talking about e-readers and portable touch-screen tab-lets that can be used for reading, to watch

films and so on. At the same time, mobile phones are evolving extremely rapidly.”

Does this mean that Bonnier has lost its faith in printed books?

“Not at all. The e-book is a complement to the printed book. It’s up to us to satisfy that need. If someone wants to get a hold

of an e-book, then our books should be available. But this doesn’t mean that we’ll stop printing books. The printed book will remain the most common reading format for a long time to come.”

36

Shannon MendisBonnier Corporation, United States, participant in the GROW program

“My GROW period, three months at Bonnier Publications in Helsinki, meant more to me than words can say. Every thing from launching the new Olivia website to experiencing a new culture, including meeting new people within Bonnier and exploring the city of Helsinki. One of the main things to remember is to take it for all it’s worth. Dance as if no one is watching you even if it’s the silliest dance you’ve ever done. I met some wonderful people and tried things I never thought I would. It’s an experience I will never forget.”

Sverker OlofssonSveriges Television, winner of the Great Journalist Award

“It was an incredibly powerful experi-ence that’s hard to describe adequately. It was a strong confirmation of my journalism skills and my work. I never thought I would even be considered for the prize. And the ceremony was also wonderful, something to remember forever. I’ve almost never been greeted with so many warm words and pats on the back from so many friends and col-leagues. When my CEO pointed out that my portrait will hang with those of the biggest names in journalism, I under-stood that this was really, really huge.”

Juha TuominenMTV3, Finland, Field Sales Representa-tive of the Year at Bonnier Sales Awards

“I had a great year last year, and I think the reason is that I try to find solutions for my customers’ business challenges, rather than only selling ads. Just to be nominated meant a lot to me, not to mention winning the award. It motivated me and gave me extra energy to do my best every day for MTV3. It made me even more committed to the company, too. When we watched video clips of the ceremony afterwards with all of the MTV3 sales staff, I’m sure many of my colleagues thought: ‘I want to be there next year.’”

Prizes and GrantsEach year Bonnier and Bonnier-owned companies award prizes and grants worth various amounts both to employees as well as to members of the public. Among the most well-known is the Stora Journalistpriset (Great Journalist Award), which has been presented since 1966 and is Sweden’s most prestigious journalism award. A comparable prize is awarded in Finland and Estonia.

The year 2008 marked the start of the GROW program, which provides Bonnier employees with the possibility of working in another country for three months. A total of 31 people have taken advantage of the program so far, and 34 new people will take part in this global ex-change program in 2010.

Bonnier Sales Awards is a competition established by Bonnier AB management in 2007 to encourage and reward desirable performance and positive results within the Group’s sales operations. All sales staff, including sales managers, employed by a Bonnier company can participate.

37

Internal Prizes & Grants:Albert Bonnier 100th Anniversary Private StipendSusanne Enblom, Ann Eriksson and Carina Söderman, Bonnierförlagen

Bonnier Sales Awards (2008)Sales Manager of the Year: Jonas Irebjörk, TV4 Sverige Telephone Sales Representative of the Year: Patrick Notaro, Bonnier Corp Field Sales Representative of the Year: Juha Tuominen, MTV OYRookie of the Year: Linn Thyselius, SF Media

Gerard Bonnier Employee StipendNina Ulmaja, Pontus Dahlström and Leena Valtonen, Bonnierförlagen

GROW 2009Jonas Westin, TV4, Shannon Mendis, Bonnier Corp, Malin Westman, Bonnier Carlsen, Kristin Mack Alnaes, Bonnier Media 2, Maria Lanner, mama, Nia Williams, David Borg, Sydsvenskan, Erik Wannerlid, Spoon, Jorid Aldrin, Bonnier Tidskrifter, Michael Goesele, Bonnier Corp, Sigurd Eriksen, Bonnier Publications, Elizaveta Matusova, Delovoy Peterburg, Lisa Julius, Bonnier Corp, Christoffer Cederschiöld, SF Bio, Renée Meyer, Weldon Owen, Gabriella Green, Weldon Owen, Tuuija Kuusela, Tammi, Amie Hrabah, Bonnier Corp, Audrey Bay, Bonnier Corp, Michelle Makmann, Bonnier Corp, Päivi Koskinen, MTV3, Ylva Lundberg, Homeenter, Mikko Väisanen, MTV3, Maria Brunckhorst Schmidt, Bonnier Publications, Patricia Schmidt, arsedition, Steffen Trannerup, Bonnier Publica-tions, Simon Lindberg, dn.se, Kaisa Filppula, Bonnier Publi-cations, Monika Klinar, Finance, Anna Essling, TV4, and Tine Lund, Bonnier Publications

Åke Bonnier Private Foundation 75th anniversary Stipends and Albert Bonnier Stipend FundMartin Blomgren, Dagens Industri, Björn Gunnelöf, Vi i Villa, Björn Hedensjö, di.se, Thérèse Dyhlén, Bonniers Konsthall, Charlotte Jenkinson, Allt om Mat

Tor Bonnier and Albert Bonnier, Jr. StipendsEmma Almgren, Sydsvenskan Tryck, Mats Andersson, DNEX, Leif Barklund, DNEX, Jan-Olof Bengtsson, Kvälls-posten, Anna Bäsén, Expressen, Fredrik Cederman, Expressen, Johanna Einarsson, Sydsvenskan, Paula Sundin, Sydsvenskan, Ingrid H Fredriksson, Sydsvenskan, Björn Gustavsson, Expressen, Ronny Johannesson, Kvälls-posten, Annelie Lindbergh, Dagens Nyheter, Ulrika Ringö, Dagens Nyheter, Teresa Lindstedt, Sydsvenskan, Jan Malmborg, Dagens Nyheter, Hans Olsson, Dagens Nyheter, Therese Ottem, DNEX, Ann Persson, Dagens Nyheter, Sven Riedel, Dagens Nyheter, Peter Österlind, Sydsvenskan, Margareta Rost Taylor, Expressen, Alexandra Selimson, Dagens Nyheter, Alf Sjögren, Sydsvenskan, Åsa Sjöström, Sydsvenskan, Anders Stardh, DNEX, AnnCharloth Stjärnstrand, Kristianstadsbladet, Åsa Tellerstedt, DNEX, and Lena Whitman, Expressen

External Prizes & Grants: Albert Bonnier Prize for Business Owner of the Year (Dagens Industri)Bicky Chakraborty, Elite Hotels (2008)

Albert Bonnier Stipend Fund for Swedish AuthorsJohannes Anyuru, Anita Goldman, Ulf Peter Hallberg, Kristian Lundberg and Staffan Söderblom

Albert Bonnier Stipend Fund for Young and New AuthorsJohan Jönson, Fausta Marianovic and Malte Persson Expressen’s Per Wendel PrizeChristian Holmén and Micke Ölander, Expressen

Gerard Bonnier Essay PrizeGunnar D Hansson

Gerard Bonnier Poetry PrizeHelena Eriksson

Maria Bonnier Dahlin Foundation Stipends for Current Young Swedish ArtistsSofia Bäcklund, Kristina Matousch and Viktor Rosdahl

Albert Bonnier Foundation 100th Anniversary Stipend FundHelena Eriksson, Gunna Grähs, Carola Hansson, Gunnar Harding, Claes Hylinger, Kurt Mälarstedt, Steve Sem- Sandberg, Jan Stolpe and Johan Svedjemark

Great Journalist AwardKinga Sandén, Sydsvenskan, Sverker Olofsson, SVT, Per Hermanrud, TV4, Karin af Klintberg and Jane Magnusson, SVT

Great Journalist Award, FinlandKatri Makkonen, YLE, Petri Saraste, MTV3, Salla Vuorikoski and Jussi Eronen, MTV3, Minna Lindgren, Helsingin Sano-mat’s monthly supplement

The Bonnier Award, EstoniaTarmo Vahter, Eesti Express

Osterwold Prize of Hörbuch HamburgBest Male Speaker: Gustav Peter Wöhler Best Female Speaker: Ulrike Grote Best Author’s Reading: Andreas Steinhöfel

Hasse Olsson Prize for Finance Journalist of the YearNiklas Svensson and Johan Stambro, TV4

38

Board of Directors

1. Carl-Johan Bonnier, Chairman 2. Jeanette Bonnier3. Pontus Bonnier 4. Bengt Braun5. Pernilla Ström6. Arne Karlsson

7. Hans-Jacob Bonnier8. Börje Andersson9. Lars Carlberg10. Per-Olov Atle11. Claes Hallin12. Christian Caspar, Co-opted

1

5

9 10 11 12

6

2 3

7 8

4

39

Group Management

1. Jonas Bonnier, President & CEO Bonnier AB2. Torsten Larsson, CEO Bonnier Broadcasting & Evening Paper and

Bonnier Entertainment3. Sara Öhrvall, Director of Research & Development, Bonnier AB4. Maria Curman, CEO Bonnier Books5. Göran Öhrn, CFO Bonnier AB6. Casten Almqvist, CEO Bonnier Business Press and Bonnier Digital7. Ulrika Saxon, CEO Bonnier Magazines and Bonnier Morning Paper

1

5 6

2 3

7

4

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In 2009, Bonnier AB’s advertising rev-enues shrunk by slightly more than SEK 2 billion. Adjusted for variations in exchange rates as well as for acquisitions and divest-ments, the decrease amounted to slightly more than SEK 2.38 billion, which was 21 percent lower compared to 2008. Due to the acquisition of C More and unfavorable foreign currency exchange rates, write-offs for goodwill increased by SEK 249 million to a total of SEK 886 million. Even the net financial items decreased, which in turn meant a higher average debt level (primarily due to the acquisition of C More in December 2008) as well as a markedly higher interest rate in the new loan agree-ments set in June 2009. For the Group, the sweeping cost-saving program none-theless counteracted some of the negative effects. After a marginal improvement during December, the yearly EBITA* was SEK 1.19 billion, compared to an EBITA of SEK 2.41 billion for 2008.

The total sales for Bonnier AB increased in 2009 by 4 percent compared with the previous year, totaling SEK 30.9 billion. Growth occurred primarily in the business areas Bonnier Broadcasting & Evening Paper, Bonnier Books and Bonnier Entertainment.

The business area Bonnier Books signifi-cantly improved its profit (+25 percent), achieving its best result ever. The profit for Bonnier Entertainment was very stable and the movie theaters had their best year yet. The other business areas went in the other direction, mostly due to lower advertising revenues.

By the end of December 2009, share-holders’ equity had increased, including minority interests, to SEK 7.1 billion, a decrease of slightly more than SEK 1 billion compared to 2008. Net debt in relation to shareholders’ equity, including minority interests (the gearing ratio) increased to 1.19 (1.06) by the end of December. Profit

after net financial items decreased by SEK 1.8 billion, with a year-end result of SEK –228 million. This includes planned write-offs for goodwill of SEK 886 million (SEK 637 million). Profits excluding good-will write-offs were at SEK 658 million (SEK 2.17 billion).

Books’ sales increased by 13 percent. EBITA was SEK 710 million (SEK 568 million), which was the business area’s best result yet. Continued strong success in Germany is due in part to sales of Stephenie Meyer’s Twilight series, which contributed greatly to the business area’s increased profits. Even in Sweden profits increased and a larger market share was taken. In Finland, the U.K., Australia and the U.S. book sales decreased; Finnish Tammi revenues were exceptionally high in 2008 due to sales of the final Harry Potter book. Norwegian Cappelen Damm continued to develop and held its position as a market leader.

Magazines’ sales decreased by 9 percent. EBITA was SEK –13 million (SEK 466 mil-lion). In Denmark and Sweden, profits were at the same level as losses in the U.S. American advertising sales continued to be very weak. Our operations managed to keep and in some cases increase their market share. In 2009, six titles were acquired that further strengthened our market position. Despite considerable cost-saving measures, the decrease in ad-vertising revenues reduced profits.

Broadcasting & Evening Papers’ sales increased by 24 percent. The acquisition of C More accounts for 29 percent of the increase. EBITA was SEK 991 million (SEK 1.37 billion). C More, which was acquired at the beginning of December 2008, has developed strongly. For TV4, MTV Media and Expressen, lower advertising sales re-sulted in lower profit levels for 2009. But it should be noted that TV advertising sales haven’t been hit as hard as those for print.

Entertainment’s sales increased by 6 per-cent. EBITA was SEK 255 million (SEK 251 million). SF Bio continued its strong ticket sales and reported its highest profits ever in 2009. The films that had the most view-ers during the year were The Girl with the Dragon Tattoo, The Girl Who Played with Fire and Harry Potter and the Half-Blood Prince. Swedish film company Svensk Filmindustri finished the year off strong with its distribution contract for Fox’s Christmas blockbuster Avatar in Norway, Denmark and Finland. At the end of the year Bonnier Amigo Music was sold.

Business Press’ sales decreased by 25 per-cent, but with divestments accounted for, the decrease was only 17 percent. EBITA was SEK 62 million (SEK 194 million). In terms of percent, this business area was hardest hit by weak advertising sales. Profits for Swedish DI-gruppen have more than halved. While the market was tough in Denmark, in the Baltic countries it was nearly in free fall. During the spring and summer, the Croatian business.hr and the Latvian Diena and Dienas Bizness were sold. Significant cost-saving measures were carried out in 2009, primarily within op-erations in Central & Eastern Europe.

Morning Papers’ sales decreased by 13 per-cent, in the wake of extremely weak adver-tising sales. EBITA was SEK –375 million (SEK –161 million). The number of printed copies has had a stable development during the year. Considerable restructuring costs have negatively affected profits even during 2009. Stockholm City, among others, was restructured and during autumn moved operations to the business area Magazines. But as reported earlier, the decrease in advertising sales have hit print media hardest.

Other includes common Group activities and functions. The effect on the Group’s EBITA of these activities was SEK –445 million (SEK –278 million).

Financial report, Bonnier AB 2009

Tough Year with Positive Surprises

4141

*EBITA is the operating profit before capital gains/losses, share of profit/loss in associated companies and goodwill as well as other acquisition-related write-offs and depre-ciations.

Net sales by business areaMSEK 2009 2008 2007Bonnier Books 6,710 5,917 6,314Bonnier Magazines 5,671 6,202 6,031Bonnier Broadcasting & Evening Paper 9,524 7,703 6,979Bonnier Entertainment 4,203 3,969 4,019Bonnier Business Press 1,866 2,495 2,525Bonnier Morning Paper 3,196 3,678 3,787Other –303 –367 –448Bonnier AB total 30,867 29,597 29,207

Operating profits (EBITA*) by business areaMSEK 2009 2008 2007Bonnier Books 710 568 678Bonnier Magazines –13 466 699Bonnier Broadcasting & Evening Paper 991 1,374 1,159Bonnier Entertainment 255 251 252Bonnier Business Press 62 194 337Bonnier Morning Paper –375 –161 38Other –445 –278 –318Bonnier AB total 1,185 2,414 2,845

EBITA* margin% 2009 2008 2007Bonnier Books 10.6 % 9.6 % 10.7 %Bonnier Magazines neg 7.5 % 11.6 %Bonnier Broadcasting & Evening Paper 10.4 % 17.8 % 16.6 %Bonnier Entertainment 6.1 % 6.3 % 6.3 %Bonnier Business Press 3.3 % 7.8 % 13.3 %Bonnier Morning Paper neg neg 1.0 %Other n/a n/a n/aBonnier AB total 3.8 % 8.2 % 9.7 %

EarningsMSEK 2009 2008 2007Net sales 30,867 29,597 29,207EBITA* 1,185 2,414 2,845Operating profit 212 1,816 2,710Net financial items –440 –283 –285Profits after financial items –228 1,533 2,425Profit for the year –381 1,052 1,542

Net sales by business areaMSEK

10,000

8,000

6,000

4,000

2,000

0

Books

Mag

azines

Broad

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Enterta

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Books

Mag

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EBITA* by business area MSEK

1,000

800

600

400

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Operating capitalMSEK 2009 2008 2007Tangible and intangible assets excl. goodwill 4,314 4,792 4,563Working capital 143 90 331Other financial assets 193 182 173Goodwill 10,982 11,788 8,468Operating capital 15,632 16,852 13,535Net debt 8,497 8,690 6,691Shareholder’s equity and minority interests 7,135 8,162 6,844Financing of operating capital 15,632 16,852 13,535Gearing ratio (net debt/shareholders’ equity) 1.19 1.06 0.98

42

Organization

Bonnier

Books Broadcasting & Evening Paper

Business Press EntertainmentDigital Magazines Morning Paper

Bold Printing Group

Dagens Nyheter

Bonnier Corporation

Bonnier Publications

Bonnier Tidskrifter

BinkExpressen Homeenter

SF Bio

Svensk Filmindustri

Bonnier Business Press International

Dagbladet Børsen

Dagens Industri

MTV Media

TV4

Bonnierförlagen

Organization as of January 1, 2010

Bonnier Media Deutschland

Bonnier Publishing

Cappelen Damm

Tammi

SDS Group

Editor: Niklas Sessler

Graphic Design: Elin Eriksson

Project Manager:Susann Werner

Copy Editor: Bert Menninga

* Text:Jonas Malmborg Niklas SesslerGunnar AhlströmJonas LeijonhufvudAnders MalmstenSusan Moynihan Marie NilssonGunnar RehlinFredrik Sjöshult

Photos: Niklas PalmklintMagnus Skoglöf Karl-Oskar BjurenstedtKaroliina EkElin ErikssonPaul HansenPer-Anders JörgensenGrzesiek KaweckiMikael Olsson Zach Stovall

Cover Photo:Sound-dampening material covers a wall at sound studio Frekvens in Stockholm, where audio books are recorded for Bonnier Audio.

Bonnier ABSE-113 90 Stockholm, Sweden+46 8 736 40 00info@bonnier.com

The story continues at bonnier.com