Novelist and Time Warner executive Olaf Olafsson buys stake in the publisher of Morgunbladid Skip to content

Novelist and Time Warner executive Olaf Olafsson buys stake in the publisher of Morgunbladid

By Iceland Review

Icelandic National Broadcasting Service, RÚV, reports that novelist Ólafur Jóhann Ólafsson (Olaf Olafsson) is buying a 17 per cent stake in Árvakur, the publisher of Morgunbladid.

In an interview with RÚV, Ólafur Jóhann, as he is known in Iceland, said that he had had an interest in participating in the Icelandic media market for some time and had seized the opportunity of buying into Árvakur when it was offered to him. He predicted that “interesting times” lay ahead in the media market in Iceland.

Ólafur Jóhann said that he expected that his experience in the international media business would “be valuable”.

In addition to his career as a writer, Ólafur Jóhann serves as executive vice president of the US media giant Time Warner. Time Warner has recently been the subject of considerable media attention after the famed US corporate raider Carl Icahn bought a substantial stake in the company along with several other investors. In a recent letter to Time Warner shareholders, Mr Icahn criticized the Time Warner board of directors and management for having committed a “sin” by merging with America Online and suffering from “paralysis of inaction” in dealing with the company’s problems.

In Barron’s annual survey this year of the most and least respected of the world’s top 100 companies (by market value) Time Warner placed number 98, ahead only of scandal-ridden Freddie Mac and Fannie Mae. According to Barron’s survey respondents rated “strong management” as the most important factor in judging how much, or little, they respected each company.

Investment bank Straumur-Burdarás, led by Iceland’s first dollar billionaire Björgólfur Thor Björgólfsson, is also buying 17 per cent of Árvakur.

In a recent interview with the Financial Times, Björgólfur Thor denied that Iceland was a banana republic. Björgólfur Thor, and his two business partners, operated a brewery in St. Petersburg, Russia, in the 1990’s. As described in a June 16 article in the Guardian, “the Icelanders [ploughed] money into the country…in the city regarded as the Russian mafia capital. That investment was being made in the drinks sector, seen by the mafia as the industry of choice.”

In 2002, the Icelandic government sold Björgólfur Thor and his partners a controlling stake in the former state bank Landsbanki. Their bid was the lower of two bids ultimately submitted by bidders pre-approved by the government’s privatization committee.

At the time, approximately 50 per cent of Landsbanki had already been sold piecemeal onto the stock exchange. Then prime minister and chairman of the Independence Party Davíd Oddsson had pledged to sell the state banks to a broad base of shareholders and warned that the banks “must be neutral within the Icelandic business community.”

A few years earlier, prime minister Davíd Oddsson had also warned of the situation in Russia describing Russia’s government and economy as “suspended in a state of arrested development and ruled by criminal mobs and drug lords.” He added, “their money, tainted with blood, pours over Europe and creates an atmosphere of fear and insecurity. Persons with no regard for the law seek to launder their ill gotten financial gains in financial systems of the [European] nations. Many European statesmen now believe this to be the greatest danger facing the West.”

Since purchasing a controlling stake in Landsbanki from Davíd Oddsson’s government, Björgólfur Thor has bought substantial stakes in numerous other companies in Iceland, including investment bank Straumur and investment company Burdarás which merged this fall.

Iceland’s two most widely read daily papers are Morgunbladid and Fréttabladid. Landsbanki and its subsidiaries already own 15 per cent of the publisher of Fréttabladid, the holding company Dagsbrún which is listed on the Icelandic stock exchange (ICEX: DB, formerly known as Og fjarskipti or OGVODA).

In an interview with Forbes Magazine, after placing on the Forbes List of World Billionaires, Björgólfur Thor said he had “no interest in making enemies, particularly in a country that he [was] outgrowing.” According to Forbes, Björgólfur Thor said, “I don’t want to be seen as too powerful in Iceland.”

RÚV reports that the 34 per cent of Árvakur which Straumur-Burdarás and Ólafur Jóhann are purchasing from existing shareholders is changing hands for ISK 1.2 billion. RÚV quotes the editor of the monthly business magazine Frjáls Verslun (a sister publication of Iceland Review), saying that Árvakur will be “strengthened” by the transaction and is planning to expand.

According to RÚV, the shareholders’ pre-emptive rights of purchase have been removed from Árvakur’s articles of association, facilitating further transactions with Árvakur shares.

According to RÚV, currently the two largest shareholders of Árvakur are the descendants of the former editor Valtýr Stefánsson, who own 38 per cent, and the descendants of businessman Hallgrímur Benediktsson with 37 per cent. Both groups are said to be selling shares to Ólafur Jóhann and Straumur-Burdarás. One member of the latter group is Kristinn Björnsson, vice-chairman of Árvakur, member of the board of directors of Straumur-Burdarás and former CEO of the Icelandic distributor for Shell, Skeljungur. In 2004, an investigation by Icelandic competition authorities found that as CEO of Skeljungur Kristinn Björnsson had participated in a price fixing arrangement with two other oil distributors. At the time, Kristinn Björnsson’s wife, Sólveig Pétursdóttir of the Independence Party, served as minister of justice.

On October 14, the bi-weekly business publication Vidskiptabladid reported that Straumur-Burdarás and an undisclosed investor had purchased 30-35 per cent of Árvakur. The following day Árvakur CEO Hallgrímur Geirsson said to daily Fréttabladid that Vidskiptabladid’s story was “wrong” and added “no agreements have been made”. His cousin, Kristinn Björnsson, also denied that any deal had been made and added “I have nothing further to add for the time being.”

Last summer, prior to the Straumur-Burdarás merger, Ólafur Jóhann and Straumur participated in a consortium of investors that made an unsuccessful bid for the Icelandic state telecommunications company, Síminn.

In his latest novel, the Innocents, Ólafur Jóhann based a character on Björgólfur Thor’s mother, Thóra Hallgrímsson. Before marrying Björgólfur Thor’s father, the current Landsbanki chairman Björgólfur Gudmundsson, Thóra Hallgrímsson was the wife of the American Nazi leader George Lincoln Rockwell who appears under name in Ólafur Jóhann’s book. Thóra Hallgrímsson and George Lincoln Rockwell separated in the mid-sixties.

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