Axel Springer holds in Russia

Michael Hedges February 6, 2008

After a year trying to shed its Russian subsidiary Axel Springer AG has decided to hold… for now. Axel Springer publishes Russian editions of Newsweek, Forbes, OK! and ComputerBild. The German publisher informed prospective buyers of its decision last week.

Originally, Axel Springer attempted to arrange stock swaps with Russian publishers. Failing that, it entered negotiations with Kommersant Publishing and Independent Media Sanoma Magazines (IMSM).

Several reasons have been bantered about, mostly in the Russian media, for Axel Springer’s attempt at getting out of Russia. Kommersant, one of the bidders, reported (January 29) that Frieda Springer, widow of the founder, demanded an exit from Russia after the murder of journalist Anna Politkovskaya. Others suggested bad ad sales management decisions leading to poor revenue performance.

More likely is the refusal of license holders to approve any new partnerships. Newsweek is owned and licensed by the Washington Post Company.

Axel Springer found itself in the Moscow courts last year defending a lawsuit filed by Yelena Baturina, Russia’s richest woman and wife of Moscow Mayor Yury Luzhkov. The Russian edition of Forbes featured Mrs Baturina in a cover story and a photo caption was ‘misinterpreted’. The cover story was withdrawn and the December 2006 edition of Forbes Russia was republished, infuriating the US publisher of Forbes. A Moscow court awarded Mrs. Baturina 35,500 RUB (€985). Axel Springer Russia indicated it would appeal the ruling, according to RAI Novosti.

Western investors and media partners have been attracted to the stunning ad revenue growth in Russia. Staying is Russia seems to be related to avoiding all controversy.