Meet The Terminators

Michael Hedges November 26, 2012, 2012 Follow on Twitter

Big media houses have lost patience. Digital transition is a costly irritation more than opportunity for some. Loss making units are being jettisoned as quickly as possible. The doors are swinging closed.

Causing considerable quaking within the German press sector, publishing house Gruner + Jahr, a Bertelsmann subsidiary, announced (November 23) it would quickly close business newspaper Financial Times Deutschland (FTD). Less than two weeks earlier (November 12) Frankfurt am Main daily Frankfurter Rundschau was declared insolvent by shareholders. Both newspapers have accumulated millions in losses.

Attempts to secure a buyer for the FTD failed, according to several reports, and rumors of an impending closure started swirling shortly after Bertelsmann released financial results for the first nine months of 2012, reporting modest revenue and earnings growth. “Group profit will be impacted in particular by special items from the print business and several direct-to-customer businesses as well as from our operations in southern Europe,” said Bertelsmann CEO Thomas Rabe in a statement (November 13). “The subdued economic outlook and the euro crisis make it difficult to predict our future.”

“I realized that it could not go on as it was,” said Gruner + Jahr CEO Julia Jäkel to Hamburger Abendblatt (November 24), “as we looked at economic models…of printed newspapers and found that all of these models were not sustainable.” A digital-only edition of the FTD with paywall was rejected. Smaller business publications Impulse and Börse Online will also close, though Ms Jàkel suggested an internal management buy-out of the mostly online publications is moving forward. Monthly business magazine Capital will be retained, main offices moving to Berlin.

“The fate of the FTD touched me most,” she added. “Regardless of the past, these models would again mean huge investments, which would be associated with immense risks.” The FTD had never seen a profit with Gruner + Jahr sinking €250 million over its 12 year life, which began as a joint venture with Financial Times publisher Pearson and progressed to buy-out by Gruner + Jahr in 2008 after which the two publications charted separate paths. December 7th will be the FTD’s final publication date, the company separating “more than 300 employees.” The 2011 turnover for Gruner + Jahr was €2.3 billion.

Frankfurter Rundschau shareholders, publishing houses M. Dumont Schauberg (Dumont) and Deutsche Druck- und Verlagsgesellschaft (DDVG), said there was “no visible perspective for… the continuation of the company,” in a joint statement (November 13). Dumont is one of Germany’s major newspaper publishers, owning all or part of a dozen titles. DDVG is the Social Democratic Party’s media arm and owns several newspapers outright and bits of many others.

A “rescue plan” for Frankfurter Rundschau might entail “an investor taking over the assets of the company, actively participating in the management, free from the current debts,” said bankruptcy administrator Frank Schmitt to public radio channel hr-Info (November 20). There have been “serious inquiries and offers,” he added. The newspaper lost €16 million so far this year. Employment advertising in Germany, a mainstay for newspapers, is falling rapidly.

The bad news spread quickly. Employees of Berliner Zeitung and Berliner Kurier, also owned by Dumont, were sent contract buy-out offers by email, reported kress.de (November 20). “We can not exclude at this stage that there will be layoffs,” said the email from managing director Michael Braun. Due to “significant forced restructuring measures,” employees have until December 3rd to “terminate voluntarily.”

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