Axel Springer’s Chairman Is Bullish On Newspapers And He Seems to Have a Winning Formula

Mathias Döpfner, Axel Springer’s chairman and CEO, says the company set out to print a “quality newspaper in tabloid format, in full color, and with high quality journalism and an independent political line” and the formula has worked better than anyone had imagined for Dziennik.

He says it is still early to make a final judgment on the newspaper’s viability, but there can be no doubt he is happy so far.

The company seems to have a real good understanding of the Polish market. In October, 2003, it launched FAKT, a tabloid in the truest sense of the word and it quickly became the country’s best seller.

ftm background

East Europe Is Still The Prime Battlefield For European Publishers With Axel Springer Launching In Poland An Upscale Daily, Dziennik, Just Six Weeks After Agora dropped its Upscale Nowy Dzien.
No sooner does Poland’s Agora drop its three-month-old up market Nowy Dzien (New Day) because shareholders were up in arms over its losses, then along comes Axel Springer saying it is launching its own upscale broadsheet in Warsaw on April 18, with the paper said to be modeled on Springer’s successful Die Welt brand in Germany.

German Regulators Crack Whip at Axel Springer-ProSiebenSat Deal
Nobody really thought the anti-competition or anti-concentration authorities would pass the Alex Springer – ProSiebenSat1 deal with a blink and a nod, potentially putting Germany’s biggest publisher into the television business and head-to-head with Bertlesmann/RTL. Either more concessions from Springer or a new financing plan, hence a new partner, for ProSieben will appear this week. Or maybe something else...

The Classified Ad Might Have Read Something Like: “Largest Swiss Media Company Looking to Expand Its East European Operations Seeks Former German Chancellor To Open Political Doors.” Ringier Welcomes Gerhard Schroeder to Work in Zurich
In a mighty coup for Michael Ringier, chairman of the Swiss publishing empire that carries his name, and at the same time delivering as good a blow as any at his arch-rival, Germany’s Axel Springer, former German Chancellor Gerhard Schoeder has agreed to advise Ringier on international political affairs and spend one or two days a week at Ringier headquarters in Zurich starting in January.

The Times Raises Its Newsstand Price 5p, Ending The 12-Year UK Quality Newspaper Price War; But In Eastern Europe Newspaper Wars By Free and Paid Tabloids Are In Full Swing
It was September, 1993. Circulation of the Times broadsheet was continuing its spiral downwards with no end in sight, so owner Rupert Murdoch resorted to that old standby in times of circulation crisis – he cut the newsstand price by 30%. That single move is credited today, 12-years later, with causing such a financial bloodbath for all of the UK national quality broadsheets that they have yet to recover fully. And it also literally changed the face of most British quality national newspapers.

“The Business Logic of Combining Axel Springer and ProSeiben is Compelling”
All was happiness in Munich when the long negotiated deal was announced bringing Germany’s most profitable television operator under the wing of Germany’s biggest newspaper publisher.

“All the advice was against us in publishing Fakt’” he told a symposium at the World Association of Newspapers Congress. “Least of all that a German company should try it.” That business plan called for a 300,000 circulation after three years. It was 500,000 after just two months and reached breakeven in its second year which is really extraordinary for any such new publication.

Döpfner said he was very pleased with the progress of the tabloid Welt Kompact in Germany. He said it is a completely different newspaper to Die Welt and research shows there is only about a 5% cannibalization of Die Welt’s circulation to the new tabloid that sells for less than half of what Die Welt costs.

ftm asked Döpfner why he still insisting on hiding the circulation of each newspaper and would only announce their combined circulation. He responded, “That’s a very valid question, but I am not willing to divulge today that information.”

The suspicion in Germany is that Welt Kompakt, which has attracted mainly an audience that had not bought newspapers before, is not doing as well as the spin might indicate. Of course, it could always be that Die Welt’s circulation has taken a nosedive, but we never will really know as long as their circulations are published as one.

Döpfner is absolutely convinced of a good future for newspapers and he has a magic formula. “Young people will read a newspaper in the morning it that newspaper deals with events that affect their lives,” he said. “Newspapers of the future must captivate. Readers want strong leadership from their newspapers that should explain events in an interesting way that keeps them interested.” And he believes in Gospel. “Good Gospel moves whole communities,” he said.

He says a newspaper that is perfectly balanced is “tedious”. He said that readers do not want to make all their decisions themselves. They want to be led, and that means leadership by a newspaper.

But he understands that in the Internet world newspapers need to adapt. He told the story of how one of his editors told a visiting children’s group how pleased he was because of procedural changes that now allowed him to hold open deadlines until 11 p.m., to allow distribution by 4 a.m. and the newspaper would be in all newsstands by 6 a.m. and then he asked for questions from the kids.

“You say there are no changes to the newspaper after 11 p.m.” a boy asked. “Right” said the editor. “So why don’t you just email me the newspaper at 11 p.m?” And that may, indeed, be the direction newspapers move to.

Axel Springer To Cut 266 Jobs - September 7, 2006

The worst thing employees can hear is that management has hired a consultant to see how the business can be run more efficiently. German Consulting Company Roland Berger has completed just such an audit for Axel Springer AG, Europe’s largest newspaper publisher, with the result that 266 jobs are to go.

Springer Chief Executive Mathias Döpfner said the reduction in administrative personnel would allow Springer to continue as “Germany’s most profitable publisher.”

Döpfner turned Springer around in 2002 after its first-ever loss the year before by selling assets, getting more editorial productivity, and firing 1,400 staff.

Those 266 positions that are not vacated by an early retirement package or natural wastage will be eliminated within three years, the company said.

Agora Profits Slump 80% Year-On-Year - August 12, 2006

The success of Springer’s Dziennik has caused Polish Media Group Agora, publisher of the Gazeta Wyborcza (GW), to spend heavily on promotion but that hasn’t stopped copy sales deteriorating, meaning less revenues from books sold alongside the newspaper and so Q2 has turned out to be pretty much a disaster.

Net profit was down to 8.8 million zloty (€2.27 million) in a quarter that saw revenues fall to 294 million zloty (€76 million) from 325 million zloty (€84 million).

And there are hints that the declines are not just due to the new Springer paper. A BDM financial analyst said that GW could suffer a 10% circulation decline this year (previous forecast 7%) and that the newspaper has already suffered a 2% drop in advertising revenue, year-on-year, and it is doubtful that was because of Dziennik because the new newspaper hasn’t been on the market long enough for that effect. But the analyst believes by the end of the year GW’s advertising could fall by as much as 4%

Agora has embarked on a cost-cutting exercise to improve efficiency. It is still smarting from the 22 million zloty (€5.7 million) cost of the launch and closing down of its Nowy Dzien on which it pulled the plug in February, just three months after start-up. Once Springer announced its new entry Agora lowered GW’s cover price in April by some 40% to be competitive.