Axel Springer – the most successful supra-national, print-to-digital news group transformation – is itself seldom out of the news.
The Berlin-based company has made a succession of pricey acquisitions in recent years, spending more than $1.5bn on Politico, Morning Brew and Insider with valuations of 5-9x revenue. Mathias Döpfner, CEO and 22% shareholder of the now privately-owned company, plays the media industry’s political leader, lobbyist, contrarian and clairvoyant. He talks sense to governments about Google et al and tells his peers to ‘get’ tech before the techies get content. But the musicologist-turned-editor-turned-media-mogul – super-articulate in English and German – sometimes seems to miscalculate.
That is one way to view a succession of faux pas in which he: appeared to tell his editors to hope for a Trump victory, urged Musk to let him run Twitter, and was clumsy, to say the least, in handling #MeToo impropriety involving one of his executives. That episode – involving the Bild editor-in-chief in Germany – might have gone unnoticed but for a New York Times investigation, following Axel Springer’s threat to sue a woman complainant. It accused her of exposing the company’s business secrets and claimed “clear indications” that third parties had attempted to oust the accused editor and harm the company.
Readers of thorough investigations by the New York Times and Financial Times and of comments by the main protangonists will have had difficulty in defending the way the whole episode was handled by Axel Springer. It was a mess.
Ironically, it almost seemed worse that this was the same Axel Springer whose eponymous founder – more than 50 years ago – had formulated the company’s distinctive operating principles:
- We stand up for freedom, the rule of law, democracy and a united Europe.
- We support the Jewish people and the right of existence of the State of Israel.
- We advocate the transatlantic alliance between the United States of America and Europe.
- We uphold the principles of a free market economy and its social responsibility.We reject political and religious extremism and all forms of racism and sexual discrimination.
The context is important because Döpfner was in the US this week, telling journalists – many of whom still worry about his well-publicised mis-steps – that his newspapers would phase out printing in the coming years and that artificial intelligence will replace humans for some news coverage. He said media companies must take the AI challenge seriously. Reporters would have to focus on investigations and longform journalism.
OK so far for the company which already generates 85% of its revenue and 95% of profit from digital.
But then came the CEO’s assertion that his company broadly aims to increase its profits in Germany by around €100m through cost-cutting at its dailies, Bild – with copy sales now down to 1mn – and Die Welt. It may cut up to 300 jobs in Germany. Springer’s future, he said, would increasingly be focused on the exploitation – in the US and across the world – of the digital assets Politico and Insider.
Politico would become the company’s global flagship and was expanding in the US and also in France, and Britain (where the team is expanding to 50 – 3x in a few months). In just over a year, the whole group had hired 400 journalists across its US newsrooms. Apart from the shift of focus from Germany to the US, it’s a change in Döpfner’s former touting of Insider as the flagship – before he bought Politico.
His comments came along with an announcement of a new US headquarters in a landmark building, in New York’s SoHo, designed by award-winning architect Toshiko Mori. Three years after the opening of Springer’s spectacular Berlin headquarters, it was a potent message about the company’s future: “The biggest growth chances for our digital assets are in the US – the biggest media market and largest democratic market in the world,” he said. Springer would become the largest digital publisher in the democratic world.
He repeated his ambition to IPO or de-merge his classifieds business and most journalists followed our own reading of this as being the way for Döpfner and the Springer family shareholders to buy-back KKR private equity’s 35.6%. Maybe they would either enjoy a calm spell as cashed-up 100% owners – or do yet bigger deals through an IPO.
Döpfner’s AI scares and the warning of redundancies 6,000 miles away in Berlin – seemed slightly incongruous: he was also saying that Springer’s 2022 revenue of €3.9bn was 15% up on 2021 and EBITDA was a record €750mn.
The bits we can only guess about are whether the seemingly strong revenue growth (bolstered inevitably by acquisitions and currency) is still falling short of what KKR and Springer had projected when they de-listed the company – and what this might mean for the eventual buy-back, timing and price. But the most interesting slice of Döpfner’s transatlantic musings is his implication that politics and business are the fundamental value at the heart of quality news brands – and that almost everything else is news or magazine-like content that may increasingly be disrupted by AI.
So, the Springer future is all about Politico and Insider.
It is 22 years since Mathias Döpfner became the unlikely CEO of an overwhelmingly German newspaper and magazine group. He has transformed Axel Springer from print to digital and domestic to international, while – against the odds – restoring revenue and profit growth. The company now employs more than 16,000 people in 40 countries. It’s a brilliant performance.
But the expensive M&A has (sort of) been funded by Bild which had historically accounted for almost all Springer’s profit. It’s still a powerful German brand but it is long way from its 5mn-copy sales peak and 2022 was the year when its future became real: a bold plan to create a Bild national TV channel became an expensive failure, and revenues of both daily papers have continued to slide. The nicely conservative and slow-changing German media market has been reminding Springer that there might not be much growth left at home.
Suddenly, the US becomes all important: “The next goal has been identified: Axel Springer wants to become global market leader in digital content through accelerated growth,” screams the corporate web site.
Döpfner wants Axel Springer to be considered a US company, ready to conquer the world. Yes.
