Telegraph becomes Axel Springer flagship

30 June update: Axel Springer, the $3bn Berlin-based, transatlantic news group and Europe’s largest news publisher, has now completed its acquisition of the UK’s Telegraph Media Group (TMG) for £575mn in cash.

Springer CEO Mathias Döpfner said: “Today is a day we have worked towards for a long time, and one we will always remember. Axel Springer was founded in 1946 under a British press license, and the Telegraph was our North Star. Axel Springer and The Telegraph share strong commitments to freedom, values, a tradition of embracing and pioneering technological change, and an entrepreneurial will to actively shape the future. This creates a strong foundation for further accelerating our AI-powered digital transformation. Together we can lead the next generation of trusted media.”

The new CEO of Telegraph Media Group will be Carolin Hulshoff Pol, former CEO of Springer’s German news brands. She with the new CFO Patrick Wehrmann are a highly experienced – and much trusted – Springer team. Apart from the new CEO’s accomplishments managing both Welt and Bild in Germany, the CFO’s involvement with Politico and Business Insider, in the US (and, indeed, his substantial experience in the UK) will be crucial, especially in the planned US launch.

Döpfner said that Springer plans to invest in TMG “to enable it to become the leading center-right media outlet in the English-speaking world”, especially in United States, leveraging its media brands Politico, Morning Brew and Business Insider.

By the standards of successive Axel Springer acquisitions ($1.5bn for the then not very profitable Politico, and $343mn for the unprofitable and still shaky Business Insider, bought on the rebound of an abortive bid to acquire the Financial Times) the Telegraph acquisition may not seem too dramatic.

The price of 2x revenue and 10-12x EBITDA contrasts with the 5-9x revenue which Mathias Döpfner has been accustomed to paying in the US. There is, of course, the little question of the relative value of a newspaper-centric brand rather than hot digital newsletters like Politico or Morning Brew. But, for all its recent turmoil, the Telegraph remains, arguably, the UK’s most profitable news brand.

It is set to be the flagship of Axel Springer on both sides of the Atlantic.

More than that, it gives Döpfner, the platform for his long-held ambition to create a global English-speaking news brand – to rival the New York Times, Financial Times and The Guardian – with a differentiating centre-right political voice. It also gives him a personal platform in his role as the global news industry’s political leader, lobbyist, contrarian and clairvoyant.

The Springer CEO talks sense to governments about Google et al and once enjoyed telling his peers to ‘get’ tech before the techies got content. The musicologist-turned-editor-turned-media-mogul – super-articulate in English and German – enjoyed his recent Westminster courting of the UK’s political leaders which is said to have ensured speedy government approval for the acquisition. Everyone was impressed.

He knows only too well that the Trump administration will similarly warm to his strategy once he starts (soon) to ramp up the Telegraph in the US. His 2023 faux pas, in seemingly telling his editors to hope for a Trump victory, and even his clumsy handling of messy sexualized scandals involving the Bild editor-in-chief unsettled Springer’s US teams at the time. But the stories might now endear him to President Trump, as will Axel Springer’s longtime support for “Jewish people and the right of existence of the State of Israel”.

The Telegraph’s strident criticism of the UK government’s stand-back from the current Iran war will help too, although Döpfner will carefully manage his pro-EU views and his advocacy of UK-EU rapprochement (against the current views of the Telegraph). But he senses the commercial and political opportunity of the forthcoming 250^th anniversary of US independence to Axel Springer, as a company whose web site now declares it “has found a home in America”.

It’s 24 years since Döpfner became the unlikely CEO of what was an overwhelmingly German newspaper and magazine group that had lost its way and most of its profit. Over that time, he has transformed Axel Springer from print to digital and domestic to international, while – against the odds – restoring revenue and profit growth. The success was crowned with the company’s de-listing and sale of the classifieds business in which he had so farsightedly invested in his first few years. He has turned Axel Springer into a debt-free global news company. And it’s owned by two families – his own and that of Friede Springer, wife of the late founder.

The company now employs more than 10,000 people in 25 countries.

The expensive M&A was (sort of) been funded by Bild which had historically accounted for almost all Springer’s profit. It’s still a powerful German brand but is a 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. Revenues of both Bild and Welte have continued to slide and the nicely conservative and slow-changing German media market has long been reminding Springer that there might not be much growth left at home.

The Springer chief knew that in 2013, when he audaciously completed the €920m sale to Funke Group of his women’s and TV listings magazines and regional newspapers, including Berliner Morgenpost, Hamburger Abendblatt, and Horzu. They had been among the founding publications of Axel Springer almost 70 years before.

That was really where Döpfner’s big strategy began. But the propulsion came from the way that Springer used the funding of private equity partners to create a digital classifieds business, ultimately valued at some €10bn. It had all begun with a neat Schibsted-like strategy to compensate for the loss of classifieds from its German newspapers by launching and acquiring digital classifieds in ‘new’ markets where it was not inhibited by the need to defend an existing business.

Then came the US acquisitions to confirm the company’s bold strategy and its CEO’s determination to become a global player. Enter the Telegraph.

The UK acquisition will be just be the start of a new profile for the CEO once described as the 21^st century Rupert Murdoch. Döpfner’s new employees in London are relieved that – for the first time in more than five years – their employer is someone who values the Telegraph and has the strategy and resources to make it the flagship of his whole company.

Don’t be fooled by the fact that Mathias Döpfner only decided to acquire the Telegraph a few months ago and that, until relatively recently, he had wanted to invest primarily in the US rather than Europe. He’s preparing to be very visible in the UK, is all-in on the Telegraph expansion and his hastily reworked plans to build the 170-year-old news brand across the Atlantic and globally.

The Telegraph deal brings to more than $1bn, Axel Springer investment this season. Last month, it acquired Bisnow, the US and European real estate B2B information and events group. After months of frustration at the claimed paucity of targets for his c$2bn war-chest, Mathias Döpfner has now decisively clarified where Springer’s future growth is coming from: the worldwide development of: a Telegraph/ Politico/ Business Insider news service; and a B2B information and events group, maybe incorporating trade shows and price reporting agencies. Buckle up.