It’s just over a year since Axel Springer agreed the divestment of its €10bn classified advertising business to investor KKR. Under the deal, the Germany-based media company again become a private business, 95% owned by Friede Springer and CEO Mathias Döpfner and valued at €3.5bn. Its major brands include the German newspapers Bild and Die Welt, and Politico, Business Insider and Morning Brew, in the US. The demerger came five years after KKR had paid €3bn for a 49% stake in Springer which then delisted from the Frankfurt stock exchange.
The deal thrilled Döpfner who told staff that it fulfilled the best hope he had for the business back in 2019 and was “a great success”. He also recounted how the company had changed in the two decades since he became CEO: “Back in 2002, Axel Springer was a lossmaking German newspaper and magazine publisher. In 2021 and 2022, the company achieved double-digit revenue growth for the first time in four decades.” And, in the previous five years, the value of the company had almost doubled.
Much of the growth had come from the classified ads business, being divested. But the Axel Springer news brands did have a digital reach of some 400mn monthly uniques, 1mn paying subscribers and are undisputed leaders in Germany and among the top four in the US.
But there have been some expensive mis-steps in Döpfner’s 20-year revolution.
In 2006, German regulators blocked Springer’s bid to buy ProSieben TV, and the following year it lost hundreds of millions of euros in an unsuccessful bid to create a mailing rival to Deutsche Post. But neither the CEO nor the owner were discouraged.
Having joined the Springer board in 2000 and become CEO two years later, Döpfner worked tirelessly to transform the Berlin-based domestic newspaper and magazine publisher into a primarily-digital, increasingly international provider of news, classifieds and marketing services through a powering strategy of M&A and organic development including:
- Acquiring: US-based digital media, including Politico, Business Insider, and Morning Brew for a total of some $1.5bn. Digital classifieds in jobs and real estate, starting with the then pan-European StepStone in 2009 and the UK’s Total Jobs in 2012. In total, Springer has spent almost €4bn on more than 50 digital companies.
- Converting: German daily newspapers Bild and Welt into digital brands, with hundreds of thousands of subscribers.
- Divesting: The €920m sale to Funke Group of the Springer women’s and TV listings magazines and regional newspapers, including Berliner Morgenpost, Hamburger Abendblatt, and Horzu.
The reinvention required real strategic courage, especially early on when the family-controlled company sold Horzu and Hamburger Abendblatt, the two publications first launched in the 1940s by the late founder Axel Caesar Springer. With the acquisition of Die Welt, they had been the start of the company whose influence, reputation and profitability was transformed by the 1952 launch of Bild, based on the UK’s then all-powerful Daily Mirror tabloid.
Herr Springer’s business career had been punctuated by fierce criticism of the fiery Bild. But there were many other facets of the man who fought for the reunification of Germany and, symbolically, built his headquarters overlooking the Berlin Wall, which came down four years after his death. It is now the site of the company’s stunning Rem Koolhaas-designed Axel Springer Campus.
On Axel’s death in 1985, his fifth wife Friede Springer became the company’s largest shareholder.
The newly-listed company lurched from one crisis to another in the following 15 years, with a succession of bosses and disastrous strategies. Then, along came its unlikely saviour, Mathias Döpfner.
Having studied musicology, literature and theatre science in Frankfurt and Boston, he began his career in 1982 as the music critic of the Frankfurter Allgemeine Zeitung. After working as a news correspondent in Brussels – and also as manager of a concert agency – he moved to Gruner + Jahr in 1992. Four years later, he became editor-in-chief of the tabloid Hamburger Morgenpost. In 1998, he joined Axel Springer as editor-in-chief of Die Welt. He sharply reduced its losses. Within four years, the seemingly unambitious Döpfner found himself propelled into the Springer senior management.
In 2002, he succeeded former News Corp UK boss August Fischer, after rising print costs and advertising cuts had pushed Axel Springer into its first-ever annual loss, of some €200mn. Döpfner became CEO at 38, half the age of his predecessor. He set about cutting costs and, in 2004, increased Springer profits by 23%. He also managed to rid the company of its hostile 40% shareholder, the former TV entrepreneur Leo Kirch.
Döpfner is now one of the most admired media leaders. But, back in 2002, he looked nothing of the kind. His sudden, fast-track executive career prompted colleagues to identify the characteristics he shared with the company’s late founder: his passion for music (in Döpfner’s case, everything from Mahler to James Brown), his “non-Jewish Zionism”, and strong personal convictions about almost everything in media and politics.
In 2019, after KKR had become Axel Springer’s largest single shareholder, Frau Springer sold a 4.1% stake to Döpfner and gifted 15% more – bringing his shareholding to 22%. She also transferred to him voting rights for her remaining 23% shareholding.
The CEO’s restless drive to harness the best instincts of companies everywhere had prompted him to send senior executives to California, on a mission that has left an indelible mark on the rejuvenated company’s strategy. The Springer team roomed in Palo Alto, a stone’s throw from Stanford University, and networked with its graduates across Silicon Valley.
Then came the pain as he made a point of recruiting senior executives from outside the company in order to change the culture. He cut jobs and integrated print and online newsrooms. But, even while he was cutting back, he pushed into new markets, launching the Polish tabloid Fakt that became the country’s bestseller in its first year. And the restless search for new opportunities has been snowballing ever since through acquisitions, disposals, and digital startups.
The once sleepy Axel Springer group became – alongside the New York Times and Norway’s Schibsted – a standout in the transformation race by daily newspaper companies.
Like Schibsted, Springer expanded its digital classifieds strongly in countries where it was an insurgent with no traditional media to defend. Unlike the Norwegian company – which created a large number of classified sites in ‘new’ countries – Springer based its growth on significant acquisitions in many of the key markets.
In 2015, Springer paid a splashy €450m for Business Insider, on the rebound from its failed €900m bid for the Financial Times. It had been described by Döpfner variously as “the Wall Street Journal of the business elite”, “business journalism with a twinkle in its eyes” and “the largest business destination in the world”. He had also predicted that “It’s going to be one of the most attractive and best positioned digital native brands in the world”. But, 10 years later, it’s still…a work in progress.
However, the real reason for the fundamental strength of Axel Springer now – as a debt-free, $3bn-revenue, independent digital media company – is the way it has used private equity funding. Its 20-year period of digital and geographical transformation with three different investor groups might just inspire another family-owned news provider, the UK’s Daily Mail Group, which itself delisted almost four years ago.
Almost two years before the Mail privatisation, Axel Springer was being hailed by a German investor as “the media company which had done everything right. Thanks to its early focus on the internet, over 80% of its earnings now come from digital business.”
In the year before the pandemic, CEO Mathias Döpfner reported to his listed company shareholders that 2018-19 was the most successful year in the company’s history with revenue of €3.2bn (+4%), EBITDA of €738bn (+14%) digital growth of 10%, and digital subscriptions for its core German news media Welt and Bild of more than 500k (+11%).
But an optimistic investor briefing by Döpfner turned sour when his assertion that profit growth would be held back by the need for more digital investment sent the share price plummeting by 7% to its lowest level for more than two years. Pow!
It provoked Springer chair Ralph Büchi: “We can’t go on like this. In our view, the company is undervalued on the stock market; that was clear when you added up the value of the individual parts.” This was the signal of the company’s ambition to delist from the stock exchange.
To achieve it, Axel Springer took a path that had already worked twice before: It set out to find a powerful financial investor “who will drive growth and development with us in the long term,” said Büchi.
In June 2019, it announced a “strategic partnership” under which US investment firm KKR (one of seven companies Springer had negotiated with) would make a voluntary takeover bid for the company. Friede Springer (42.6%) and CEO Mathias Döpfner (2.8%) would retain their shares, giving KKR a stake of more than 40%.The deal was hailed by one analyst who said “On the one hand, Springer is escaping the short-term nature of the capital market and, on the other hand, it is gaining liquidity for investments.”
The strategy was familiar to Springer which, during 2003-8, had welcomed another US investor, Hellman & Friedman, as a 40% shareholder. That enabled Döpfner to further internationalise the media business. Almost a decade later, another US investor General Atlantic become a JV partner in Springer’s burgeoning digital classifieds business which – in five years up to 2017 – helped to double digital revenues to more than 70% of the total.
That was the context for the partnership with KKR which, since delisting, enabled investments of over €1.9bn to support Axel Springer in accelerating its digital growth. Politico and Morning Brew, in the US, and ScreenOnDemand in Germany, expanded the media portfolio, while Mya Systems and Bayard, in the US, MeilleursAgents, in France, and Neuraum, in Germany, had strengthened the classifieds offering.
During KKR’s 2019-24, Springer increased annual revenue by 30% to €3.9bn (in years when many media companies had not grown at all), with double-digit increases in 2021 and 2022. Digital came to account for more than 85% of all revenue.
It was a bold strategy that had paid off.
Like Schibsted, Springer’s digital classifieds had been a global triumph. But Döpfner always wanted the company to be a pureplay news provider and believed the “non-core” earnings would pay for the journey. He simply loves the news business in much the same way as Rupert Murdoch.
In June this year – more than 20 years since Döpfner embarked on the transformation – he outlined the company’s new five-year plan to executives. He focused on the three strategic pillars of Axel Springer’s future: AI-based journalism, expanding media-marketing platforms (eCommerce etc), and “developing new growth areas”. He wanted to double the company’s value within five years. He told his people: “Journalism remains our core, but it’s evolving. The business model of maximizing clicks and advertising is over! We must focus on deep and long-term relationships with our users.”
Instead of platform dependency, Axel Springer wanted to increase direct access to its journalism. In the future, AI would help text would seamlessly transform into audio and video: “Direct traffic is the proof that users choose Axel Springer. Dependence on search and Social is a weakness. Owning the audience is a strength.”
Döpfner emphasized the need to use AI in all areas of work, and compared the technological revolution with the transformation from analog products to digital journalism : “Digital is the new print. AI is the new digital. The task is the same, the spirit is the same, but the pace is exponentially faster. This isn’t AI versus human intelligence—it is AI with human intelligence. AI and HI. It’s not either or. It’s both. Who combines the best of both intelligences in the most complementary way will win.”
But, then, came the big reveal.
In addition to its journalism – with brands like Bild and Welt, in Germany, and Business Insider and Politico in the US and internationally – the company needed to build its third strategic pillar; “We have to build a high-margin, hyper-growth business beyond journalism and marketing media, a third pillar as a strategic hedge. We have to find new gold. Like we found one and a half decades ago with digital classifieds. It should have something to do with our main competencies: Content. Subscription. Advertising. Mass markets. Technology.”
With an estimated €4-5bn of cash, no debt and a bullish CEO (most of) whose biggest bets have paid off handsomely, it seems clear that Springer hopes to achieve that doubling of value within five years by making bigger-than-ever acquisitions. His stated ambition certainly implies that he will need to spend much more than the $1bn (5x revenue) he spent on Politico, his largest deal so far.
We reckon Döpfner’s acquisition targets might include the following:
- Dow Jones: Springer would be among those keenest to acquire the Wall Street Journal and DJ’s increasingly attractive B2B information services, totalling $2.3bn revenue/ $600mn EBITDA. WSJ has more than 4mn subscribers. But any News Corp plan to divest its best division might also energise Bloomberg, Thomson Reuters, Morningstar and Moody’s. Our own speculation is that an auction might just be coming, as part of the Murdoch family’s funding of its recent $3bn+ ‘succession-planning’ conpensation payment to Lachlan Murdoch’s siblings.
- Financial Times: The £550mn-revenue, UK-based news, information and events business might be the wildest speculation because it is just 10 years since Springer lost the auction to Nikkei. The Japanese owner has publicly denied rumours of any intention to sell. But Springer must regret missing out on the FT and, instead, acquiring Business Insider (BI) on the rebound. The $130mn-revenue (and falling) BI digital newsletter group is believed to be lossmaking, a victim of web traffic said to be almost two-thirds down in four years. It’s a crisis illustrated by headcount cuts totalling more than 30% in the past three years.
- Substack: the (not-yet-profitable) eight-year-old newsletter platform was this year refinanced at a valuation of $1.1bn. It has so far raised $200mn in funding and would fit well with Springer’s focus on on digital-first, direct-to-subscriber media assets. It claims claims over 5mn paid subscriptions and generates about $450mn in “annual gross writer revenue” (with Substack earning 10%, or $45 million, as platform revenue). Acquisition would give Springer access to a creator-driven, ad-light platform with direct relationships between writers and reader – arguably, one of the fastest-growing segments in digital media.
- Telegraph Media Group: A real long shot, given its likely acquisition by US media investor RedBird. But Springer had – 20 years ago – wanted to acquire the UK news brand. It might share RedBird’s view that the Telegraph could be a right-of-centre news leader internationally, especially in the US. If the protracted attempts by RedBird to persuade UK legislators that its package of investors (including sovereign wealth funds from the Middle East) do not succeed, could Springer be interested again? Don’t hold your breath because neither Springer (nor perhaps anyone else) would now be persuaded to pay the £500mn (1.8x revenue, 8x EBITDA) currently offered by RedBird. But still…
- Washington Post: Those same ambitions might be better achieved with the acquisition of the $550mn-revenue Washington Post. The legendary US news brand was acquired by Jeff Bezos for $250mn in 2013 and is believed to have disappointed the Amazon founder, not least due to its lossmaking (maybe partly at the expense of the buoyant New York Times) but also by the political angst caused by the Trump administration for a traditionally liberal news brand. The Post’s potential value is believed to be anything from $500mn to £1.5bn.It is said to have incurred pre-tax losses of $100mn in 2024. But, with, 2.5mn subscribers (all but 100k digtal), it’s the third largest US newspaper-centric brand after the New York Times and the Wall Street Journal. So it could be a tempting target for Springer.
- Semafor: It’s the three-year-old increasingly global digital news brand with a difference: it’s tightly staffed, profitable and is effectively funded by events. The Axel Springer CEO is known to be interested in the business model – and the company ($45mn revenue and growing fast). It could be a great fit with Politico, Morning Brew and Business Insider and the Semafor co-founders might thrive in Springer. Any kind of fund-raising to accelerate its global roll-out could be just the opportunity for Döpfner to swoop.
Döpfner has said: “America has become the main heart chamber and the growth engine of our publishing business” which might be the key to some of those possible acquisitions.
In a world where the New York Times has shown just how to build a strong subscription base with a diverse ‘bundle’ of news, information, sports, puzzles and leisure services, you can imagine how Mathias Döpfner would knit his political, business and financial media into any of those major news brands. It certainly seems inconceivable that the (sort of) heir to Rupert Murdoch’s news industry leadership does not have a plan to compete with those aiming to become English-language global news leaders, like the New York Times, FT and The Guardian.
Those who know the Axel Springer boss best think he is impatient to make the moves that can ensure the doubling of value he has targeted. Will the company be celebrating its 80th birthday in 2026 with the next big splash?
