Axel Springer proves global intent with Politico transaction


Digital media update

Axel Springer’s largest investment in history marks a milestone for the German publishing group to become a digital media giant in a bold but adventurous way.

politics, Bought this week According to estimates by some people familiar with the matter, the valuation is close to $1 billion, the latest in a series of US assets that Springer has annexed. Another person close to the company said the valuation was low, but did not specify how much.

Since the establishment of Politico Europe in 2014 as a joint venture with Politico, Springer has been seeking to expand in the United States. Last year, it acquired the newsletter business Morning Brew, and in 2015 it acquired Business Insider, while pursuing other goals, including Axios.

According to people familiar with the company, this week’s deal is unlikely to be Springer’s last deal. They said they will seek to further enter the English market or introduce Politico’s internal style driven by exclusive news into more countries and languages.

“We are still in the early stages of digital news development,” the company said. “Axel Springer aims to create a leading digital media publisher in a democratic world.”

Springer’s ambitious global ambitions partly stemmed from its failure in the 2015 takeover battle Financial TimesAfter losing the last-minute bid to the Japanese publisher Nikkei Index, CEO Matthias Depfner set up a venture capital arm to bet on US-based digital media startups with holdings including Minority stakes in companies including Thrillist and NowThis.

The current performance of the company is a test of Döpfner’s argument that to survive in an increasingly competitive media environment, the Springer Empire needs to actively seek investment and growth.

Two years after being privatized by KKR, little is known about the company’s financial situation. But its acquisition clearly shows that Dopfner’s strategy is guiding Springer’s three unusual stakeholders. Döpfner and the founder’s 78-year-old widow Friede Springer each hold 22% of the shares, and the CEO exercises their joint voting rights. KKR owns the rest.

Mathias Döpfner, CEO of Axel Springer © REUTERS

Under the leadership of Döpfner, the business has divested local German newspapers and most of its media assets in Eastern Europe. It retains two flagship media businesses in Germany-newspaper and television station Welt, as well as the country’s best-selling daily newspaper.

“Mathias Döpfner is ambitious,” said Sarah Simon, a media analyst at Berenberg, noting that Springer is one of the few traditional media companies that have successfully built a large and powerful business. She said that although most of its growth came from acquisitions, “they took cash flow from the traditional printing business and redeployed it to mergers and acquisitions and developed digital business from there.”

According to people familiar with the company, like several other global news organizations, Springer is trying to shift from advertising revenue to subscription revenue. Therefore, its acquisition of Politico may be related to the American media company’s digital business model, which combines free content with targeted products for paying users. For private equity companies seeking a reliable source of income, the subscription model is the key.

François Godard, a media expert at Enders Analysis, said: “While Springer is seeking to develop his personal business, he is also looking for business models and understanding of the digital economy.” “They must hope they can. Learn from it [Politico] They can be attracted to other parts of their business group. “

He believes that Welter’s attempt to combine video with newspaper readers failed because website readers did not click on TV clips with paid advertisements. He said that Bild’s relative success still lags behind the online subscriptions of the French Le Monde or the British Times or the Daily Telegraph.

But Godard is skeptical that the group’s actions in the United States will produce the results Springer seeks. He said that it is not yet clear whether Politico Europe’s joint venture is successful.

Under the management of Springer, Business Insider has developed rapidly, and the valuation of the digital news website founded by Henry Blodget has risen nearly five times, reaching $2 billion.

Part of the reason it does this is to learn from other content businesses, such as creating multiple online categories full of special interest content. This model is called “Netflix News” internally.

A person close to the company said that there are no plans to merge Insider, Business Insider’s general news department, and Politico, although they may share ideas.

But Axel Springer’s future ownership remains unclear. KKR will usually try to withdraw within 5 to 10 years.

Simon of Berenberg suspected that the organization might try to make confidential parts of the company public.Last year it Try to buy EBay’s classification business has lost out to competitors.

“My guess is that at some stage, if they can make paid content businesses, namely newspapers and online content, large enough, they might separate classified ads from them and have two separate entities,” she said .

People familiar with the matter said that the news business is likely to remain private in the next few years. The expansion away from the prying eyes of public shareholders gives Depfner breathing room to plan longer-term goals and set his sights on larger goals.


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