Out of the Stock Exchange to fight the crisis with investments. It is the bet launched by German publishing giant Axel Springer which, as Bertelsmann did at the time, has decided to leave the Frankfurt stock market to face a challenge on several fronts, starting with investments (starting with the purchase of eBay) that will only be able to bear fruit in a long, too long time for the needs of financial analysts.
It comes from here the editorial bet of the year, made possible by the intervention of the US giant of the private Kkr which has decided to share the enterprise of the heirs of the publisher: to resist the impact of the offensive by Google, the giant that is about to enter the market of online job advertisements, invading one of the most profitable sectors of the German group. It is a decisive battle for the future of the house, was the diagnosis of the CEO Mathias Doepfner: advertising revenues are a strategic asset to support the independence of information, which characterizes the group's newspapers, from The World a Politico, from Business Insider to the same battleship BILD. Of course, seen from the outside, the situation is still sustainable, given that it is still reported in the first quarter a net profit of 55,4 million (out of a turnover of 771 million) but there's nothing to be happy about, as demonstrated by the profit waning (relegated to page 2 of The World) launched by the group which forecasts “significant decline in profits in 2020”.
In these cases, usually, the recipe is to cut costs starting from personal costs (and from expense reports, the specialty of newspaper administrators). Mathias Doepfner, who is also a 2,8% shareholder, persuaded Springer's widow, Mrs. Friede (who owns around 42,6%) to choose another path: team up with a strong partner able to support the weight of the investments necessary over time to sustain the impact of a billionaire competitor and with an immense technological strength. That's how it was born combination with Kohlberg, Kravis and Roberts, the private equity giant that has valued the entire Springer group at 6,8 billion euros, putting on the plate 63 euros per share, with a 31,5% premium on the average price of the stock on the Stock Exchange in the last three months. An offer intended only for the market because both Doepfner and Mrs. Springer will remain in the capital together with Kkr which, as is his habit, moves in a long-term perspective.
Thus, a business plan will take shape which, according to the CEO, "requires significant investments in people, products, technologies and brands in the coming years". The goal is to reinvent the group in the light of the digital revolution. The first stage could be the purchase of eBay, the platform that could serve as a response to the offensive of the Mountain View giant. But it will only be the beginning because this move will not be enough to make the king of search engines desist from his offensive, which is destined to continue in other European markets. “Google – comments Berenberg media analyst Sarah Simon – intends to make Springer spend a mountain of money this year and then aim to hit the competitor's profits from next year with very competitive offers”.
In short, it will be a battle with no holds barred, which could not be supported by a stock listed on the Stock Exchange because the prospect is to face, in an initial phase, possible significant losses in the face of massive investments. Nothing that can scare KKR, which has seized the unique and perhaps unrepeatable opportunity to enter the main game for control of the media at a price within its reach. Nothing to scare Frau Springer, 76, who will have a veto right on strategic decisions. Or even less Doepfner, the real architect of the deal matured on the notes of music, the passion that unites him to Johannes Hut, the number one of Kkr in Europe and to Philip Freise, the manager of Kkr who will follow the investment, who sits on the board of the Wagnerian festival in Bayreuth. It is not surprising, in this context, that the company of the year has been named after a work. But not at the Walkyrie or at the Ring of the Nibelung but, curiously, at Giuseppe Verdi's Traviata. Who knows, perhaps Frau Friede is feeling a little Violetta.
