Thursday, March 05, 2009


EUROPE'S LARGEST NEWSPAPER PUBLISHER

'A Bankrupt Media Company Is Better Than a Government Funded One'

In a SPIEGEL interview, Mathias Döpfner, the 46-year-old CEO of Germany's Axel Springer, Europe's biggest newspaper group, discusses the press crisis in the United States, whether governments should subsidize ailing media and the future of journalistic quality on the Internet.

03/05/2009 03:25 PM

SPIEGEL: Mr. Döpfner, in its lyrics (the German rock band) Die Ärzte (The Doctors) describes your company's daily newspaper Bild as a blend of "fear, hate, tits and the weather report." When was the last time your publishing house's flagship publication was an embarrassment?

Döpfner: It's a shame that Die Ärzte doesn't read Bild. I think it's in particularly good shape, and that the move from Hamburg to Berlin was very good for the newspaper.

SPIEGEL: Bild defines itself as a mass-circulation paper, but circulation keeps shrinking.

Döpfner: Well, that puts Bild in pretty good company. Given the many additional media offerings -- from private television to the Internet to mobile phone communication -- I think this development, though not welcome, is unfortunately relatively normal.

SPIEGEL: Circulation is crumbling almost across the board in your core newspaper business. And you accept this as a natural course of events?

Döpfner: Rising circulation would be preferable, of course. What's important to me is that we do not lose any market share, and that we have made the transition into the online business quickly enough and are able to keep the circulation of our publications profitable. I don't want to sugarcoat it, because the circulation trend is upsetting to us, but it isn't a tragedy. Bild's reach has been growing for the past 20 years. Just under 12 million readers a day -- now that's something not even television can beat. And the returns it produces are enough to make us turn bright red -- if the logo weren't red enough already. The Welt Group (eds: Springer's quality daily newspaper) made money for the first time in 2007 and increased its profits in 2008.

SPIEGEL: Mere return on investment should be a deceptive number for publishers.

Döpfner: Isn't return already a swear word today? Perhaps profit isn't everything, but nothing works without profit. Profit is the basis for independent journalism. We make up for the decline in circulation by increasing prices. Bild costs 50 or 60 cents today, depending on the region. Now that's a steal.

SPIEGEL: That's what you say. But perhaps the declining circulation is evidence that the reader simply doesn't want to pay more for the paper.

Döpfner: The tabloid newspapers in other countries are significantly more expensive. Newspapers are still very inexpensive. Nowadays people pay 10 cents to send a text message, just to tell someone something like: "I'll be there in a minute."

SPIEGEL: It isn't just circulation that's been sinking. Because of the economic crisis, advertising revenues are down everywhere, because companies aren't advertising as much anymore. Would you hazard a prediction for this year?

Döpfner: I know better than to do that. The developments in 2009 are completely unpredictable. We too are sensing that the year is getting more difficult. But I believe that we can be among the winners in the end.

SPIEGEL: Now that's a fervent hope.

Döpfner: In 2008, we increased our sales by 5.8 percent, achieved the best performance in the history of Axel Springer and are proposing the highest dividend of all times, at €4.40 ($5.50) a share. Employees benefit from this as a result of profit sharing. But we too are subject to the law of gravity, which is why we will proceed with caution throughout the year.

SPIEGEL: Will Springer be able to avoid layoffs?

Döpfner: We have not had to make any harsh cutbacks so far, and none are planned. In all the years I can remember, there have never been any business-related layoffs at Axel Springer. Many people are exaggerating with their apocalyptic doomsday mood. But even I cannot rule out anything completely in this environment.

SPIEGEL: In the United States, the economic crisis has accelerated the rapid decline of newspapers. Even venerable papers like the New York Times are maneuvering their way from one debt rescheduling to the next shady investor. Could German publishers face the same thing?

Döpfner: One should never say never. But there are a few important differences. Although I must, unfortunately, include our competition in my assessment, German newspapers are simply better, and a few German publishing companies have adjusted to the Internet much more quickly. Many publishers are still quite profitable. In other words, the complaints are coming from a position of strength. But those who find themselves caught in a vicious circle of pressure to be profitable and declining quality should not be surprised when things go downhill. Moreover, nervous journalists contribute to their own disenchantment.

SPIEGEL: Who are you talking about?

Döpfner: It amazes me to witness the masochism with which some journalists characterize their industry as a dying species. The future belongs to citizen journalism and blogs. Granted, these are fantastic assets, but they have nothing to do with journalism. Someone must have confused something here. Newspapers and magazines are still the most effective and powerful media -- both for readers and the advertising industry.

'A Dark Day for Freedom of the Press'

SPIEGEL: In France, President Nicolas Sarkozy will soon subsidize newspaper subscriptions. In Germany, there is talk of government bailouts for ailing media companies.

Döpfner: I hope that this never happens. However, I cannot rule out that a few ailing publishers will come knocking on the government's door. That would be a dark day for freedom of the press in our country, as well as a true violation of a taboo.

SPIEGEL: But what if it were the only way to preserve diversity among newspapers?

Döpfner: The separation between government and the press is the basis of our democratic constitution. I don't see the government as a beverage vending machine, where anyone who happens to be thirsty can grab a drink. In most of the cases to date, I consider these arbitrary subsidies to be regulatory insanity -- including the government bailout of Commerzbank. To put it in exaggerated terms, even a bankrupt media company is better than one that is funded and controlled by the government. The ZDF (public television network) is a prime example of what happens when politicians try to appoint editors-in-chief. (eds: Roland Koch, the conservative governor of the German state of Hesse and members of his Christian Democratic Party have sought to keep the contract of the station's editor in chief, Nikolaus Brender, from being renewed. The supervisory body that oversees the public television and approves senior appointments on the channel, is comprised of members representing a broad swath of society, including elected representatives of Germany's main political parties. Critics have called for the structure of the supervisory body to be changed so that the public broadcaster cannot become the victim of political influence.)

SPIEGEL: On the other hand, there are parts of Germany where the media diversity you invoke atrophied long ago. One could define publishers as providers of a basic journalistic service.

Döpfner: You mean a press regulated under public law, after all? God forbid! Publishers are private businesspeople who must reach their economic goals independently. What bothers me is the whining among members of our profession. Change also means opportunity. There is no point in criticizing readers for migrating online. You have to follow them and offer them something new. Yes, we are experiencing a structural transformation. But other industries have already undergone such change, from the auto industry to banking and the steel industry. The government doesn't have to subsidize us. All it has to do is create less restrictive underlying conditions. That is cheaper than nationalization.

SPIEGEL: An advocate of liberal markets like you would certainly want to see fewer advertising prohibitions and less rigid antitrust law.

Döpfner: Exactly. The latest joke in Brussels is that officials there are thinking about banning underwear advertising, because it might be discriminatory. Where exactly is this going? We need a repeal of all advertising bans. One should be able to advertise freely for legal products. We need a modernization of antitrust law, and we need a modification of copyright law.

SPIEGEL: And the results to date? Zero.

Döpfner: Unfortunately, you're right. The last time someone tried to amend the antitrust, they encountered a polyphonic chorus of individual interests. But reason is gradually taking hold among us publishers. This also applies to copyright law. This is downright fateful for publishing houses. In the past, when they would print only a few copies of newspapers on paper, this wasn't terribly important. But this has changed dramatically as a result of the digitization of our content.

SPIEGEL: But publishers banked on this development early on. The outcome was that people never learned to pay for content on the Internet. A strategic mistake.

Döpfner: Yes, but this is where a sentence from (the opera) "Die Fledermaus" holds true: "Happy is he who forgets what cannot be changed." But it is unacceptable that some -- the publishing companies -- spend a lot of time and money to create content, while others -- online providers and search engines -- help themselves to the content and market it. Ancillary copyright legislation needs to be written to ensure that compensation is provided for the multiple use of professionally created content. The copy price of the future is the copyright.

SPIEGEL: It sounds as if you didn't want to collect your money from the individual user, but through a collection group, like in the music industry.

Döpfner: There are no concrete concepts yet. The important thing is that lawmakers recognize the problem.

SPIEGEL: This sort of thing will take time. But you yourself postulate, rather boldly, that Springer will be earning half of its revenues and profits on the Internet in only 10 years.

Döpfner: That's right. My goal is to turn Springer into a multimedia company. We are just breaking the 1 billion clicks per month barrier at bild.de. Many of our online activities are already profitable today.

SPIEGEL: But you aren't making as much money there as in the past. The online business was responsible for all of €800,000 ($1 million) in profits for the first three quarters in 2008.

Döpfner: That's primarily because we are constantly reinvesting. And this has paid off, with sales increasing by 130 percent.

SPIEGEL: Digitization is galloping ahead, and it could destroy Springer before the new businesses become sufficiently profitable.

Döpfner: Yes, it could, if we don't embrace progress. But digitization can also mean that we will be in an even better position 10 years from now than we are today. Personally, I have never felt as good as I do now.

SPIEGEL: Are you serious?

Döpfner: However, when I became chief executive, the Internet bubble had just burst, and we would have had the opportunity to go on an anticyclical spending spree. But Springer was in a lot of trouble at the time, and banks were unwilling to lend us a cent. Now another bubble has burst, but this time we are in a position to act. This puts us in a position to benefit from low valuations of companies.

SPIEGEL: But instead of going shopping, you have just sold more than €300 million ($375 million) in shares of daily newspapers.

Döpfner: When you cannot achieve a majority, it's a good idea to get rid of minority stakes. In those situations, we would rather replace almost stagnating newspaper business with rapidly growing Web business.

SPIEGEL: You have already invested hundreds of millions of euros in the online business, and in some cases you have spent a lot of money for acquisitions. But the enormous growth there that may have justified high prices once upon a time has also ended ...

Döpfner: ... but that growth is still solidly in the double digits.

SPIEGEL: And you expect the content for the online world to be provided in the future by multimedia editors who work on bild.de in the morning, perhaps edit a TV segment around noon and then quickly write an analysis for Die Welt ?

Döpfner: No, those would be soulless beings and soulless products. That doesn't work. In the future, we will have people who process content, on the one hand, that is, specialists who know how to structure an Internet platform or page one of a daily newspaper. On the other hand, there will be specialized content producers: the football expert, the political columnist, the researcher and the storyteller. All they will have to do is make their expertise and skills available in a multimedia environment.

SPIEGEL: So you're talking about egg-laying, wool and milk-producing pigs.

Döpfner: No, precisely not! On our farm, one person contributes the eggs, a second person the milk and a third person the meat. But it doesn't signify the end of journalistic professional honor when an editor takes along a small camera to an interview and then gives the camera to a colleague, who uses the material to edit a story. We started doing this at Die Welt and the Berliner Morgenpost. Our model has since caught on (with other newspapers in Germany), from the WAZ (in Essen) to Gruner + Jahr.

SPIEGEL: Perhaps among management, but not necessarily with those who are supposed to apply it.

Döpfner: I cannot judge how this works in other publishing houses. The need for well-told stories has unified mankind for thousands of years. And a good story remains a good story, whether it is on glossy paper or a mobile phone display, is carved into marble tablets or appears as a Bild headline.

SPIEGEL: Speaking of headlines, when Charlotte Roche (author of the German bestselling novel "Wetlands") lost half her family in a car accident, she was badgered by Bild reporters. At some point Roche ran into you on a plane and told you to your face that you are "a bad person." How did you perceive that?

Döpfner: As free expression. I thought about it.

SPIEGEL: And what did you conclude?

Döpfner: I have been thinking about things for roughly the last 27 years. That's how long I have worked as a journalist, and how long I have had to take responsibility. I started out as a music critic in the local section, where one can further or damage a pianist's career with a small review. As far as I am concerned, this contemplation doesn't stop with a headline about a family tragedy. But I have also experienced a lot of hypocrisy since then. You wouldn't believe how many people will push their most intimate story on a newspaper, only to end up feigning outrage and suing the paper for running precisely that story.

SPIEGEL: Mr. Döpfner, we thank you for this interview.

Interview conducted by Isabell Hülsen and Thomas Tuma.


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