German Publisher Axel Springer, Owner of Politico, to Shift His Focus to U.S.

From a Wall Street Journal story by Bojan Pancevski headlined “Axel Sprinter to Restructure Its German Business as It Shifts Focus to U.S.”:

The German owner of Politico and other U.S. outlets announced a restructuring of its domestic operation, floated potential disposals and unveiled plans for a new headquarters in New York City as it shifts its focus to the U.S.

Axel Springer SE, one of Europe’s largest news organizations and the only one with a major U.S. presence, said it would slim down its corporate structure in Germany and phase out the print editions of its publications as it seeks to become a leading digital-only publisher.

The company aims to boost earnings in its German media business by around €100 million, equivalent to $106 million, in part through cost cuts during the next three years, Chief Executive Mathias Döpfner said.

The cuts will mainly affect the company’s German dailies Bild—Europe’s biggest-selling tabloid—and Welt. Springer will focus on developing its U.S. assets, which include Washington politics portal Politico, general news outlet Insider and business-focused website Morning Brew, Mr. Döpfner said.

Mr. Döpfner said the print editions of the company’s newspapers would be phased out in the coming years and that artificial intelligence will replace humans for some news coverage. Journalists will focus on scoops, investigations and long-form features.

He said media companies must take ChatGPT, the popular language module that can generate well-written—though often factually inaccurate—essays, and other AI developments seriously as a challenge to their business.

“Only those who create the best original content will survive, and the only way forward is to invest in original journalism,” Mr. Döpfner said.

Springer has acquired several U.S. businesses in recent years and the company’s U.S. expansion could include another major acquisition, Mr. Döpfner said, “if a super-brand with extremely big journalistic quality and proven digital strategy were to come to market.”

The expected job cuts in Germany will hit middle-management and supporting functions such as layout and production, but some journalists could also be affected, according to the company. Employees will initially be offered buyouts, but layoffs can’t be ruled out, Mr. Döpfner said.

Mr. Döpfner wants to keep expanding Springer’s U.S. presence and plans to make Politico the company’s global flagship publication with the goal of ultimately overtaking the New York Times and The Wall Street Journal in audience numbers and advertising revenue.

Springer is now setting up a new American headquarters in New York’s Soho district, in a futuristic building designed by award-winning Japanese architect Toshiko Mori, Mr. Döpfner said. In addition to housing the news operation, the building will act as a representative space for events gathering guests from politics, culture, science and the media, he added.

“The biggest growth chances for our digital assets are in the U.S.A.—the biggest media market and largest democratic market in the world,” he said.

Politico is expanding in the U.S., notably in California, and in parts of Europe such as France and Britain. In just over a year, the group hired 400 journalists across its U.S. newsrooms, and it will continue to hire in the coming years, Mr. Döpfner said.

Springer’s sales increased by 13% to €3.9 billion in 2022—the second consecutive year of double-digit growth, according to the company. Operating profit was around €750 million, while 85% of revenue and more than 95% of profit came from digital operations.

Mr. Döpfner said he intended to free up cash by selling or floating parts of the company’s online services portfolio, including StepStone, a German job portal, Idealo, a price-comparison service, marketing platform Awin and property portal Aviv. StepStone could be taken public by the end of the year, while the other three could be expanded further before a potential public offering.

The proceeds could be used to buy out American private-equity group KKR & Co.’s 35.6% stake in Springer, giving Mr. Döpfner, who owns 21.9% of the company, a controlling stake.

Few media executives have such tight control over their companies today. Mr. Döpfner says his ambition is to make Springer a leading media company in the U.S. and the biggest digital publisher in the democratic world. Under Mr. Döpfner’s tenure, which has stretched over almost two decades, Springer established a policy of not investing in non-democratic markets such as China.

“Autocracies and dictatorships are out of the question for us, because we don’t intend to deal with moral hazard,” he said.

The 60-year-old brings an unconventional profile to the hypercompetitive U.S. market. A former musician who names James Brown as his idol, Mr. Döpfner started in journalism as a music critic following a stint at the Berklee College of Music in Boston, where he trained as a bass player.

He embraced a full-time career in newspapers after an internship at the San Francisco Examiner in 1988 and worked his way to becoming the CEO of Springer in 2002.

He has since turned the company from a print-focused publisher that struggled with falling readership and advertising revenue into a globally active digital conglomerate that employs more than 16,000 people across media and tech companies in over 40 countries.

“If their ambition is to be the biggest, that’s quite an ambition given who’s established out there already,” said Douglas Arthur, an analyst at Huber Research, referring to the New York Times, The Wall Street Journal and Washington Post. “It’s not impossible, but it’s a tall task.”

Alexandra Bruell in New York contributed to this article.

Bojan Pancevski is The Wall Street Journal’s Germany correspondent, covering all aspects of Europe’s largest economy and its influence on the rest of the continent and beyond.

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