Mathias Döpfner may be the only chief executive of a major European company to have written a book on German New Wave bands and a treatise on eroticism in music. The former music critic might also be the only European CEO who’s confident he’s figured out how to save the newspaper business. Döpfner, 50, runs Axel Springer, a German publisher whose titles range from the proudly trashy tabloid Bild to Die Welt, a high-minded broadsheet originally intended to counter Nazism after World War II.
As the 6-foot-7 Döpfner sees it, getting newspapers back in the black is a matter of returning to basics: in particular, classified ads. The big three classified categories—jobs, homes, and cars—were for decades newspapers’ cash cow, until free alternatives like Craigslist and Trulia (TRLA) pushed the market almost entirely online. Döpfner has tried to grab some of that business back, spending almost $1 billion in 2009 and 2010 to buy classified-ad hubs like France’s Seloger.com and Norway’s StepStone, a job-seeker site. Döpfner says he’s eyeing Deutsche Telekom’s (DTE:GR) Scout24, Germany’s biggest online classified site.
Axel Springer’s digital revenue rose 22 percent to €1.2 billion ($1.54 billion) last year, overtaking that of its German newspapers for the first time. Digital profit jumped more than 50 percent to €243 million. “We are doing in the digital world exactly what we’ve been doing for the last 70 years,” Döpfner says. “You could say the classifieds are subsidizing the content, but that’s also been the case in the analog world.”
Axel Springer’s become a bright spot in a European media landscape that, like its U.S. equivalent, is in bad shape. Axel Springer’s print and online newsrooms have been fully integrated for almost eight years, and through a joint venture with U.S. private equity firm General Atlantic, it’s taking stakes in promising websites, including Immoweb, Belgium’s largest property website. It’s also bought French women’s site Aufeminin.com.
It helps that Axel Springer’s two flagship papers, Die Welt and especially Bild, continue to play a crucial role in German—and thus European—politics. The tabloid is by far Europe’s best-selling newspaper thanks to its punchy scoops, witty headlines, and paparazzi shots of topless celebrities. Nearly 3 million Germans buy it on the newsstand daily.
This doesn’t mean all is well. Döpfner’s aggressive digital spending is likely to result in lower profit this year, according to Axel Springer’s March 6 forecast. And despite its popularity, Bild’s print circulation is dropping faster than that of other German papers, making the shift to new sources of revenue especially urgent. To shore things up, Axel Springer has joined papers like the New York Times in putting up a metered paywall for Die Welt, and is crafting a separate pay model for Bild. It’s also aggressively defending its digital content. Axel Springer led a group of publishers in an effort to block Google (GOOG) and other news aggregators from showing excerpts of its articles without paying for them. A ruling from Germany’s parliament last month requires aggregators to compensate publishers for use of their content, but still allows them to post very short excerpts without paying.
From Döpfner’s perspective, all this amounts to proof that journalism can stand on its own, rather than rely on nonprofit foundations, government grants, or other business models. “I’m against the notion that print media should be subsidized,” he says. “Media should be run as a successful business. And it can be.”