Axel Springer Says Tablets Are ‘Game Changer’ for Newspapers

Axel Springer AG (SPR) Chief Executive Officer Mathias Doepfner said tablet computers such as Apple Inc. (AAPL)’s iPad will change the newspaper industry as consumers are willing to pay for content on these devices.

“At the moment, the tablet market in absolute figures is very small, with roughly 400,000 tablet PCs in Germany,” Doepfner said on Bloomberg Television’s “Last Word” with Andrea Catherwood today. “By the year 2014, forecasts are saying it will be around 10 million, so there is tremendous growth potential.”

Axel Springer, Europe’s largest publisher of newspapers, is relying on increased income from online classifieds and consumers paying for entertainment and news on mobile devices. The Berlin-based company said today that revenue from national newspapers, including the Bild tabloid, dropped 3.3 percent in the first quarter, while the share of income from digital media channels surged to 28.8 percent in the first quarter from 24.4 percent in 2010.

Shares of Axel Springer rose as much as 4 percent to 112.25 euros in Frankfurt trading today and were up 2.3 percent as of 5:20 a.m.

“The newspapers and the magazines of the future are the mobile devices,” Doepfner said. “The beauty is that we don’t have to change habits, we can count on existing habits that everything that you do on a smartphone, you’ll pay for.” The CEO said consumers are already paying for sending text messages or downloading applications on mobile phones.

Online Push

Despite increasing distribution of news online, Doepfner still predicts newspapers will last “longer than people think,” and will remain a profitable business for the company. The newspaper business is “healthy, it’s stable, but of course circulation is going to decrease,” he said. “The question is: are we gaining more in the digital world than we are losing in the print world?”

The company aims to make half of its revenue from digital operations within seven years.

Axel Springer’s revenue grew by 11 percent in the first quarter to 736.7 million euros ($1.1 billion), helped by acquisitions of companies such as French real-estate online classified business SeLoger.com. Excluding acquisitions, sales rose 5 percent.

Doepfner said the company will grow, helped by existing assets and through acquisitions at “conservative prices.” The aim is to buy “new economy assets at old economy prices,” he said.

The CEO said Springer paid an average multiple of 12 times earnings before interest, taxes, depreciation and amortization for online assets, based on the year of transaction. That’s “very conservative” compared with other online transactions “and we want to keep that discipline,” he said.

“It makes no sense to chase trophy assets, even if it’s a super-sexy fast growing online business.”

To contact the reporter on this story: Andrea Catherwood in London at Acatherwood@bloomberg.net; Ragnhild Kjetland in Frankfurt at rkjetland@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong in Berlin at kwong11@bloomberg.net

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