- CEO Doepfner has long coveted an English-language publication
- Blodget's site is a "consolation prize" after FT went to rival
Who needs pink paper, anyway? For Mathias Doepfner, a screen will do just fine.
After losing a bidding war for the venerable Financial Times, the chief executive officer of German media group Axel Springer SE is counting on a much newer brand to gain relevance in the English-speaking world.
The Berlin-based company’s $343 million deal for 88 percent of Business Insider is part of Doepfner’s plan to build on a dominant position in Germany to win over readers in the U.S. and Britain. With some 76 million unique monthly visitors -- just shy of Germany’s population -- Business Insider is one of the most successful online-only media brands when it comes to attracting eyeballs, if not yet turning profits.
The deal puts "Axel Springer on our way to becoming a leading digital publication," Doepfner said on a conference call Tuesday.
It gives the six-foot-seven former journalist, who worked his way from the newsroom to the executive suite, a high-profile opportunity to prove he can make news pay in the Internet age. Since taking over Springer in 2002, he’s used a string of acquisitions to turn the publisher of the best-selling tabloid Bild into a digital-first operator of online news and advertising portals that he touts as a model for 21st-century media.
"Business Insider will help Springer grow, and it’s a sure sign of the company’s aggressive intent to become a major provider of business news," said Alex De Groote, a media analyst at Peel Hunt in London. "Having failed to get the FT, this will be seen as a useful consolation prize."
Doepfner, 52, who sits on the boards of Time Warner Inc. and Vodafone Group Plc, has sought to expand outside continental Europe for some time. He’s dispatched executives on extended trips to Silicon Valley to look for new ideas, and in 2014 Springer opened an investment arm there to buy into tech startups. The company bought a small stake in Business Insider in January, and it’s behind a joint venture that publishes Politico Europe, the Brussels version of the Washington paper and website.
In July, Springer came within hours of buying the 127-year-old FT from Pearson Plc, only to be beaten by a last-minute, $1.3 billion bid from Japan’s Nikkei group. Shortly afterward, Doepfner told analysts he would have "loved" to own the salmon-colored newspaper, but that he couldn’t justify topping Nikkei’s offer.
It was a rare setback for the prolific dealmaker. In 2011, Springer paid $760 million for French real-estate portal SeLoger, and it has also bought smaller sites that host classified ads for cars, boats, and jobs. The idea behind those deals, Doepfner has said, is to reclaim a revenue source that underwrote newspapers in the days before Craigslist and Trulia decimated their classifieds, while also asking customers to shell out for news. Both Bild and Die Welt, Springer’s flagship broadsheet, have introduced some paid services.
The shift is paying off. Springer’s sales climbed 10 percent in the first half of 2015 to 1.6 billion euros ($1.8 billion), with digital media accounting for almost two-thirds of that. While circulation revenue from print fell, overall ad sales jumped 15 percent, to 986 million euros thanks to digital growth.
On Wednesday, Springer said it agreed to buy a minority stake in New York-based Thrillist Media Group, a lifestyle portal targeting male readers. Financial details weren’t disclosed.
It’s not yet clear exactly how Business Insider, which offers a distinctive mix of blog-style takes on stories in the mainstream press, slideshows, and data-driven original pieces on business and political news, will fit into Doepfner’s model.
Buying it may be a more cost-effective way to develop a broad English-language brand than the FT would have been, said Thomas Shrager, managing director of asset manager Tweedy Browne, which owns 4.5 percent of Springer. “It’s not something that, if it doesn’t work, will destroy Axel Springer," Shrager said. "It’s a calculated risk.”
Business Insider’s founder and editor-in-chief, Henry Blodget, will stay on. Formerly a technology analyst at Merrill Lynch and tireless booster of the 1990s tech boom, Blodget was barred from the securities industry after then-New York attorney general Eliot Spitzer accused him of publishing research on tech companies that was rosier than his actual views. Blodget, who settled without admitting or denying any wrongdoing, began Business Insider in 2007.
Springer said the price valued the acquisition at six times estimated 2016 revenue, and Doepfner said he will seek "further growth and reach" for Business Insider. After that, he said, will come "monetization and growth with regards to revenue and then as a third priority, it is really about profits."
Despite his professed admiration for Silicon Valley and the U.S. -- Doepfner is a board member of Berlin’s American Academy, and Springer papers have long been staunch supporters of NATO -- Doepfner has had his share of beefs with the American business world.
In 2014 he penned an "open letter" to Eric Schmidt, the chairman of Google Inc., in which he called for "an autonomous European digital infrastructure" and confessed to being "afraid of Google" because of its power over advertising and Web traffic. Along with France’s Lagardere SCA, Springer helped found the "Open Internet Project," which has lobbied the European Union to investigate Google’s business practices.
Doepfner nonetheless made clear Tuesday he’s not nearly done with his foray into the digital world. Buying Business Insider was just a "first big step" in expanding beyond Europe, he said. "New digital media companies are being built and we definitely want to be a player."