Financial Times Deutschland Folds After 12 Years of Losses
Financial Times Deutschland, the unprofitable pink newspaper that was spun off from the U.K. title, was shuttered today, the latest victim of contracting circulation and advertising revenues as readers go online.
The German-language title, owned by Bertelsmann AG’s Gruner & Jahr unit, published its final edition after failing to make money in 12 years of existence. The broadsheet isn’t alone. Frankfurter Rundschau became insolvent last month, while news agency DAPD, including the former German service of the Associated Press, filed for bankruptcy in October.
European newspapers, long-viewed as more resilient than collapsing U.S. peers, are being forced to find ways to make money from content. As readers migrate to mobile phones and tablets, advertisers are pulling print ads, which still typically account for about half of a newspaper’s revenue.
“Times are tough and it’s not a trade secret that some newspapers are hitting the bottom,” said Nick Thomas, an analyst at Informa Media & Telecoms in London. “The transition to digital has been slow and revenue from online isn’t there.”
Financial Times Deutschland began in 2000 as a joint venture with FT publisher Pearson Plc (PSON), which exited the business in 2008. The newspaper had a third-quarter average daily circulation of 102,000, according to Gruner & Jahr’s website, and the closing will affect more than 300 employees.
From its inception, the FTD often used unidentified insiders to report stories and reduce reliance on official government and company announcements. That helped spur local media, including Handelsblatt and the business sections of newspapers such as Sueddeutsche Zeitung and Frankfurter Allgemeine Zeitung, to use that sourcing method more often.
“Black, Finally,” reads the front page of the today’s edition, which recounts FTD’s best scoops including the departure of SAP AG (SAP) founder Hasso Plattner as CEO in 2003, the financial difficulties of lender Hypo Real Estate in 2008 and Volkswagen AG (VOW)’s plans to take over Porsche SE the following year. It also includes a collage of portraits of its 309 staff.
“We have no need to explain ourselves or defend our decisions,” wrote Andrew Gowers, the newspaper’s first editor- in-chief. “The product, and the position it secured in the minds and hearts of a highly intelligent, modern-minded premium readership, spoke for itself and continued to do so until this final edition.”
The woes aren’t limited to Germany. Spain’s largest newspaper, El Pais, said in October it would cut staff by a third, while French tabloid France Soir closed last year. In the U.K., the owner of the London Evening Standard and The Independent newspapers, Alexander Lebedev, is seeking an investor to help prop up the titles. Website newspaperdeathwatch.com chronicles the recent closure of U.S. titles like the “Cincinnati Post,” Colorado’s “Rocky Mountain News” and the “Honolulu Advertiser.”
Worldwide newspaper revenues declined 4.5 percent this year because of fewer readers, weaker demand and cheaper digital offerings, researcher MagnaGlobal said this week.
In response, publications must seek new ways to make money from their content. In the U.S., a number of newspapers have switched to online-only formats, including the Christian Science Monitor and Seattle Post-Intelligencer.
The FTD’s closure “is a loss that shows Anglo-Saxon attempts to make the economy a general-news topic doesn’t work here,” said Norbert Bolz, head of media research at the Technical University of Berlin. “People here are proud to profess that they are clueless about business and the economy, something that comes from a general anti-capitalist mindset.”
In Germany, Axel Springer AG (SPR) has combined the editorial staff of its Die Welt newspaper with that of Hamburger Abendblatt. Die Welt will also limit the number of articles readers can view for free, while Springer plans to introduce a pay model for Bild-Zeitung, Germany’s largest newspaper.
“The challenge here is long-term and the structural adjustment of both paid and ad spending out of print news is difficult,” said Adrian Drury, an analyst at Ovum in London.
One online format is the paywall, popularized by the FT and copied by others including The Wall Street Journal and The New York Times. The model typically allows a user to read a number of articles for free each month before they pay.
“We’re in a really crucial time of transition in an industry where publishers are investing heavily in digital but without an immediate certainty of return,” said Francine Cunningham, head of the European Newspaper Publishers’ Association.
An estimated 2.5 billion people read a newspaper regularly, according to the World Association of Newspapers and News Publishers. Newspaper circulation rose 1.1 percent last year and 4.2 percent between 2007 and 2011, with growth in Asia countering losses elsewhere. While digital formats are on the rise, their audiences don’t yet command sufficient revenue, the association said.
Informa Media & Telecoms’ Thomas cites Norway as a rare example of a market that’s thriving. “They have an incredibly high penetration of newspapers that are also at the forefront of new business like online classifieds.”
Schibsted ASA (SCH), which owns dailies VG and Aftenposten, created an online classified business that’s expanded worldwide and has helped counter slipping revenue at the titles. Oslo- based Schibsted is now among the world’s top operators of online classified sites.
Britain’s Daily Mail newspaper has become the world’s most visited newspaper site with 6.6 million viewers a day by capturing readers primarily interested in gossip and news on celebrities. The digital version is radically different than the print copy, which serves as a traditional newspaper title.
“This is about brands reinventing themselves on different platforms and in the case of the Daily Mail it’s found a huge audience interested in celebrity culture,” said Thomas.