KKR’s Kravis Wins Over Ringier Family for Digital Deal

When Ringier AG was approached by KKR & Co. about a digital joint venture, the family owners of the 180-year-old Swiss publisher had doubts about teaming up with the New York-based private-equity firm.

It took the personal intervention of KKR’s billionaire co-founder Henry Kravis over breakfast with company Chairman Michael Ringier -- the fifth generation running the publisher -- to lay those fears to rest.

“It was a really big deal for us here in Switzerland and the family was very skeptical in the beginning,” Ringier Chief Executive Officer Marc Walder said in an interview.

Ringier was won over by KKR’s straight-dealing approach and the fact that it’s also a business with family roots -- two of its founders are cousins. Kravis “started talking about his beginning and then his principles and why he’s interested in working with a well-known family company; this was very important to us,” said Walder. “There was no bluffing, no negotiating tactics.”

KKR took ownership of a 49 percent stake in Ringier Digital units Scout24 Schweiz AG and Omnimedia AG last week, and together the companies are chasing online advertising revenue.

The Swiss company plans to expand its classified-ads business and make acquisitions of as much as 100 million Swiss francs ($109 million) each, said Walder. Ringier is targeting 30 percent of sales from online activities by the end of this year, rising to 50 percent by 2017.

Printing Roots

Scout24 runs online marketplaces for cars and real estate as well as a general classifieds site. Omnimedia is the marketer for Ringier digital sites. Not included in the venture is online jobs site Jobs.ch, which Ringier bought with Swiss peer Tamedia AG in 2012 for 390 million Swiss francs, said Walder.

“Today we are the No. 1 classified ads player in real estate, jobs and cars” in Switzerland, Walder said, stressing that the move to digital is the company’s most important accomplishment in recent years. “This used to be a print business. Ringier was never in the classifieds business but then all these classifieds ran away from print and went on digital platforms.”

Walder, 49, joined Ringier in 1991 after eight years as a professional tennis player on the ATP tour and has has held the top job since 2012 when he was promoted from CEO for Switzerland. He has helped oversee spending of 1.4 billion Swiss francs in six years to expand Ringier’s online operations and move the company further from its 19th century roots printing school curriculums and regional gazettes.

Acquisition Targets

The KKR deal marks the first time Ringier has worked with private equity, said Walder. It helped that KKR’s previous partnership with closely held German publisher Bertelsmann AG proved successful.

Bertelsmann bought out KKR’s share in music rights joint venture BMG in 2013 after more than three years. The unit oversees rights to songs from artists including the Rolling Stones, Johnny Cash and Nirvana. Ringier’s partnership with KKR will probably last for four to five years before the New York firm seeks a buyer for its stake or the companies decide on an initial public offering, Walder said.

Ringier still produces more than 120 newspapers and magazines with titles such as Swiss tabloid Blick, and publishes in countries including Germany, Poland and Hungary. In recent years it’s also bought websites in Africa in countries including Ghana, Nigeria and Tanzania.

The company is interested in acquiring Hungarian jobs portal Profession.hu and is also looking at a few digital operations in Poland, where it already owns the largest Web portal Onet.pl.

Independent Future

Internet advertising will rise 15 percent to $137.5 billion this year, accounting for more than a quarter of paid media spending worldwide, according to an April forecast by researcher eMarketer.

Ringier, currently owned by fifth-generation siblings, will remain a standalone company, despite chatter that it will merge or be bought by a peer such as Axel Springer SE, Walder said.

“There will be a sixth generation and we will stay alone,” Walder said. “We do get approaches, but we’ll stay alone.”

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