Springer-HuffPo Profit over Principles

If German publisher Axel Springer buys the Huffington Post, it will have to abandon several of its key principles - including paid-for content. But it's a wise business move.
The circulations of Axel Springer’s print titles are falling rapidly.

It was in May 2013 that Mathias Döpfner, the CEO of German publishing giant Axel Springer, vilified the online newspaper Huffington Post, short HufffPo, as an “anti-business model for journalism.”

Just two years later, Springer is in talks with the very same company, which was founded in 2005 by the U.S. journalist Arianna Huffington. And this despite the fact that HuffPo is still practicing what had once aroused Mr. Döpfner’s indignation: As well as staff pieces, it also publishes articles by unpaid authors who are required to relinquish all rights.

In addition, the online paper is free, whereas at Springer they loudly sing the praises of paid digital content.

But given HuffPo’s worldwide presence – it is published in Brazil as well as in the Arab world, Japan, France, and, of course, Germany – Mr. Döpfner is apparently prepared to abandon his articles of faith. Springer’s international expansion was his major topic at the media group’s annual results presentation in March. The war chest is well stocked, and last year Springer posted revenues of about €3 billion ($3.4 billion).

Were Springer actually to become a partner in the online newspaper, it would be tantamount to the end of an era.

And another reason HuffPo is a lucrative takeover target is because it would probably have been profitable a long time ago if it had stopped investing in international expansion. At least that is how Tim Armstrong tells it. He is CEO and chairman of the U.S media company AOL, which bought HuffPo for $315 million (€276 million) in 2011. Springer is understood to support Mr. Armstrong’s assessment.  

Were Springer actually to become a partner in the online newspaper, it would be tantamount to the end of an era. Up until now, the media group has fought against free offers - whether digital or analog - to protect its top-selling Bild daily newspaper.

The tabloid is very German in nature and it is highly unlikely that it can be internationalized. Moreover, it is suffering from a galloping decline in circulation. It is questionable whether online subscriptions will be able to compensate. It would be better to add a modern, international and profitable popular press title such as HuffPo to its portfolio.

In Germany, however, HuffPo’s online activities would need to be deftly coordinated with Bild's online version, Bild.de, otherwise Springer might suffer an upset bigger than its sale of time-honored publications such as the Hamburger Abendblatt daily and television guide Hörzu a year ago.

 

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