Media area is separated
Axel Springer Group splits up
19.09.2024, 14:07
Friede Springer is delighted that a dream has come true: Axel Springer will once again become a family-run media company, with her and Mathias Döpfner at the helm. The job and real estate portals will become independent companies with a new shareholder structure.
The international media group Axel Springer will once again become a family-run media company and is planning to split up its businesses. The media division will be owned by Friede Springer and Mathias Döpfner and separated from the classifieds business with job and real estate portals – according to the group, the plans are subject to official approval and the transaction is expected to take place in the second quarter of 2025.
“The new structure is intended to position all business areas optimally for future growth potential and success in their respective markets,” said the group with around 18,000 employees. The move also changes a strategic partnership concluded years ago with the large US financial investor KKR: The classifieds businesses will become independent companies with a new shareholder structure – US financial investor Kohlberg Kravis Roberts (KKR) and the Canadian pension fund CPP Investments will become the majority shareholders there.
The vice-chairwoman of the supervisory board and publisher’s widow Friede Springer said: “Mathias Döpfner and I had a clear vision that Axel Springer would one day be a family business again. The fact that this vision is now becoming a reality fills me with great joy.” Chairman of the board Döpfner, who like Springer also holds a large share in the media company, said: “Before we began our partnership with KKR five years ago, Friede Springer and I had an idea of how the company could ideally look in a few years. That is exactly what is now coming true.” The future structure offers the “very best conditions” for a good future for journalism.
This is what the structure looks like
The deal is expected to look like this: The media business with the brands “Bild”, “Business Insider”, “Politico”, “Welt”, “Morning Brew” and other areas such as the online comparison portal “Idealo” will remain with Axel Springer. Döpfner and Friede Springer control almost 98 percent of the company. “The remaining shares will be retained by Axel Sven Springer, a grandson of the company founder – a smaller part of his previous minority shareholding. This will make Axel Springer a family business, completely in private hands, for the first time since its IPO in 1985,” the group said.
The separated part includes companies such as the job exchange Stepstone Group, Aviv with real estate portals and finanzen.net. KKR and CCP Investments will then be the majority shareholders in the independent joint venture – Axel Springer will become a co-minority shareholder and there will be an economic stake for Axel Springer’s grandchildren. The exact stake has not yet been determined. What the separated part will be called in the future or whether there will be several units has also remained open.
Why the split?
The media industry had long expected that KKR and Springer would part ways. At the end of 2019, Springer entered into a strategic cooperation with the financial investor in order to grow faster through investments. In 2020, Springer withdrew from the stock exchange after around 35 years. Figures on how much the group is worth today are not officially known. The “Financial Times” suggested a few days ago that it would be worth 13.5 billion euros, of which more than 10 billion euros came from the portal business. If the figures are correct, Axel Springer would have more than doubled its value compared to the time before the cooperation.
KKR is known for getting involved in companies for a few years and then, ideally, exiting again with a profit. In an interview at the beginning of 2023, when asked when he expected KKR to withdraw from the group, Springer CEO Döpfner said: “When they joined, they told us that they had a time horizon of at least five years, more likely seven, maybe even ten.” By the end of 2024, it will have been five years of cooperation.
One idea that Springer, with sales of 3.2 billion euros and profits of around three quarters of a billion euros in 2022, considered was an IPO for the job exchange Stepstone. This did not happen due to market conditions. That could have been another option for separating KKR from the group and paying it off, so to speak.
Is this step risky?
At first glance, the split entails a certain risk. Digital job, real estate or trading platforms are often part of the portfolio of large media companies because they generate advertising revenue through them. The whole thing is related to digital change. Companies used to book advertisements in printed newspapers, magazines or on television. With the Internet, completely different players are on the market. The balance of power has shifted – Google and other large platforms are now at the forefront. Media companies can cushion the trend somewhat by using classified portals.
What is Döpfner planning?
It will be interesting to see how publishing boss Döpfner – CEO since 2002 – will continue to run the international media business. The separation gives the manager more freedom in making decisions. A clear focus is on the USA, where Springer wants to grow and possibly become the largest publisher. Springer completed the purchase of the digital US media group Politico in October 2021 – this was the largest corporate takeover in the company’s history. Further acquisitions in the USA could follow. In addition to the headquarters in Berlin, there is another office in New York.
In the future, Axel Springer wants to say goodbye to the printed newspaper business – without giving a precise date – and become a purely digital company. The strongest media brand in Germany is still the tabloid “Bild”. Other brands are “Welt” and the TV station of the same name and the Berlin tabloid “BZ”. The group is focusing on digital payment models in journalism and on reach. Some time ago there was a cost-cutting program at the German brands. The group laid off employees.