December 4, 2012 4:34 pm

Europe’s newspaper woes spread to Germany

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Copies of German newspaper "Frankfurter Rundschau" are displayed for sale at a store in Berlin©Reuters

Germany’s newspaper crisis has led to the birth of a new compound noun: Zeitungssterben, newspaper death. The announcement by G+J, the magazine division of Bertelsmann, that it will close Financial Times Deutschland and the bankruptcy filing of the Frankfurter Rundschau have led to much soul searching.

Even chancellor Angela Merkel offered her condolences, calling on the sector to keep its spirits up. “I think print media are very important,” she said on her weekly web-post. But her officials note that what Germany is seeing is not unique. While the country looks set to lose two quality dailies, in Spain editorial staff are being slashed, and in Italy speculation about possible newspaper mergers comes and goes.

Smaller titles serving smaller markets mean individual newspaper crises may not have the scale or the drama of those in the US where, for example, the Tribune Company, publisher of the Chicago Tribune filed for bankruptcy in 2008 just a year after Sam Zell led a $8.2bn leveraged buyout of the company.

“But the newspaper crisis is happening in all developed countries in the western world,” says Douglas McCabe at Enders Research, a London media consultancy. “Although it is fair to say that some countries are getting hit later than others.”

While feeling the effects of the internet, German print publishers were long insulated more than peers in other countries, he says. “Germany is decentralised; it’s not as online as, for example, the UK. The penetration of mobile devices isn’t as big, and it has traditionally seen a greater reliance on newspaper subscriptions.”

The German newspaper publishers’ association says total daily sales fell by about 17 per cent to 21.1m copies between 2005 and 2012. In a period when some UK quality newspapers saw circulation drop by 40 or even 50 per cent, copy sales at the august Frankfurter Allgemeine declined 5 per cent to 355,000 a day.

But this could not shield the papers from a drop in advertising sales, which started as advertisers began to switch to the web at the start of the millennium and accelerated after the global and eurozone crises in 2008. Germany’s advertising association believes dailies took €3.6bn from ads in 2011, down 45 per cent from 12 years ago.

This finished off Financial Times Deutschland – which has been wholly owned by G+J since 2008, when Pearson, owner of the FT, sold its half-stake – and the Frankfurter Rundschau, which filed for bankruptcy in the middle of November.

Europe’s largest economy was finally witnessing what its neighbours had already seen. France-Soir, France’s populist newspaper, closed its print edition last December and its online edition stopped this summer after bankruptcy. In January, La Tribune, the financial daily, also dropped its print edition to go web-only.

Spain has seen dozens of print publications close since the economic crisis began four years ago, and strains are now showing at the top of the industry. El País, one of the country’s most popular newspapers, wants to cut about one-third of its 460 jobs.

The downturn has spurred speculation of mergers in Italy, the most notable of which could be a combination of RCS Mediagroup’s publications – Corriere della Sera and Gazzetta dello Sport – and la Stampa, owned by the Agnelli family.

People at the publications, however, deny there is anything in the talk.

The gloomy truth for the industry is that cost cuts, mergers or other visions of salvation will probably not be enough to ensure survival. There will be more casualties, says Claudio Aspesi, an analyst at Bernstein Research in London.

“There are probably only a handful of print titles that will be able to develop sustainable business models – these will probably be the big, international brands” like the Financial Times or the New York Times, he says. “The others will have to find themselves an oligarch, or find shelter as part of a bigger organisation.”

That would mirror the French, Italian and UK models of rich owners buying into media as much for influence as profit: Les Échos, the financial daily, is owned by LVMH, the luxury goods group controlled by Bernard Arnault; Le Monde, France’s most prestigious title, was saved by left-leaning businessmen; Le Figaro, the highest-circulation daily with 307,000 copies, is owned by Dassault, the defence group.

The Frankfurter Rundschau is still hoping for an investor to pluck it from insolvency. But Financial Times Deutschland’s search failed. Owning a newspaper for “non-economic reasons” does not appear to be a German foible, Mr Aspesi says. “It would seem even German billionaires are more frugal than billionaires elsewhere.”

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