Axel Springer Believes It’s A Lot Easier For Print To Make Money In Poland Than It Is In France So Au Revoir To The Planned French Version of Bild

Philip M. Stone July 6, 2007

That huge collective sigh of relief heard throughout France Thursday came from newspaper publishers upon hearing that Axel Springer has shelved its long talked-about plans to publish a French version of its German Bild tabloid that has a 12 million daily readership and close to four million circulation, the highest in Europe.

But the reason Springer gave for dropping the project goes right to the heart of what is wrong in the French print marketplace – it’s too difficult getting national newspapers distributed throughout the country in a timely efficient way and even if that was overcome there just aren’t enough newsstands out there selling newspapers, and that hurts everybody.

Springer has not been shy in the past in starting a Bild lookalike in a market in which it believes in can succeed –its most successful being in Poland when it launched Fakt in October, 2002, that almost immediately became the market leader. It was because of that Polish success that France became another logical choice because the country, for all of its national newspapers, does not have a real sexy, crime-filled tabloid national paper with plenty of pictures of naked girls.

But the Springer board has concluded that it is one thing to find a niche in the market – a sexy tabloid  -- but quite another in ensuring that its proposed €120 million ($162 million) investment would be successful given France’s antique distribution system and a lack of retail outlets. There has been spin for more than a year that Springer would launch its French Bild sometime after the summer. It was only last February that Robin Leproux, head of Axel Springer in France, allegedly told Le Figaro that the launch was on schedule and that 300 staff had been hired, but Axel Springer in Germany immediately denied that report.

The Springer board decided Thursday for various reasons that France was just too iffy, with distribution and lack of sales opportunities top of the list of fears.  Board member Andreas Wiele explained, “Despite encouraging market research results, we decided against launching a tabloid following a careful analysis of all existing data and market factors. In particular, we recognized that the logistical and technical manufacturing conditions did not meet our satisfaction. In the end we decided that the project presented more risks than opportunities.”

A company spokesperson also blamed the aggressive labor union situation in France, fearing “The possibility of potential strikes hindering the project.”

What was uppermost in the board’s mind was that one big reason for the German Bild’s circulation success is that for a country of some 80 million population there are about 120,000 sales points throughout Germany, and yet in France, with a population of some 60 million, there are only about 30,000 newsstands.

French national newspaper publishers are still in the midst of trying to stop circulation slides and trying to make profitable such renowned titles as Le Monde, Le Figaro and Liberation. Those papers have been taken over by industrialists with deep pockets, but the last thing they needed was for Springer entering the market and doing to them what it did in Poland.

In October, 2002, Springer launched the spicy tabloid Fakt that within two months became the market leader with a circulation of more than 500,000.  Not satisfied with that it launched in 2005 a quality newspaper named Dziennik whose business plan called for circulation of 150,000 by the end of the first year. After just seven months its circulation rose to more than 200,000.

That caused no end of grief to local Polish media company Agora, publisher of the second highest circulation newspaper, the quality broadsheet Gazeta Wyborcza. It lowered its newsstand price by 45% fearing Dziennik could steal some of its readers and that price move came right after the company blew some €10 million by launching Nowy Dziea (New Day) only to kill it three months later when the stock market voted with its feet against further marketing investment.

And the May, 2007, figures show it is more of the same. Gazeta Wyborcza’s circulation sank 4.27% from the same month a year ago, but it was down 10.4% from just the month before. Fakt’s May numbers were down 2.11% but still sold on average 503,522 copies, some 73,039 more than Gazeta Wyborcza. The only thing that can really bring any joy to Agora is that Dziennik got hit worst of all falling for the first time in more than a year to below 200,000 to 192,776,  25.58% lower than a year ago and 8.74% less than April. Agora and Springer both blame a long holiday weekend that kept readers from the newsstands.

All of this comes on top of more turmoil in the French national newspaper market. Pearson, owner of the financial Les Echos (and publisher of the UK’s Financial Times) is in discussions with Bernard Arnault, owner of the privately held luxury goods group LVMH, for Arnault to buy the French newspaper. That has its staff up in arms à la Dow Jones and Murdoch and they have already stopped the presses twice.

Arnault already owns the competitive La Tribune and says if he buys Les Echos he will sell La Tribune although he is quoted by Le Figaro as saying that he would be willing to keep a minority interest in La Tribune “to demonstrate our attachment to the future of the publication”.

But back to Springer, ever since competition authorities stopped it buying German broadcaster ProSiebenSat.1 for €2.5 billion last year it has been on a spending spree. In just the last couple of weeks it announced:

It is spending some €288 million in buying the auFeminin.com internet portal, first by purchasing 41.1% of the shares from the founders at €32 a share and then making a mandatory offer for the rest.

In its favorite Poland it is taking over the sports newspaper Przeglad Sportowy, with a 72,000 circulation, for an undisclosed sum from the Swiss Marquard Media AG.

It is taking a majority interest the German mail services company PIN Group for €510 million.

Springer shares are performing well, and the decision not to launch in France moved them up another 3.4% Thursday. JP Morgan has just begun coverage and says the company’s online operations will contribute more than 10% of the company’s revenues next year, well ahead of the current average 3.7% in German media companies.  It said the company has one of the strongest publishing strategies around.

For Springer to have turned down investing in the French Bild is an indication of how troubling the French newspaper market is. Springer likes to invest in newspapers; it believes newspapers have a great future. CEO Mathias Döpfner told Variety in a recent interview, “A newspaper launched today is a combination of online and print. We use the online to cross-promote the print, and vice versa. If you do that properly, then I think newspapers can be a very profitable business model and have a future.”

But apparently not in France.

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