FT Deutschland faces closure as media woes hit Germany

FRANKFURT Tue Nov 20, 2012 6:02pm GMT

An edition of the Financial Times Deutschland (Germany) is seen at a shop in Frankfurt August 28, 2012. REUTERS/Kai Pfaffenbach

An edition of the Financial Times Deutschland (Germany) is seen at a shop in Frankfurt August 28, 2012.

Credit: Reuters/Kai Pfaffenbach

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FRANKFURT (Reuters) - Launched to much fanfare a dozen years ago, German business daily Financial Times Deutschland (FTD) looks set to become the latest casualty of the chill winds sweeping the global newspaper industry.

Germany is home to Europe's largest print media market and has proven relatively resilient to the technological, cultural and demographic forces that have shuttered newspapers in many other developed countries, but that is now changing.

Europe's largest economy is slowing as the three-year-old debt crisis ravaging much of the euro zone takes its toll, compounding the hit to advertising revenues and limiting the willingness of consumers to pay for newspapers they can read mostly for free online.

Publisher Gruner + Jahr (G+J), controlled by German media conglomerate Bertelsmann BERT.UL, is expected to decide the fate of the FTD at a board meeting on Wednesday but few at the paper doubt what the decision will be.

"There is not a single person in the newsroom who believes the newspaper will continue," a journalist who has been at the paper since its launch told Reuters.

Another employee likened the mood to a "house of mourning".

A G+J spokesman declined to comment.

The FTD, salmon-pink like its British namesake, has a daily circulation of about 102,000. It was founded as a joint venture with Pearson (PSON.L), but the publisher of the Financial Times sold its 50 percent stake to its German partner in 2008.

The paper shook up the German print landscape in 2000 with its modern design, international perspective and free-wheeling journalism style.

But it has never made money and booked a loss of 10 million euros last year, according to German media reports. Accumulated losses since 2000 are estimated at 250 million euros.

Last week, the respected Frankfurter Rundschau, a liberal daily based in Germany's business capital, filed for bankruptcy. The DAPD press agency, which had a mainly newspaper client base, took a similar step a few weeks earlier.

"The underlying trend in Germany has been that local and regional papers in particular have been struggling," said Horst Roeper of independent media research Formatt-Institut, predicting the trend would continue.

ADVERTISING DROP

Data from Nielsen Media Research showed that advertising income for German newspapers dropped 6 percent to 4.1 billion euros in the first 10 months of 2012 from the previous year. Magazines saw a drop in the same period of 4.6 percent.

Nevertheless, any visitor to Germany will be struck by the sheer number and variety of newspapers on sale here.

Figures from the Federation of German Newspaper Publishers showed Germans spent 22.8 million euros in the third quarter of this year on 333 different newspapers, the bulk of them local or regional, making it the biggest market in Europe and the fifth biggest in the world.

Germany's strong regional loyalties, its tradition of decentralised political decision-making and its economic strength during the euro zone crisis have all helped to shield the newspaper industry.

But Germany is no island, and the same trends that have claimed titles such as France's 'La Tribune' and Spain's 'Publico' are also at work here, eroding newspapers' traditional customer base and forcing publishers to adopt new tactics.

"A structural crisis is now hitting the German market with full force," said the FTD journalist.

"In the past crises at the newspapers were linked to the economy. This time the economy is doing fine but readership and advertising are going down. We're not the first to die and we won't be the last."

In neighbouring France, family-owned media group Hersant is being dismantled under pressure from its lenders while in Britain Trinity Mirror (TNI.L), publisher of the Daily Mirror, Sunday Mirror and The People, is to merge its national and regional divisions to cut costs.

Keen to claw back lost revenues, Germany, France and others are considering laws to force Internet search engines such as Google to pay a fee for displaying links to newspaper articles.

They argue that search engines capture part of the value added in an article when they index them.

Germany's largest newspaper publisher Axel Springer (SPRGn.DE) plans soon to erect a digital pay wall for conservative daily Die Welt as well as for Bild, continental Europe's best-selling daily.

"It's a risk and there's no guarantee that it'll work out, but I'm more optimistic than I was a year or two ago," Axel Springer Chief Executive Mathias Doepfner told Reuters last month.

It hopes to emulate Pearson's Financial Times, News Corp's (NWSA.O) The Wall Street Journal and the New York Times (NYT.N), all of whom have had some success charging for on-line content.

(Additional reporting by Leila Abboud in Paris, Kirsti Knolle in Frankfurt and Noah Barkin in Berlin; Writing by Harro Ten Wolde and Gareth Jones; Editing by Noah Barkin)

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