Joint Ventures Are The Parking Places For Other Plans

Michael Hedges August 2, 2021 Follow on Twitter

Joint ventures are reasonably robust corporate structures. Typically, they conduct business through a defined set of rules. There’s a lot of sharing. Companies like joint ventures until they don’t. And that’s how it’s supposed to work.

The Ringier Axel Springer Media (RAS) joint venture is winding down, mostly. Swiss publishing group Ringier will acquire the 50% stake held by German publishing group Axel Springer, said a joint statement (July 28). “This transaction is an acknowledgement of our long-term commitment to being a modern media investor in Eastern Europe,” said Ringier chief executive Marc Walder. “The portfolio in these countries suits us ideally and will further strengthen the Ringer ecosystem.”

RAS was formed in 2010. putting Axel Springer owned publishing companies in Central and Eastern Europe together with Ringier assets in the same region. “When we started the joint venture in 2010 with what was almost entirely a print portfolio, we had the vision of transforming the local print brands into strong digital players in their future media markets,” added RAS Media chief executive Mark Dekan. “Together, we have not only brought the existing media brands into the digital age, but we have also created new leading digital media and classified brands that are now among the most relevant offerings in their markets.”

RAS was formed as many publishers and broadcasters began having second thoughts about Eastern European business realities, often distant from their home base. In 2010 WAZ Media Group managing director Bodo Hombach announced the publisher would begin withdrawing, citing endemic corruption and institutional neglect. A year earlier the European Bank of Reconstruction and Development (EBRD) supplied a €40 loan to support WAZ Media Group publishing ventures.

Metromedia International Group exited several Eastern European ventures in 2004, several acquired by Dublin-based Communicorp, which also, eventually, exited. Northcliff International, subsidiary of Daily Mail and General Trust (DMGT), exited Hungarian, Slovakian, Romanian and Bulgarian investments in 2012 and 2013. Lagardère Active would follow.

"Europe has long been turning a blind eye to the catastrophic situation in the media, especially in Southeastern Europe,” said Herr Hombach to Der Spiegel (January 9 2011). “I find this state of affairs depressing.” In 2011 Axel Springer offered €300 million to take over the WAZ Eastern Europe and Balkans assets, part of a larger bid to takeover WAZ Group entirely. It was rejected.

Axel Springer is best known as publisher of magazine Die Welt and tabloid Bild in Germany. The publisher has developed numerous vertical digital brands in many countries. It has a huge digital classifieds operation. Last year, US-based private equity firm KKR took control of the company. “As part of our growth strategy, we will focus on our strategic core areas and large markets,” said Axel Springer News Media president Jan Bayer in the announcement. Strategic core means digital, large markets means the US, Germany and Poland. Assets in Hungary, Serbia, Slovakia, Estonia, Latvia and Lithuania become part of Ringier. The devolution of RAS has been in the works coincident with the arrival of KKR.

Joint venture Ringier Axel Springer Polska will continue. It has been the biggest Eastern European contributor to the RAS profit and loss sheet, publishing tabloid Fakt, Newsweek Polska, online portal Onet and dozens of online portals, classifieds and lifestyle. Leaving the joint venture in place also avoids “repolanization” calls from right-wing Polish politicians that have circled around the WarnerMedia/Discovery transaction involving television channel TVN.

Ringier is a largely family-owned publisher based in Zürich, Switzerland. Like Axel Springer it has been on a digital track for several years with emphasis on e-commerce and sports marketing. In Switzerland it publishes the German-language Blick and French-language Le Temps, which is owned by a not-for-profit foundation, and dozens of magazine brands. Ringier is a shareholder in two local Swiss radio stations with NRJ Group.

In March, Ringier acquired a majority stake in Sportal Media, Bulgaria’s leading sports media portal. The publisher has a broad footprint in Romania including tabloid Libertatea, also not part of the RAS joint venture. In Slovakia, the RAS joint venture is not completely going away, a small shareholding to be retained. The Slovak publications include well-regarded online news portal Aktuality SK. Ringier also has an extensive online portfolio in Africa.

Ringier and Axel Springer expect the transaction will be completed by the end of 2021, appropriate approvals notwithstanding. According to terms of their agreement, no financial details will be released.

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