Look Hard And A Spicy Story Arrives And Gets Out

Michael Hedges October 20, 2021 - Follow on Twitter

Only rarely are corporate exploits centered in one country followed across borders. There are exceptions, every step by Netflix or Facebook attracts global attention. Normal transactions are treated like birth notices. Sharp reporters are on the lookout for spice.

German publisher Axel Springer announced this week (October 19) completion of its acquisition of Capitol Hill News Company from owner/founder Robert Allbritton. Capitol Hill News publishes Politico, a Washington DC focused political news portal, Protocol, a technology news portal, E&E News, which covers energy and environmental news, regulatory consultancy AgencyIQ and Politico EU, a Brussels-oriented political news portal founded in 2015 as a joint venture with Axel Springer. News of the prospective deal was widely shared in late August. Mr. Allbritton will reportedly walk away with US$1 billion.

Given the number of big number deals, media and otherwise, announced and consummated in recent months this would typically receive only about three paragraphs from major business publications and news agencies, maybe four because private equity giant KKR is majority shareholder in Axel Springer. But, also typical of the times, scandal changes the interest level. Add a leak or two with hints of impropriety and even the most vaunted publishers move the story up to page one.

Last Sunday (October 17, updated October 19) the New York Times (NYT) media columnist Ben Smith offered a blunt assessment of Axel Springer, its chief executive Mathias Döpfner, its best selling tabloid Bild and its chief editor Julian Reichelt. “A high-flying German media giant is ahead on digital media but seems stuck in the past when it comes to workplace culture and dealmaking,” said the lede. Recovering from their shock - most everything in Mr. Smith’s NYT piece previously and cautiously reported - German media watchers flew into a rage of reflection.

At the top of Mr. Smith’s NYT piece, were sordid details, some previously published by German news magazine Der Spiegel (March 12) and competitor of Axel Springer owned Die Welt, of Herr Reichelt’s workplace behavior, which earlier this year caused him a brief suspension Lawyers for Axel Springer, Freshfields, investigated and reported back “nothing to see here.” Belying a political orientation Chief executive Döpfner referred at the time to Herr Reichelt, reported Mr. Smith, as “ really the last and only journalist in Germany who is still courageously rebelling against the new GDR authoritarian state,” an explicit reference communist East Germany and implicitly to coronavirus restrictions from the current German government. “Almost all the others have become propaganda assistants.”

Toxic workplace culture, to be polite, resonates broadly among editors, particularly when the subject is somewhere else. Every allegation of impropriety is investigated, often in advance of authorities, and duly reported. Once sexual harassment charges were resigned to the back pages. The Harvey Weinstein and Donald Trump cases changed that; supporters of the #MeToo Movement being ardent readers. And so are their lawyers.

In addition to the Der Spiegel investigative reporters from Ippen.Media, publisher of regional newspaper Frankfurter Rundschau among others, were also chasing the story. As it was set to be published, proprietor Dirk Ippen spiked it, citing competitive issues. The Ippen.Media investigative team expressed “shock,” reported Süddeutche Zeitung (October 19). Alas, their work, collaborated with others, was published by Der Spiegel (October 18).

On Monday, Herr Reichelt was sent packing. Said the Financial Times (October 19), Herr Döpfner’s “words have come back to haunt him.” But his
big plan for expansion into the US market with the Capitol Hill News/Politico acquisition was if not threatened as least under pressure. German media news portal Meedia (October 18) suggested there had been an intervention by KKR, perhaps partner Henry Kravis personally, after the NYT piece was published.

Secondary to the toxic workplace behavior of Herr Reichelt in the NYT piece was detail of Herr Döpfner’s angling to acquire US news portal Axios while negotiating with Robert Allbritton for Politico. The two online news portals are seen as competitors. Indeed, Axios was founded by dissatisfied Politico editors. Bitter memories on both sides remain.

During the summer Herr Döpfner proposed a purchase and sale agreement to Axios chief executive Jim VandeHei. His plan was to acquire both, merge them and install Mr. VandeHei as chief executive. Knowing that ill will between the publications continued, Herr Döpfner suggested secrecy “until it was too late for Politico to withdraw.” Mr. VandeHei astutely informed his board, saying that was “not how we do business here.” Axios withdrew from consideration. An Axel Springer spokesperson, to German business portal Wertschafts Woche (October 19), denied Herr Döpfner was being “sneaky.”

See also...

• Hot Topics - Media in Germany

• Hot Topics - Axel Springer

• Hot Topics - Mergers and Acquisitions