1. 63rd WORLD NEWSPAPER CONGRESS
Session: Finance
Titel: How do we get through the next crisis
Speaker: Gregor Waller
Mark your calendar
64th WORLD NEWSPAPER CONGRESS
19th WORLD EDITORS FORUM
Vienna, Reed Messe Wien
www.wan-ifra.org/kiev2012

2. How
do
we
get
through
the
next
crisis
Some
Landmarks
Gregor
Waller
Consultant
and
Entrepreneur
Principal
Consultant
at
Frenemies
Consul7ng,
a
WAN-­‐IFRA
ac7vity
www.wan-­‐ifra.org

3. The
double
dip
“monster”
(recession)
that
will
hit
the
world
economy
2012
will
bring
Europe’s
newspaper
publishers
in
the
red
figures*
–
it
even
can
get
worse
Large
Newspapers
>200k
Midsize
Newspap.
>
100k
Local
Newspapers
<50k
-­‐20%
-­‐40%
-­‐20%
-­‐30%
-­‐40%
-­‐5%
REVENUES
-­‐30%
-­‐10%
-­‐5%
-­‐30%
-­‐5%
-­‐10%
-­‐10%
-­‐30%
-­‐10%
-­‐10%
-­‐10%
-­‐10%
-­‐10%
-­‐10%
-­‐1%
-­‐2%
-­‐3%
-­‐4%
-­‐1%
-­‐2%
-­‐3%
-­‐1%
-­‐2%
-­‐3%
-­‐4%
-­‐4%
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
EBITDA
CirculaIon
Display
Ads
Classified
Ads
*
Average
of
4
newspapers
in
each
class
WAN-­‐IFRA
Finance
Session
-­‐
Thesis*
2011-­‐10-­‐14
2

4. 2012 the „2. Exitus“ will begin:
Discerning the “prepared” potential winners of the Digital Trans-
formation from the “passive” stakeholders “at print speed”
Unable
for
challenges
of
PotenIal
Winner
of
the
Digital
TransformaIon
Digital
TransformaIon
§ Focus
on
dividends/noninvest
§ Commi_ed
to
a
Ime
of
invest
Shareholders
§ No
cooperaIon
with
dislikes
§ Digital
in
all
top
posiIons
suitable
for
financing
the
§ AUachment
to
CE,
CEO,
long-­‐ § OK
to
deep
cut
layoffs
transi7on
into
the
Digital
Age
term
companions
(legacy)
§ OK
to
„digital
overhead“
§ Avoidance
of
cannibalizaIon
§ All
“Head-­‐of”
must
be
digital
Top
Management
§ No
digital
experiment
budget
§ Best
PracIce
Restructuring
capable
of
managing
the
§ „Passive“
digitza7on
approach
§ Coop-­‐Network
with
publishers
transi7on
into
the
Digital
Age
§ No
digital
restructuring
plans
§ Digital
Think
Tank
Editors
in
Chief
§ No
evaluaIon
of
digital
editor
§ Digital
all-­‐channel
workflow
willing
and
capable
of
§ No
best
pracIce
learning
trip
§ Customer
&
compeIIon
focus
transforming
a
„print-­‐culture“
§ I
hire
a
digital
deputy
chief
ed.
§ „get
digital
or
get
out“
editorial
in
a
digital
editorial
§ Conference
@
10
–
no
metrics
§ Commercial
whilst
integrity
2011-­‐10-­‐14
WAN-­‐IFRA
Finance
Session
-­‐
Thesis
3

5. Take Over Targets 1:
How to identify newspapers with bad management
1.
LiUle
RESTRUC-­‐ • Li_le
or
no
significant
RSTRUCTURING
PROJECTS
in
the
past
5-­‐7
years
TURING
in
the
past
• No
/
li_le
BENCHMARK
PROJECTS
in
the
past
5-­‐7
years
2.
No
clear
DIGITAL
• No
DIGITAL
STRATEGY
FOCUSSING
company
ac7vi7es
into
the
Digital
Age
STRATEGY
executed
• Li_le
/
No
EXPERIMENTING
with
KEY
ELEMENTS
of
media
Digital
Strategy
3.
No
vision
for
• Editor-­‐in-­‐chief
is
NOT
the
DRIVER
of
the
digital
transforma7on
DIGITAL
EDITORIAL
• No
CRITICAL
MASS
of
20%
DIGITAL
EDITORS
4.
No
DIGITAL
edi-­‐ • NEWSROOM
&
WORKFLOW
do
not
allow
to
serve
ALL
digital
channels
torial
WORKFLOW
• Editorial
has
no
strategic
CONTENT
PLANNING
strategy
–
linked
to
online
5.
No
DIGITAL
PRO-­‐ • Digital
Product
Diversity
is
neither
strategized
nor
implemented
DUCT
STRATEGY
• Paid/Free
Content
debate
is
not
decided
6.
No
DIGITAL
• No
ACTIVE
SALES
FORCE–
integra7ng
digital
products
&
know
how
SALES
know-­‐how
• “Space”
selling
rather
than
SOLUTION,
TARGET
GROUP
selling
2011-­‐10-­‐14
WAN-­‐IFRA
Finance
Session
-­‐
Thesis
4

6. Take Over Targets 2:
Newspapers with pure advertising based digital business models
are „easy prey“ for investors leveraging targets via Paid Content
BUY
ANY
„FREE-­‐PHILOSOPHY“
newspaper
&
LEVERAGE
it
Paid
Content
works
by
over
100%
by
introducing
a
smart
PAID
CONTENT
model
2012
2022
Free
Paid
Cont.
Free
Paid
Cont.
#
of
free
apps
30,000
-­‐-­‐-­‐
300,000
-­‐-­‐-­‐
#
paid
apps
(15%
of
free)
-­‐-­‐-­‐
4,500
-­‐-­‐-­‐
45,000
Abendbla_.de
7,95
€/mo
&
Morgenpost.de
5,95
€/mo
CPM/month
(30
views)
100
€
100
€
50
€
50
€
week
week
week
week
week
week
week
51/09
10/10
20/10
30/10
40/10
01/11
13/11
Digital
ad
revenues
1,08
m€
0,16
m€
5,4
m€
0,81
m€
Price/month
-­‐-­‐-­‐
15,99
€
-­‐-­‐-­‐
24,99
€
120.000
subs
3,99
€/mo
Paid
Content
revenues
-­‐-­‐-­‐
0,73
m
€
-­‐-­‐-­‐
11,34
m
€
OVERALL
REVENUES
p.a.
1,08
m€
0,89
m€
5,4
m€
12,15
m€
244.000
subs
15
$/month
>
100%
2011-­‐10-­‐14
WAN-­‐IFRA
Finance
Session
-­‐
Thesis
5

7. If today we had the market penetration of tablets we will have in 5 to 10
years, no western newspaper CFO would give an OK to a new print
plant with circulation dropping at least 50% in the next 10 years.
Output (mio sheets) 4.000 3.000 2.000 1.500 1.000
Salaries (m€) 200 m€ 200 m€ 200 m€ 200 m€ 200 m€
Invest (m€) 30 m€ 30 m€ 30 m€ 30 m€ 30 m€ 100%
Variable cost/sheet (10 ct) 800 m€ 600 m€ 400 m€ 300 m€ 200 m€
Total cost of ownership 1.030 m€ 830 m€ 630 m€ 530 m€ 430 m€
Cost per sheet 0,26 € 0,28 € 0,32 € 0,35 € 0,43 €
Progressive Preissteigerung 22% 28% 37%
AmorIzaIon
period
20-­‐28
years
50%
Total
Cost
of
ownership
40%
50
cent
80
cent
130
cent
200
cent
Printed
sheets
2011-­‐10-­‐14
WAN-­‐IFRA
Finance
Session
-­‐
Thesis
6

8. Next Steps?
• Work
out
Digital
Strategy
• Work
out
a
Restructuring
plan
and
project
• Work
out
Transforma7on
Cost
1.
Shareholders
• Get
an
o.k.
to
cooperate
with
other
newspapers
• Do
a
manager
appraisal
• Discuss
the
key
necessity
of
an
editor-­‐in-­‐chief
truly
understanding
digital
• Found
a
joint
M&A
unit
2.
CooperaIon-­‐
• Found
a
joint
IT-­‐unit
(backend
IT
&
produc7ve
IT)
Network
• Found
a
joint
service
unit
• Work
out
your
Digital
Strategy
• Scope
and
Cost
of
Transforma7on
• Shareholder
ok
to
Digital
Strategy
&
Digital
Transforma7on
3.
Steps
• If
“no”
–
convince
them
to
sell
NOW
• Pimp
the
bride
(execute
restructuring)
–
you
have
to
do
it
anyway
• Look
for
investors
that
understand
both
the
opportuni7es
of
the
Digital
Transforma7on
and
the
“7me
to
invest”
2011-­‐10-­‐14
WAN-­‐IFRA
Finance
Session
-­‐
Thesis
7

9. Thank you for
your kind attention!
Gregor
Waller
Digital
Age
Consul7ng
/
Entrepreneur
Associated
Principal
Consultant
Frenemies
Consul7ng,
a
WAN-­‐IFRA
ac7vity
Digital
Age
ConsulIng
Hoeltystrasse
17
22085
Hamburg
Germany
Phone:
+
49
160
90.410.654
eMail:
waller.gregor@googlemail.com
Twi_er:
wallergreg
2011-­‐10-­‐14
WAN-­‐IFRA
Finance
Session
-­‐
Thesis
8