Europe’s number one newspaper publisher Axel Springer Verlag confirmed Tuesday that it recorded its first ever loss in 2001, falling €191 million into the red from a net profit of €98m the year before.
Blaming the ad slump, restructuring expenses and rising paper costs for the results, the group also posted a 1.4% drop in sales revenue to €2.86bn. It is axing around 10% of its 14,000 workforce.
The news will not be welcomed by floundering German media giant Kirch Gruppe, which holds a 40% stake in the publisher (a holding it is trying to sell to ease its crushing debt burden).
Springer’s difficulties have encouraged it to consider exercising an option to sell its 11.5% stake in Kirch’s broadcast unit ProSiebenSat.1 back to the ailing group. The contractually agreed price is €767m, over seven times the stake’s current value, though Kirch has threatened to take Springer to court, claiming the option is not valid [WAMN: 31-Jan-02].
Kirch’s well-documented financial strife means it is unlikely to be able to pay, prompting Springer to seek a larger stake (25%) in ProSieben as part of a settlement, say insiders.
However, such an agreement may founder on the publisher’s opposition to the planned merger between ProSieben and the Kirch Media division, the June target date of which has consequently been called into question.
In addition, Kirch’s woes have now forced it to put its majority holding in Formula One motor racing up for sale. Struggling to keep his media empire together, Leo Kirch is also thought to be willing to offer Rupert Murdoch a sizeable holding in Kirch Media to help settle another option, this time concerning a stake in the group’s pay-TV unit [WAMN: 07-Feb-02].
Data sourced from: Handelsblatt (Germany); Wall Street Journal; Financial Times; additional content by WARC staff