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Home , Bertelsmann, Der Spiegel, Reinhard Mohn

LOGOS 14.1_crc 31/3/03 1:54 pm Page 12

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Dateline Munich German feels chill winds of the economy

Klaus G Saur By the end of 2002, the recession, verging on stagnation, of the German economy had begun to reach a large part of the German publishing industry. Reduced sales, operating losses and bankruptcies had all increased. Sales by publishers and bookstores fell by between 2 and 3% in 2002 – a small percentage compared with other industries, but a serious danger to publishers with low Founder and Chief Executive of operating margins. K G Saur Verlag of Munich, a Worst hit have been newspaper publishers, leading bibliographic and whose advertising revenues fell by 30 to 40%, having already suffered a 10 to 15% decrease in reference publishing house, Klaus 2001. Only regional newspapers such as those Saur has been President of the published by Ippen in Munich, Hamm and Kassel, Bavarian Publishers Association; the Rhein-Pfalz in Mainz, the Passauer Neue Presse Chairman of the Publishers and the local papers of Stuttgart have maintained their margins. Committee of the Börsenverein; In all fields of publishing, large companies Chairman of the Board of the have proved more vulnerable than small- and Book Fair; and medium-sized. Among book publishers, C H Beck, Chairman of the Board of the Suhrkamp, Diogenes, Carl Hanser, Langenscheidt German National Library. He and a few others have maintained their profitability and are seen to be secure. was awarded by the Only two years ago, there were many investors University of Marburg in 1985; seeking to buy publishing houses. Now more and the Simmonds University College more publishing houses are for sale, but there are of Boston in 1991; the State no buyers. Prices are low, even for traditionally profitable sectors such as professional, academic University in Ishewks in Russia and school publishing. In the normally secure in 1997; and the University of STM book and journal sector, the sale by Wolters Pisa in 1998. He is an Honorary Kluwer of its academic imprints and the troubles of Professor of the University of Blackwell in England have not gone unnoticed in . Glasgow and of the Humboldt The dire economic situation can be traced in University, . Saur is also a the fortunes of eight German publishing houses: member of the of Brockhaus Duden, the 1. AG German encyclopedia and The departure of Chief Executive Thomas Middelhoff, impelled by , wife of the dictionary publishing house, and main shareholder, , signified Chairman of the Board of the publishing group Beltz Verlag. Email: [email protected] 12 LOGOS 14/1 © WHURR PUBLISHERS 2003 LOGOS 14.1_crc 31/3/03 1:54 pm Page 13

German publishing feels chill winds of the economy

serious alarm about the company’s perfor- appointed CEO, left the company after a few mance. Losses were being incurred in all months, and there is much coming and going sectors with the exceptions of Bertelsmann at middle level. Springer professional information and the Brooding darkly over these financial service company. The cash generated by troubles is the revelation, made at the time of Middelhoff’s sale of AOL shares proved insuf- the in October 2002, that ficient to offset operating losses. Bertelsmann cooperated with the Nazis before The heaviest losses have been in and during War II. The two-volume activities such as Barnes & Noble Online, report on Bertelsmann’s activities during the Bertelsmann Online (now sold) and Pixelpark, Third Reich, by Professors Saul Friedländer, the music business, which is close to being Trutz Rendtorff, Reinhard Wittmann and sold. Bertelsmann had unwisely committed to , revealed how deeply the purchase of another music company for Bertelsmann had been involved with the 3bn , a deal from which Middelhoff Nazis, how much money the company had withdrew when it was found to be worth only earned with its so-called “Feldpost” (paper- 1bn euros. As a result, Bertelsmann is facing a backs for German forces), and that there was lawsuit in the which could cost no proof that the company had offered either 3.5bn euros. All Internet activities are now resistance to, or criticism of, the Nazi regime. being suspended or drastically reduced. In 1999, Bertelsmann had purchased STM 2. Holtzbrinck Publishing Group publisher Springer Verlag for DM1bn, with Holtzbrinck, the second largest publishing the intention of playing a leading role in the group, owner of many newspapers and field of professional information worldwide. publishing houses in Germany, which entered Jürgen Richter, a former executive of Axel English-language publishing fifteen years ago Springer, the newspaper publisher, was with its purchase of Scientific American and appointed to lead the new enterprise W H Freeman, the US textbook publishers, “Bertelsmann Springer”. This was seen at the expanded its presence in a big way with its time as a smart move by Bertelsmann to offset purchase of the venerable British house of the volatility of the Internet business. Macmillan. The current parlous state of the However, Middelhoff announced publicly Holtzbrinck enterprise was revealed in an that Springer would be divested, and as a article in of July 1, 2002. Detailed result of this announcement Jürgen Richter figures had not hitherto been available, has left. Now Bertelsmann is faced with the Holtzbrinck being a private company owned problem of finding an investor willing to pay and run by the Holtzbrinck family. Until the a price close to its purchase price. The main Spiegel article was published, Holtzbrinck had prospect should be Reed Elsevier, world been regarded as a solid enterprise both in leaders in STM journal business and pioneers Germany and internationally. However, it was in successful online publishing, but any move vulnerable to the decline in advertising on its part would be blocked by German and revenue through its ownership of Handelsblatt European monopoly laws. and Wirtschaftswoche, and at the same time, Even the book clubs, the business on like those of many other book publishers, its which Bertelsmann built its worldwide profits declined or turned into losses. expansion, are being driven into losses by the Holtzbrinck showed signs of distress when it growth of Internet bookselling, and there is sold its television company NTV, which it no turnaround in sight. had hoped would be the German equivalent In trade publishing, , which of CNN. it purchased in 1996 for $500m and which On the newspaper front, Holtzbrinck should be the jewel in the Bertelsmann crown, would like to acquire shares of the Berliner is facing losses. Arnold Kiel, the newly Zeitung, in spite of the fact that it is already

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