Publisher: Before transitioning to independent management, Basler Zeitung Medien reported record financial results but a decline in advertising volume. How does that add up?
When Basler Zeitung Medien (BZM) presented its financial results for the 2006/07 fiscal year at the end of September, the company referred to them as the «best results in over ten years.» In fact, revenue figures rose for most of its subsidiaries. The parent company, which includes the Basler Zeitung and newspaper printing operations, also saw its revenue increase by 3.5 million to 137.6 million Swiss francs. And at 8.1 million Swiss francs, consolidated net income not only nearly doubled compared to the previous year but also reached a record high.However, the BZM annual report does contain one fly in the ointment: The free newspaper Baslerstab reported a significant decline in revenue for the second time; it is now 4.2 million francs lower than in 2004/05. A look at the VSW advertising statistics shows: Despite the strong economy, the *Baslerstab* has not recovered even in the first eight months of this year. Its advertising volume fell by a good 15 percent compared to the same period in 2006. The losses are particularly high in the job and real estate classifieds.
What makes this even more puzzling: According to VSW statistics, the BaZ has also seen a sharp decline in advertising volume—specifically since last fall, when it launched a large-circulation Friday edition in the Basel region. In the first half of 2007 alone, the BaZ reported 395 fewer advertising pages (–19.6%) than in the first half of the previous year. Among the major daily newspapers sold, it thus has the worst advertising performance; most other titles are benefiting from the current advertising boom. Even in job listings, the VSW statistics show a decline for the BaZ (–6.6%). The real estate supplement, which has been in circulation for only one year, also appears to hold little promise: the decline in these classified ads amounts to 11.3 percent.
Two months before BZM’s transition to independent operation, the BZM publications thus appear to be a major work in progress. Above all, however, the decline in BaZ’s volume does not align with the published record results. After all, how can the parent company increase its revenue with such losses in the BaZ advertising business? Certainly not through low-margin newspaper printing.
Revenue Up in Francs This contradiction did not escape the notice of BaZ publisher Matthias Hagemann either. He clarifies: «The BaZ’s revenue has increased in francs. The 2.6 percent increase in revenue at the parent company is almost entirely attributable to it, while we were only able to keep revenue from newspaper printing stable despite additional orders.» But how does the publisher explain the significant discrepancy with the VSW statistics? «Through our own activities in the advertising sector,» says Hagemann. For example, since its launch a year ago, the BaZ’s mass-circulation edition has been marketed not by Publicitas, but by the young BaZ subsidiary BZM Werbe AG—on its own. «The VSW statistics only include the ad pages acquired by Publicitas; those from BZM Werbe AG are not included,» says Hagemann. This statement is confirmed by Jürg Räber, head of P Basel. He also points out that many ads acquired for the BaZ by Key Media, a second BZM subsidiary (see box), are missing from the VSW statistics.
Either way: P-revenue at the BaZ is declining, while the BZM subsidiaries are apparently more than making up for the shortfall. Hagemann agrees. But on one point, the BaZ publisher has to pass: He cannot specify the exact number of pages in the BaZ. And he does not want to disclose the revenues of BZM Werbe AG and Key Media. But one thing is clear: «The BaZ is in a better position than it was a year ago. And in terms of mass circulation, we’re seeing positive results.» Expectations were exceeded, the product has been very well received in the advertising market, and the higher costs were more than offset in the very first year. The same applies to the real estate supplement. «We started marketing it ourselves because P, which handles the Basellandschaftliche Zeitung—part of the Mittelland-Zeitung—in the Basel region, found itself in a conflict of interest,» says Hagemann.
The situation is somewhat different for the Baslerstab: «It has indeed suffered a sharp drop in advertising revenue,» says Hagemann. «After switching to a full-service contract with P a year and a half ago, P was unable to handle the volume of small clients. That’s why we took matters into our own hands there as well.» Jürg Räber from P Basel partially confirms this. «It’s true that we faced challenges with the classifieds during the transition phase between March and June 2006. We then worked with the publisher to identify optimization options.» Later, however, the Baslerstab faced increasing competition from BZM’s own products. «The BaZ’s large-circulation edition, the real estate supplement, and the expanded job listings section made life difficult for it, as did the BaZ editorial team’s increasingly regional focus,» Räber explains.
Preparations in Full Swing: In any case, preparations for the transition to in-house management are currently in full swing at BZM. Full-page ads in the BZM publications are already announcing the change in management. Roland Steffen, Head of Publishing, is confident. «We’re on schedule; 35 of the roughly 40 employees are already on board,» he says. Steffen deliberately hired several people who had previously worked at independently managed publishing houses, such as Key Account Manager Michael Seiler and Head of Administration Andi Lüthi (both formerly of the Berner Zeitung). The key account team also includes Steffen himself, Harry Zaugg, and Erika Sprecher.
Steffen sees the biggest challenge in the back-office area, as structures, processes, and IT systems must be established—something BaZ has not had to deal with for 30 years. According to Steffen, the goal is to offer customers a professional and cost-effective service. «This means we’re doing away with P’s markup policy: We won’t charge any additional fees for target audience analysis or the use of specific studies.» These would only make advertising more expensive. Instead, Steffen is adopting a different strategy: Starting in 2008, he will offer a direct booking discount to customers who book directly rather than through P.
Let’s return once more to the VSW figures: The BaZ’s figures should be taken with a grain of salt this year—but also in 2008. Even if BZM Werbe AG takes the helm on January 1 and then, hopefully, reports the page volume correctly, the year-over-year comparison will still be flawed. This is an advantage for BZM Werbe AG, as it will be able to report rising volumes for the BaZ—even if advertising revenue is declining. The transition to independent management will therefore either actually be successful or, at the very least, appear to be successful.
Markus Knöpfli
What does Key Media do? 13.5 million Swiss francs in revenue
was generated by the BZM subsidiary Key Media in the 2005/06 fiscal year. However, the 2006/07 annual report does not include any comparative figures. The revenue of the young company, which primarily brokers ads for non-BZM print titles and also manages client budgets, is part of the parent company’s revenue, explains publisher Matthias Hagemann. As with BZM Werbe AG, Key Media’s revenue will no longer be reported separately in the future. Hagemann reveals only this much: Key Media has increased its revenue. And further significant growth is on the horizon for the current fiscal year. (mk) TZ’s Experience with In-House Operations What lies ahead for BZM,
The Thurgauer Zeitung (TZ) has been doing this for nearly ten months: After many years under a partial lease agreement, the Tamedia subsidiary took over the entire advertising business itself as of 2007. At the same time, it forged closer ties with the Landbote: The previously loose “Kombi 1A” partnership evolved into the Zeitungsverbund Nordostschweiz (NOS) with a shared editorial staff. According to VSW statistics—which in this case match the publisher’s figures—both steps have paid off: The TZ’s advertising volume, which was already up last year, rose another 20 percent in the first eight months of 2007. The increase in revenue
In Franconia, however, the figure is likely to be lower, as TZ and NOS had reduced their rates. In addition, for most job ads—which increased by 55 percent—advertisers now pay «only» the combined rate, because the new NOS job listing always appears in both newspapers. The same applies to classified ads
in the numerous thematic supplements. TZ Publishing Director Urs Bucher confirms: «The proportion of combined ads is higher today than it was back in the days of Kombi 1A.» But he is very satisfied. «We’ve met our budget pretty much exactly,» he says. Now, for the TZ
The next challenge is already on the horizon: Starting in 2008, she will also take over management of Partner Landbote, which was previously owned by P. Currently, the TZ advertising department, led by Jürg Gallo, is in the process of setting up a nine-person branch in Winterthur to handle local sales. (mk)