The Tamedia boss also talked about the allegedly planned swap with Ringier (Le Matin for Le Temps shares). And also about the recent involvement with Starticket (Werbewoche.ch reported).
WW: Tamedia's turnover in 2012 fell by 6 percent compared to the record year of 2011, but profit amounted to 152 million francs. Nevertheless, you and publisher Pietro Supino described 2012 as "disappointing" and "unsatisfactory". Why is that?
Christoph Tonini: Disappointing? No, we said that the result was pleasing in a difficult environment. But if sales and profit are down, that must give us pause for thought. The profit also includes one-off, extraordinary effects. Operating profit was almost CHF 40 million lower, which is of course not good news.
You are now planning to save a total of CHF 34 million over the next three years. Why is that?
We have noticed that not only classified ads, but also traditional newspaper advertising is migrating online. This is a structural, not an economic development. If we take it further, our print media will have to reach a cost level that is 34 million lower than today in three years' time if we want to continue to talk about a profitable business. There are also many indications that the structural change could become even more pronounced.
How did you arrive at this figure?
The savings target over three years corresponds to around 3.6 percent of our total costs of CHF 849 million. Tamedia wants to make de facto savings of 1.2 percent per year. In relation to our print sector, which also includes printing plants and distribution, it is a total of 6 percent, i.e. 2 percent per year, although the annual decline in sales here is 5 percent. In view of this, 2 percent savings per year must simply be achievable.
So things could get even worse?
Yes, then we need to adjust our goals further.
The first step is thought to be a swap between Tamedia and Ringier: you cede the loss-making Matin to Ringier (allegedly without Matin dimanche), in return for which Tamedia receives Ringier's stake in Le Temps and thus a large majority there. How concrete are these plans?
Over the past ten years, Le Matin has regularly generated substantial losses in the millions. Thanks to many large and small measures, the Matin team has always managed to stem the losses somewhat. But in the same period, advertising revenues have fallen even more sharply, by more than two thirds since 2000. And unfortunately there is no sign of a turnaround. In this situation, it would be irresponsible not to consider all the options that could help to bring Matin out of the red and secure the future of this great newspaper. However, I don't want to say who we are talking to about which ideas.
Back to the cost-cutting measures: Tamedia admitted that it had communicated these "clumsily". Is it possible to communicate savings of 34 million cleverly despite huge profits?
The first awkward thing: we only talked about savings, but we are also looking for improvements on the revenue side. Of course, we were aware that we would not find our way back into a growth market. Secondly, we happened to communicate the measures the evening after our annual media conference. As a result, the 34 million savings were directly offset by the profit of 152 million, although the profit is actually lower, as I said. Another point: we obviously did not succeed in involving the management in the overall considerations in advance and communicating the calculated figure of 34 million as what it is: a target that we set ourselves together. Instead, the figure was perceived as an order, and individual employees suspected that we already had the specific projects in the drawer. But that is not the case. We wanted to show that we are at the beginning of a process.
The protest in French-speaking Switzerland was much stronger than in German-speaking Switzerland. Were you surprised?
Yes, we did not expect this reaction. After all, our earnings target is just one of several goals. We want to ensure the sustainability of our media, maintain the diversity of the press - especially in French-speaking Switzerland - and, of course, be economically successful. Each individual measure will be assessed against the background of all these goals.
Print, journalism and quality journalism are Tamedia's core areas, it has been said time and again. But there is no investment in the core area. On the contrary, this is precisely where cutbacks are being made.
Stop! In the last ten years, there has probably been no other Swiss company that has invested so much in this core business: Just think of the mergers with Espace Media or Edipresse Suisse and the purchase of the Zurich regional newspapers - all investments in journalism, in newspapers. Added to this is the expansion of online journalism. So Tamedia believes in print and in the business of journalism.
In the last two years, however, you have mainly invested in Search.ch, Jobs.ch and now also in Starticket - all portals without journalistic content.
In fact, we are not investing in journalistic media here. But in the classifieds business, which was originally our core business. In this respect, the investment in Jobs.ch or Search.ch is an investment in the future for us: if advertising continues to migrate online, it is not simply providers from abroad that are far removed from the media that will benefit, but we as a Swiss media group. The same applies to Homegate.ch and Starticket. In this way, we can stabilize the economic situation of the company.
Will what you earn through Homegate, Jobs, Search or Starticket be available to the publishing brands again? Or are these portals just money machines in the service of shareholders?
We invest the money we earn - no matter where - in areas where sustainable business can be created in the future. We have largely financed the online news business with the current profits of the newspapers: The profit from the commuter newspaper 20 Minuten was reinvested in the expansion of 20 Minuten Online. However, this only makes sense as long as these media continue to grow and the investments have a chance of success. With this in mind, we will continue to invest in news sites and journalism in the future. We believe, for example, that the way forward for regional newspapers is a paid model combined with financing through advertising. That is why we are investing here. If this model works, we will invest even more.
Nevertheless, it would be logical to give the money you earn with the online sections back to the media brands that have lost the sections.
No, the two business models have completely decoupled. Above all, however, classified portals also require considerable investment, for example in technology, in order to remain fit for the future. In these businesses, the returns have to be high because we never know how sustainable they are.
In 2012, Tamedia's digital turnover grew by 2.7 percent to 148.2 million Swiss francs, accounting for 13 percent of Group turnover. How high was the profit share?
Online reported a loss in 2012.
This makes it all the more dramatic: what print loses cannot be nearly made up for by online, especially as mobile communication cannot be lucratively commercialized. Sooner or later, your media brands will run out of money. Will Tamedia still be active in publishing at all in 10 to 15 years?
You could have asked this question ten years ago. Since then, the Tages-Anzeiger has lost over 300 million francs in sales due to the decline in job advertisements in print. It should no longer exist today. But at the same time, we have managed to become much more efficient in the editorial department, the print shop, distribution and through cooperation agreements. That's why the Tages-Anzeiger continues to be published every day and reaches more people than ever before as a newspaper and news portal. Because we have achieved this, I have no fears for the future.
Change of subject: On Monday you announced the takeover of Starticket. Is Tamedia also going the way of Ringier and becoming an entertainment company?
No, 20 Minuten and Starticket have been offering tickets together since 2010 and work together to advertise events. In addition, probably no one in Switzerland concludes more media partnerships than our media. The investment in Starticket is therefore a logical next step, especially as Starticket is incredibly strong online with Print@home and we want to further expand our digital activities."
This may make sense from an entrepreneurial point of view, but won't the journalistic credibility of Ringier suffer?
No, our editorial teams will continue to report on all events that they find interesting. 20 Minuten reported extensively on the Rihanna concert in Zurich at the weekend, even though no one from our media group was a media partner. Anything else would be unreasonable. The customers of our editorial offices are the readers, not the ticket marketers.
Another comparison with Ringier: its online revenue share is 18 percent, and it increased by 29 percent in 2012. Why is it so much more at Ringier than at Tamedia?
I don't know Ringier's figures in detail. But in the short term, it's difficult to make a comparison. In addition, we don't primarily want to achieve higher sales, but more profit. What is clear, however, is that Ringier made a major investment in a leading Polish portal. That gave us a boost. In contrast, we closed activities such as Scoup.ch and sold Swissfriends. ch. In addition, the existing media, especially the news sites, did not develop in line with our expectations. The new acquisitions, on the other hand, will only have an impact on the result in 2013; we will grow massively. We also have a number of digital offerings that we cannot yet consolidate, but in which we will acquire a majority position in the coming years, such as Doodle.
Your online businesses are probably also more labor-intensive than Ringier's?
Yes, we operate several news sites, Ringier exclusively Blick.ch. But it is also clear that a news site will never achieve the margin of a classifieds site. But that shouldn't be the expectation either.
The commercialization of mobile use is a problem. But why is Tamedia suffering more here than Ringier, for example?
Because our mobile traffic is significantly higher than that of Ringier. At 20 Minuten, over 60 percent of hits are now mobile, so it has a greater impact if we don't achieve our goals for the commercialization of mobile use.
What is Tamedia doing?
Just as we set up online sales teams in the past, we are now also sending out special mobile sales teams: after all, a new form of advertising also requires different customer care. We have also carried out initial test cases with SBB and Migros to show that mobile advertising works. The results are very promising. Of course, we are still a long way from achieving the same level of commercialization as with desktop computers, but increases of 50 percent from a low level give us cause for hope.
Interview: Markus Knöpfli
