Martin Kall's most cogent merger arguments
Hardly any media executive in this country is better able to bring home to the world the precarious situation facing Swiss media companies as clearly as Tamedia CEO Martin Kall.
At the press conference on the Swiss media deal of the decade, Martin Kall once again pulled out all the stops and explained in detail and eloquently why he believes the major merger of Edipresse Switzerland and Tamedia is essential for the two companies and their media. All his listeners were familiar with phrases such as "economic and structural crisis". Nevertheless, the Tamedia CEO was able to fill these often misused buzzwords with content and make it clear to even the most hardened of listeners how profound and, above all, irreversible the current change is.
He illustrated the cyclical moment with the Publicitas Index (Chart 28, see below), which has now been showing the development of commercial advertising expenditure in the daily press for over 15 years and had its starting point in December 1993. The long-term comparison clearly shows that the daily press generated 40 percent more advertising revenue in 2001 than at the starting point, then came the crash - below the 1993 level. "There was a small upturn in 2007 and 2008, but this has already disappeared again. We are already in the next crisis, even though we haven't had a real upturn yet," commented Kall. In nominal terms, the revenues of daily newspaper publishers are now 11 percent below the level of 1993, while inflation has cumulatively amounted to 15 percent in the same period. His conclusion: "Compared to then, newspapers today are missing a quarter of their revenues in real Swiss francs."
He illustrated the structural problem of daily newspapers using the job advertisements at the Tages-Anzeiger (Stellenanzieger and Alpha) (Chart 29, see below). Their page volume developed almost parallel to the curve of the Publicitas index, with a peak in 2000 (10,293 pages), a slump to 2,953 pages in 2003 and a small upswing in 2007 (4,310 pages). This was followed by another decline in 2008. The volume of jobs at the Tagi was therefore 58 percent lower at the peak in 2007 than at the peak in 2000. According to Kall, this shows the structural effect: most job advertisements ended up on the Internet.
Kall then turned to one of the publishers' failings: they have missed out on TV advertising revenues. Although these had grown by a gross CHF 800 million over the last 15 years, SRG had been able to grab 25 percent of this and Swiss private TVs only 10 percent. Kall: "The main profit was made by foreign advertising windows, but without any investment in journalistic content."
He does not want to turn back the clock. "The growth market of TV has already passed the Swiss media companies by," he says clearly. But publishers should not make the same mistake again in the online sector. "Online is the growth market of the future. This could be the last chance for Swiss media companies," said Kall. However, similar things are currently happening there as in the TV medium: foreign providers such as Google, Facebook or EBay are also spreading here - also without publishing services. According to Kall's estimate, Google raked in a good 20 percent of Swiss online advertising expenditure (total gross CHF 290 million) last year and generated a profit of around CHF 45 million with fewer than 25 employees (Chart 48, page 27). "This is where we see the danger for Swiss media companies: That we are not in a position to invest sufficiently, even though we are in competition with companies that represent a much larger unit, are active in many markets and can therefore cultivate our market in a completely different way." This is precisely why Edipresse and Tamedia decided to merge. "To be successful in this market, you need a larger unit and a national presence," said Kall.
He explained how he envisages this in concrete terms using the real estate platform Homegate, which Tamedia and Edipresse have been operating jointly since 2002. Since this cooperation across the language border, the number of properties that can be viewed there has tripled to 50,000 today. "This has given us courage, because it shows that we can hold our own against the competition," said Kall.
Tamedia and Edipresse are now hoping for a similar development with the recently merged dating platforms Swissfriends.ch and Partnerwinner.ch. And they have other "interesting positions on the Internet". For example, the news network News.ch, which could be extended to French-speaking Switzerland, the search portal Search.ch and sites in the job advertisements sector.
Nevertheless, the Tamedia CEO is not fooling himself: Tamedia/Edipresse is still miles away from market leadership in its home market in all these areas, with foreign providers leading the way everywhere (Chart 52, page 27). "We have to be quick to participate in the growth of the online market," said Kall. Once the merger has been approved, the company therefore intends to quickly establish new media and business areas on the Internet. With the declared aim of "generating at least 25 percent of annual profits from online activities from 2013".
Markus Knöpfli
He illustrated the cyclical moment with the Publicitas Index (Chart 28, see below), which has now been showing the development of commercial advertising expenditure in the daily press for over 15 years and had its starting point in December 1993. The long-term comparison clearly shows that the daily press generated 40 percent more advertising revenue in 2001 than at the starting point, then came the crash - below the 1993 level. "There was a small upturn in 2007 and 2008, but this has already disappeared again. We are already in the next crisis, even though we haven't had a real upturn yet," commented Kall. In nominal terms, the revenues of daily newspaper publishers are now 11 percent below the level of 1993, while inflation has cumulatively amounted to 15 percent in the same period. His conclusion: "Compared to then, newspapers today are missing a quarter of their revenues in real Swiss francs."
He illustrated the structural problem of daily newspapers using the job advertisements at the Tages-Anzeiger (Stellenanzieger and Alpha) (Chart 29, see below). Their page volume developed almost parallel to the curve of the Publicitas index, with a peak in 2000 (10,293 pages), a slump to 2,953 pages in 2003 and a small upswing in 2007 (4,310 pages). This was followed by another decline in 2008. The volume of jobs at the Tagi was therefore 58 percent lower at the peak in 2007 than at the peak in 2000. According to Kall, this shows the structural effect: most job advertisements ended up on the Internet.
Kall then turned to one of the publishers' failings: they have missed out on TV advertising revenues. Although these had grown by a gross CHF 800 million over the last 15 years, SRG had been able to grab 25 percent of this and Swiss private TVs only 10 percent. Kall: "The main profit was made by foreign advertising windows, but without any investment in journalistic content."
He does not want to turn back the clock. "The growth market of TV has already passed the Swiss media companies by," he says clearly. But publishers should not make the same mistake again in the online sector. "Online is the growth market of the future. This could be the last chance for Swiss media companies," said Kall. However, similar things are currently happening there as in the TV medium: foreign providers such as Google, Facebook or EBay are also spreading here - also without publishing services. According to Kall's estimate, Google raked in a good 20 percent of Swiss online advertising expenditure (total gross CHF 290 million) last year and generated a profit of around CHF 45 million with fewer than 25 employees (Chart 48, page 27). "This is where we see the danger for Swiss media companies: That we are not in a position to invest sufficiently, even though we are in competition with companies that represent a much larger unit, are active in many markets and can therefore cultivate our market in a completely different way." This is precisely why Edipresse and Tamedia decided to merge. "To be successful in this market, you need a larger unit and a national presence," said Kall.
He explained how he envisages this in concrete terms using the real estate platform Homegate, which Tamedia and Edipresse have been operating jointly since 2002. Since this cooperation across the language border, the number of properties that can be viewed there has tripled to 50,000 today. "This has given us courage, because it shows that we can hold our own against the competition," said Kall.
Tamedia and Edipresse are now hoping for a similar development with the recently merged dating platforms Swissfriends.ch and Partnerwinner.ch. And they have other "interesting positions on the Internet". For example, the news network News.ch, which could be extended to French-speaking Switzerland, the search portal Search.ch and sites in the job advertisements sector.
Nevertheless, the Tamedia CEO is not fooling himself: Tamedia/Edipresse is still miles away from market leadership in its home market in all these areas, with foreign providers leading the way everywhere (Chart 52, page 27). "We have to be quick to participate in the growth of the online market," said Kall. Once the merger has been approved, the company therefore intends to quickly establish new media and business areas on the Internet. With the declared aim of "generating at least 25 percent of annual profits from online activities from 2013".
Markus Knöpfli
