"P" continues to afford web advertising
Thanks to success with print advertisements, PubliGroupe can cope with online flops
Thanks to the success of print advertising, PubliGroupe is putting online flops behind itBy Christophe BüchiPubliGroupe ("P") is undeterred by the slump in the e-economy and is sticking to its Internet strategy. And the advertising business is running like clockwork. The outlook for the current year is excellent, explains "P" CEO Jean-Jacques Zaugg.
It is a well-known fact that the old generation has to lend a helping hand to the young and bail them out. And it is simply the case that the new economy, which was recently praised to the skies, now has to be supported by the old economy. The situation is very similar at PubliGroupe. Here it is the old business with press advertisements that leads to brilliant profits, which then make it possible to absorb setbacks in the online sector.
The group has set itself the target of generating half of its operating profit outside its core business, the Swiss press market, by 2004. But the activities combined in the PubliPresse sector still contributed CHF 326 million to consolidated gross profit last year (CHF 569 million) and an impressive CHF 1.98 billion to consolidated sales (CHF 2.7 billion).
Even though sales in the PubliOnline division almost tripled from CHF 105 million and profits almost quadrupled, it should be noted that this increase was only possible thanks to acquisitions, which resulted in considerable costs on the liabilities side. The new subsidiaries include the New York consulting firm Panoramic Communications, but also Real Media Inc., which was acquired last year and still caused some problems.
Real Media took off - and was born again
The group's net operating result fell by 40 percent to 51 million francs. This was largely due to the CHF 74 million required to restructure the online company Real Media, in which PubliGroupe acquired a majority stake last year. According to Zaugg, it had to be drastically restructured in 2000 after having previously pursued a forced growth strategy: "In the phase of the New Economy euphoria, companies only thought about gaining market share instead of thinking about profitability." However, Zaugg emphasizes that PubliGroupe had not yet exercised control over Real Media Inc. during that phase.
The best print media result in ten years
The "P" boss assures us that PubliGroupe has put things in order since the middle of last year and believes that Real Media will achieve financial equilibrium towards the end of this year. Zaugg answers our question as to whether PubliGroupe now effectively controls its new subsidiary in the affirmative. PubliGroupe now occupies three of the five seats on the Board of Directors and, with Walter Annasohn, also provides the Chairman of Real Media Inc. However, the former American majority owner Dave Morgan continues to act as Co-Chairman, but in reality he seems to function at most as a co-pilot.
Although the nosedive at Real Media has hit the books hard, there is also a positive side to the coin: the results of the traditional business areas have improved significantly. Print media advertising - doomed to death by certain advertising augurs - developed particularly positively. "We had the best result in the traditional advertising business in Switzerland for ten years," enthuses Ernst Grab, the Director responsible for print media. And it's not just job advertisements that are booming. Commercial advertising also recorded high growth figures (9.8 percent). And because the old core business is flourishing, the "P" is able to "digest" the other problems without any major stomach ache.
Commuter newspapers affect
Advertising business hardly
PubliGroupe management continues to believe in the Internet as an advertising medium and intends to stick to its online strategy, but doubts that the traditional advertising business will suffer significantly as a result. When asked whether new print media such as commuter newspapers will not cause traditional publishers - and therefore PubliGroupe as well - to worry, Ernst Grab is very relaxed: "Commuter newspapers may have had a negative impact on the sales figures of certain newspapers, but they hardly have any impact on the advertising business." And: "It's not at all certain that there will still be two commuter newspapers in German-speaking Switzerland in two years' time. Perhaps their shareholders will one day have enough to finance loss-making newspapers."
It is a well-known fact that the old generation has to lend a helping hand to the young and bail them out. And it is simply the case that the new economy, which was recently praised to the skies, now has to be supported by the old economy. The situation is very similar at PubliGroupe. Here it is the old business with press advertisements that leads to brilliant profits, which then make it possible to absorb setbacks in the online sector.
The group has set itself the target of generating half of its operating profit outside its core business, the Swiss press market, by 2004. But the activities combined in the PubliPresse sector still contributed CHF 326 million to consolidated gross profit last year (CHF 569 million) and an impressive CHF 1.98 billion to consolidated sales (CHF 2.7 billion).
Even though sales in the PubliOnline division almost tripled from CHF 105 million and profits almost quadrupled, it should be noted that this increase was only possible thanks to acquisitions, which resulted in considerable costs on the liabilities side. The new subsidiaries include the New York consulting firm Panoramic Communications, but also Real Media Inc., which was acquired last year and still caused some problems.
Real Media took off - and was born again
The group's net operating result fell by 40 percent to 51 million francs. This was largely due to the CHF 74 million required to restructure the online company Real Media, in which PubliGroupe acquired a majority stake last year. According to Zaugg, it had to be drastically restructured in 2000 after having previously pursued a forced growth strategy: "In the phase of the New Economy euphoria, companies only thought about gaining market share instead of thinking about profitability." However, Zaugg emphasizes that PubliGroupe had not yet exercised control over Real Media Inc. during that phase.
The best print media result in ten years
The "P" boss assures us that PubliGroupe has put things in order since the middle of last year and believes that Real Media will achieve financial equilibrium towards the end of this year. Zaugg answers our question as to whether PubliGroupe now effectively controls its new subsidiary in the affirmative. PubliGroupe now occupies three of the five seats on the Board of Directors and, with Walter Annasohn, also provides the Chairman of Real Media Inc. However, the former American majority owner Dave Morgan continues to act as Co-Chairman, but in reality he seems to function at most as a co-pilot.
Although the nosedive at Real Media has hit the books hard, there is also a positive side to the coin: the results of the traditional business areas have improved significantly. Print media advertising - doomed to death by certain advertising augurs - developed particularly positively. "We had the best result in the traditional advertising business in Switzerland for ten years," enthuses Ernst Grab, the Director responsible for print media. And it's not just job advertisements that are booming. Commercial advertising also recorded high growth figures (9.8 percent). And because the old core business is flourishing, the "P" is able to "digest" the other problems without any major stomach ache.
Commuter newspapers affect
Advertising business hardly
PubliGroupe management continues to believe in the Internet as an advertising medium and intends to stick to its online strategy, but doubts that the traditional advertising business will suffer significantly as a result. When asked whether new print media such as commuter newspapers will not cause traditional publishers - and therefore PubliGroupe as well - to worry, Ernst Grab is very relaxed: "Commuter newspapers may have had a negative impact on the sales figures of certain newspapers, but they hardly have any impact on the advertising business." And: "It's not at all certain that there will still be two commuter newspapers in German-speaking Switzerland in two years' time. Perhaps their shareholders will one day have enough to finance loss-making newspapers."
