Axel Springer 2014 Case Study PDF

CASE: E-522
DATE: 06/20/14
AXEL SPRINGER IN 2014: STRATEGIC LEADERSHIP OF THE

DIGITAL MEDIA TRANSFORMATION
I will not tire in claiming our share in all existing electronic media and even more in all
information systems yet to come.
—Axel Springer, founder of Axel Springer (Quoted October 1978)
INTRODUCTION
In 2013, Mathias Döpfner, CEO of the publishing house Axel Springer SE, a premier source of
content in Germany, with its popular newspapers and magazines such as Bild and Die Welt, was
evaluating the progress of his company’s digital transformation. The advent of the digital
revolution at the end of the twentieth century had caused an appreciable shift in the publishing
industry. Traditional print media players were confronted with major technological
advancements and changes in consumer tastes and how news was consumed. Thus, the
challenge for Axel Springer was in finding fresh ways to distribute, monetize, and further
develop its old product. This had required the firm to re-evaluate and adapt its corporate strategy
to most effectively align with the new age.
Döpfner had directed Axel Springer to approach this task with a two-stage digital transformation
strategy process. Beginning in 2006, the company focused on organic growth and late-stage
digital acquisitions. This stage of the strategy process had centered around profitability and the
infusion of digitization into the corporate culture. In 2013, the second stage of the strategy
process was driven by Döpfner’s formulation of the firm’s corporate mission to become “The
Leading Digital Publisher” and his defining the company’s business as its branded content and
not its distribution channels. With this new strategy, Axel Springer intended to espouse early-
stage investments and entrepreneurship and grow revenue through three business models: paid
content, marketing, and classified advertising.
Jason Luther (MBA 2013), Robert A. Burgelman, Edmund W. Littlefield Professor of Management, and Robert E.
Siegel, Lecturer in Organizational Behavior, prepared this case as the basis for class discussion rather than to
illustrate either effective or ineffective handling of an administrative situation.
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Axel Springer in 2014: Strategic Leadership of the Digital Media Transformation E-522 p. 2
As of 2013, Döpfner’s two-stage digital transformation strategy had been a stunning success.
Axel Springer had more than 12,800 employees, total revenues of $3.9 billion, and EBITDA1 of
$625 million. The company had exceeded the goals it had set for digital media contributions to
revenue and EBITDA, achieved reach in 44 countries, and serviced 98 million unique digital
visitors worldwide.2
Looking forward in April 2014, however, it was clear that the future still held many challenges.
Döpfner knew that Axel Springer would need to continue to successfully balance digital and
traditional media business strategies, further reestablish the firm’s identity, and continue to
pioneer the cultural transition within the organization. Most importantly, he realized the urgency
of preparing his organization for the looming battle between digitally transforming old media
content providers (like Axel Springer) and new giant digital technology experts (like Google)
transforming themselves into media companies. He also pondered whether it would be possible,
and if so how, to mobilize a sufficiently powerful coalition to help the digitally transforming old
media content providers in that battle.
COMPANY HISTORY: INCEPTION UNTIL THE DIGITAL REVOLUTION
Axel Springer’s Founding and Imprint
Using only 200,000 Reichsmarks (approximately $887), publisher Hinrich Springer and his son
Axel Springer (“Axel”) founded Axel Springer Verlag GmbH (“Axel Springer”) in Hamburg,
Germany, in 1946. Prior to starting the company, Axel had built a career in the media industry,
first working for his father as an apprentice compositor and printer at his local newspaper
publisher and later acting as a reporter and journalist.
In his new role, Axel quickly developed the company’s presence and product offering. In 1946,
British occupiers granted Axel Springer a license to publish Nordwestdeutsche Hefte, a monthly
periodical comprised of transcripts of broadcasts from a popular radio station. This release was
immediately followed by the creation of the populist radio and later TV magazine Hörzu. Since
many Nordwestdeutsche Hefte subscribers were captured through radio broadcasting, Hörzu
served as a complementary offering, helping bolster listener numbers and fuel the periodical’s
growth.
Hörzu immediately became a popular household item and provided Axel Springer with capital
for expansion initiatives, including the introduction of the daily evening newspaper Hamburger
Abendblatt in 1948. Shortly thereafter, the company created the controversial daily tabloid Bild,
with its fusion of provocative pictures and articles about sex, crime, and celebrity gossip. In
1953, the firm acquired the publishing house Die Welt and its national daily and weekly
newspaper. By 1959, the company had purchased a majority stake in an additional newspaper
and book-publishing business, Ullstein GmbH, and had established itself as a major player in the
industry.
1
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.
2
Source: Axel Springer.
The Rise of a Political Influence
Along with Axel Springer’s control of media content and associated power of opinion making
came an influential presence in German politics. Axel had been an unwavering member of the
conservative social order, a staunch opponent to the East German government. Through this
interest, his company emerged as an anti-communist advocate of German reunification, voicing
through its newspapers the need for West Germany to respond to East German actions. Axel
Springer even went so far as to position its headquarters to overlook the demarcation line (which
later became the Berlin Wall in 1961) in the belief that the structure would act as a beacon of
freedom against an impending Soviet threat.
In 1967, the company furthered its clout by publicly announcing its four guiding principles: the
peaceful reunification of Germany; reconciliation of Germans and Jews and support for Israel;
rejection of totalitarianism or extremism; and support for a free social market economy.
Whereas the second and third views were widely accepted, the first was controversial and the
fourth was somewhat ironic. By 1964, Axel Springer’s control of market share of daily
newspapers, Sunday papers, magazines for young people, and radio and TV listings in Germany
had reached 40, 80, 45, and 48 percent, respectively.3
In the late 1960s and early 1970s, West Germany was in a state of unrest. Many, such as the
extra-parliamentary opposition, a left-wing group that opposed the conservative values that
dominated West Germany, viewed Axel Springer as an obstacle to a policy of détente with the
Eastern bloc. Specifically, its stance on unification contrasted with the common sentiment that
East and West Germany would forever be two separate states. This positioned the firm as a
symbol for the free West Germany and led to aggressive demonstrations of protest against the
company, including arson attacks and the bombing of its Hamburg headquarters in 1972.
Expanding its Strategic Position and Competencies
Beginning in 1976, Axel Springer broadened its reach to special interest groups with its targeted
magazines for women and its portfolio of sports, photography, and international art publications.
Auto Bild, an automobile magazine featuring reviews, how-tos and specific advice, began
circulating in Italy in 1986, later extending to 20 European countries, Indonesia, and Thailand.
By the mid-1980s, the company had a presence in satellite television, cable TV, and radio.
Axel Springer went public in August 1985 shortly before its founder’s death in September of the
same year. Upon his passing, the CEO transitioned the company’s responsibilities to several
existing supervisory board members and his fifth wife Friede Springer, who was never active in
the operating management, but is a member of the supervisory board. Over the next two
decades, the management team grew the firm’s positions in products ranging from Internet
access services and digital television to magazines and book publishing. The former was a result
3
“Axel Springer Verlag AG History,” Funding Universe, http://www.fundinguniverse.com/company-histories/axel-
springer-verlag-ag-history/ (accessed April 22, 2014).
of the advent of major technological and market changes in the media industry and the onset of
the Digital Age.4 (A timeline of Axel Springer from 1946-1986 is provided in Exhibit 1.)
THE DIGITAL REVOLUTION
At the end of the twentieth century, developed economies experienced a transition from analog,
mechanical, and electronic technologies derived from the Industrial Revolution to digital
technologies and information computerization. The evolution was triggered predominately by
the proliferation of personal computers, cellular phones, the Internet, broadband deployment, and
changing consumer tastes. This shift markedly affected media distribution strategies as it
became possible to remotely access information and display data across a myriad of different
mediums.
Key Driving Forces
Major Technological Change

Computers reached double-digit penetration in U.S. households during the 1980s and were
present in over one out of every three homes by 1997. This growth provided the framework for
the digital revolution and the structure upon which the Internet quickly spread during the late
1990s. Software applications such as Mosaic and Netscape Navigator became prominent and
increased usability by allowing consumers to retrieve, present, and traverse resources on the
platform. In 2001, over one-half of the U.S. used the Internet, and by 2005 it had reached over
one billion users globally. (See Exhibit 2 and Exhibit 3 for household computer penetration in
the U.S. from 1984-2012 and global Internet penetration from 1995-2014, respectively.)
This sensation was followed by the introduction of cellular phones and other mobile
technologies. Specifically, the development of the smartphone, which fused the functionality of
a cellular phone with the features of personal digital assistants, media players, digital cameras,
and navigation units, bolstered the appearance of media on digital platforms. One such device
was Apple’s iPhone, released in 2007, which quickly became a consumer staple. Apple
continued to play a pivotal role in the transformational impact technology had on the publishing
industry with the introduction of the “App Store” in 2008 and the iPad in 2010. Google’s
strategy of making the Android mobile operating system freely available also turbocharged the
development and adoption of smartphones. Over time, these devices became ubiquitous,
furthering the reach of digital platforms for content distribution. (See Exhibit 4 for global
device penetration of personal computers, smartphones, and tablets.)
Changes in How News Was Consumed

Technological changes brought a structural shift in how users consumed news. Beginning in the
late 1990s and in the early 2000s, consumers increasingly began getting news from free online
sites such as cnn.com and abcnews.com in the United States, as well as popular international
sources such as FT.com. As the decade ended and the 2010s started, mobile devices became
increasingly important for consuming media. Applications such as Flipboard, Prismatic, and
4
The Digital Age was a period beginning in the late twentieth century characterized by the rise of computerization
and information-based industries.
Zite provided one-stop, dynamic, and colorful digital interfaces to read traditional, newsstand-
style magazines on phones and tablets. As these applications evolved, some could integrate with
a user’s preferences and social media profiles to develop recommendation engines and
personalize the reading experience. Many offerings enabled a user to share stories, follow what
their friends were reading, and track articles from certain writers.
Market and Consumer Taste Changes

The speed with which the new world worked meant consumers required news headlines that
were concise and contained only the necessary information. Users also wanted interactive tools
to customize or manipulate online content, such as charts or graphs, to arrive at the information
they felt was most relevant. With the growing popularity of Facebook, Twitter, Linkedin, and
other online forums, news became a communal experience, allowing readers to comment on
articles and discuss the news content delivered in a publication. Consumers thus became
participating parties in the process of online news creation and distribution.
Effect on the Publishing Industry
Technology had hit the publishing industry far earlier than the 2000s. Ulrich Schmitz, CTO of
Axel Springer’s Electronic Media Division elaborated:
When you talk to those in the print industry, they will say that there were a lot of
technological changes in the 1980s and 1990s that had an impact more on the
process and less on the product side. Now, it’s different. Everything from the
business model to the product itself has been touched by digitization. So the
digital product looks different than the classical product. I don’t know how many
other industries can say that they have been affected in such a dramatic way.5
Prior to the digital revolution, the majority of publishers operated under the same business
model. These companies generated editorial content, aggregated reach, and monetized through
sales, advertising, and classified revenues. In this scheme, journalists had an unspoken
monopoly on content creation, but that changed with the onset of the Internet. Websites like
Wikipedia, which aggregated user-generated content and provided a broader offering than
traditional publishing did, gained traction. One-click buying technology similar to that used by
Apple’s iTunes also made online media monetization more realistic.
Moreover, in the old model content creators controlled their distribution channels. With the
proliferation of the digital revolution, these two functions diverged, as old world publishers and
newly formed online distributers now often held opposing interests. This, in turn, created an
Internet environment fraught with free content and disconnects between those actually creating
content and those receiving payment for the products and services.
Websites like the Huffington Post could aggregate and monetize news stories produced by other
publications without having to source the information themselves. Other offerings, such as
5
Interview with Ulrich Schmitz, April 15, 2014. Subsequent quotations are from the authors’ interview unless
otherwise noted.
YouTube, could use clips from TV shows, movies, and other media to generate profits. Large
technology giants, such as Google and Apple, helped users find news platforms that were once
monopolized by the old world publishers. Ironically, this period of creative destruction meant
that while the Internet expanded the available audience for media and branded content, it
severally hampered the overall market for its monetization. Thus, the new challenge for a
publisher was in finding new ways to distribute and profit from its old product. (See Exhibits 5
and 6 for the publishing industry’s business model before and after the digital revolution.)
Industry Responses
The steady decline in paper media viewership and its associated drop in advertising revenue in
the first decade of the twenty-first century was felt industry-wide. Some print publishers were
forced out of their print operations business while others, such as the Tribune Company, the
Philadelphia Daily News, the Chicago Sun-Times, and The Columbian newspaper in Vancouver
filed for bankruptcy. In an attempt to survive in the changing environment, many newspapers
conducted layoffs, partnered with other papers, discontinued features or sections, or reduced
circulation to only the publication’s more popular days of the week.
To maintain its print subscriber base, some publications, like The Los Angeles Times, offered
free or discounted digital access to those who had subscriptions to its print circulation. While
these efforts helped stymie some of the profit erosion from reduced print frequency, advertising
revenue from digital failed to cover the associated losses from print (see Exhibit 7). This
created revenue challenges for every player in the industry.
One prestigious publishing house laid waste by the digital revolution was the New York Times.
In 2000, the company had revenues of $3.5 billion and operating profits of $635 million. By
2013, these figures had reduced to $1.6 billion and $158 million, respectively. Much of this
demise was due to management’s failure to embrace the changing landscape and insistence on
continued investment in print. Between the early 1990s and mid-2000s, the company spent
approximately $2 billion on assets that ultimately resulted in failure. For example, the publisher
purchased the Boston Globe for $1.1 billion in 1993 and the Worcester Telegram for $296
million in 1999, later unloading them both for a total of $70 million in 2013.
Another company that faced the pressures of the evolving landscape was the multinational mass
media company News Corporation (“News Corp.”). Unlike smaller, less well-capitalized firms,
News Corp. was able to weather this shift by implementing an inorganic digital transformation
strategy. In particular, News Corp. bolstered its portfolio in 2007 with the purchase of The Wall
Street Journal’s publishing firm Dow Jones & Company. Subsequently, the company
transitioned its 20th Century Fox and Fox News channels to a subscription based model. Like
many other publishers, News Corp also moved its newspaper websites, including The Times and
The Australian behind pay walls in 2010 and 2011, respectively. By February 2013, The Times
and Sunday Times had 153,000 digital subscribers paying between $3.33 and $10 per week.6
6
Ryan Chittum, “Murdoch’s Hard-Paywall Success,” Columbia Journalism Review,
http://www.cjr.org/the_audit/murdochs_hard-paywall_success.ph (accessed May 20, 2014).
In 2013, News Corp. continued to use acquisitions to fuel its shift into digital services by
purchasing the Dublin-based startup Storyful for $25 million. This company helped content
distributors detect trends and source, verify, and distribute news content by monitoring social
media platforms such as Twitter.7
The South African media company Naspers also found ways to thrive during this challenging
time. In the early 1980s, the firm began its transformation to digital with its creation of the
subscription television service M-Net. This was followed by an initiative to become one of
South Africa’s earliest Internet service providers. Naspers acquired a myriad of web-based
companies, predominately in fast-growing economies, including a $32 million purchase of
approximately 50 percent of China’s most popular Internet messaging service Tencent. By 2014,
the firm held stakes in online auction businesses, price comparison sites, and e-commerce firms
and, with revenues of $6 billion and a market capitalization of approximately $47 billion, was
the largest Internet company outside the U.S. and China.
A LIGHTHOUSE OF CHANGE: MATHIAS DÖPFNER
Mathias Döpfner became Chairman and CEO of Axel Springer in January 2002, having
previously worked as the editor-in-chief of Wochenpost, Hamburger Morgenpost, and Die Welt.
At age 39, Döpfner’s appointment was controversial. He was considered by some to be too
young and many thought that his background in Musicology and German and Theatrical Arts
made him ill-equipped for the position. Moreover, within the last decade, Axel Springer’s
executive board had been a proverbial turnstile of talent, and the market viewed Döpfner as one
of many executives to begin yet another temporary stay in power.
This earlier period of steady executive turnover resulted in ever-changing and unclear strategies
within the organization. Each entering director or executive brought a new voice, managerial
style, and vision for Axel Springer. Döpfner vowed to break this trend and give the organization
a single identity and clear purpose. From the beginning, his message was clear: Axel Springer
would be the winner of digitalization in the European media business.
Döpfner Eyes Online Channels
In January 2006, Axel Springer attempted to acquire Germany’s biggest television broadcaster,
ProSiebenSat.1 for a reported $3 billion.8 Soon thereafter, the German antitrust body blocked
the transaction, claiming that the combination would afford Axel Springer with too much market
control and power over public opinion. This led management to reconsider its digital strategy
and turbocharged its need to find other avenues to distribute its content. Döpfner turned his
sights to online channels, challenging the company to have 50 percent of its revenue and
EBITDA generated from digital products within the next 10 years. These were bold statements
7
Amol Sharma and Ben Fox Rubin, “News Corp Makes Social-Media Push,” The Wall Street Journal, December
20, 2013, http://online.wsj.com/news/articles/SB10001424052702304866904579270043818215428 (accessed May
20, 2014).
8
“Axel Springer Merger Rejected in Germany,” The New York Times, January 23, 2006,
http://www.nytimes.com/2006/01/23/business/worldbusiness/23iht-springer.html (accessed April 30, 2014).
from the leader of a very much internally-focused organization that, at the time, produced one
percent of its revenues from digital media.
Three Key Success Factors
To develop a strategy and execute on his vision, Döpfner relied on a close-knit team of internal
executives who knew Axel Springer’s business by heart. Since these executives would
eventually be the change agents within the organization, the CEO believed that this approach
would create a streamlined decision-making and implementation process. Moreover, Döpfner
believed that Axel Springer should only follow a strategy of digital activities within a framework
of the business’ three core competencies: creating the best possible journalism and capturing
subscribers; knowing how to turn brands and reach into advertising; and monetizing the
classifieds marketplace.
In carrying out this plan, Döpfner focused on three key success factors: not fearing self-
cannibalization from the paper to digital divisions, accepting diverse and entrepreneurial
personalities, and not allowing silos. In regard to the latter, Döpfner wanted to ensure that digital
activities would not be done at distance from the company’s traditional print functions. He
believed that if he allowed that dynamic to occur, it would create losers and winners within the
organization. The CEO explained:
The problem at the beginning was that the structure of the organization was
around 90 percent losers (i.e., print) and around ten percent winners (i.e., digital).
Thus, the losers were positioned to reject and overpower the transformation
simply because there were more of them. So I said: “We have to create joint
responsibilities to induce buy in from the print side.”9
In one of his first crucial decisions, Döpfner assigned Kai Diekmann, editor-in-chief of Axel
Springer’s print Bild division, to oversee both the online and offline distribution channels.
FIRST STAGE OF STRATEGIC DIGITAL OVERHAUL: 2006-2012
Integrating Bild and Bild.de
Bild had been one of Axel Springer’s most important and controversial brands since its inception
in 1952. With its fusion of provocative pictures and articles about sex, crime, and celebrity
gossip, the publication quickly became Europe’s best selling tabloid. By 1985, the newspaper
had reached a daily circulation of five million and readership of over 12 million.10 This
consistent success led to a series of sub-offerings under the parent product line, including the
magazine brand family Bild der Frau and Auto Bild, the Sunday newspaper Bild am Sonntag, the
9
Interview with Mathias Döpfner, April 16, 2014. Subsequent quotations are from the authors’ interview unless
otherwise noted.
10
William Tuohy, “Paper Keeps It Lively: Germany’s Bild Feared, Attacked,” LA Times, November 19, 1985,
http://articles.latimes.com/1985-11-19/news/mn-7491_1_west-germany (accessed April 28, 2014).
mobile news portal Bildmobil, and the online news portal Bild.de. Each of these channels was
the market leader in its space in Germany as of 2014.
Prior to 2008, Bild’s offline (Bild) and online (Bild.de) segments were separate and distinct.
Bild.de was a joint venture between Axel Springer and Deutsche Telekom, with the companies
owning approximately two-thirds and one-third of the enterprise, respectively. Much to the
displeasure of Bild’s editor-in-chief, this meant that the offline division had little influence over
the content placed on Bild.de. At the time, Bild.de was heavily used for commercialization and
had little reach in the consumer content space.
Axel Springer’s management intentionally designed Bild.de’s growth in this manner. The
premise was that for over 50 years Bild had become accustomed to a legacy print product and the
immediate injection of a digital presence would be too much of a shock to the system. Donata
Hopfen, managing director of Bild explains:
I’m often asked the question: “How did Bild become so successful?” The answer
is that we built a subsidiary under the core brand that was set aside and had
different corporate rules. When launched, Bild.de even had its own telephone
numbers and buildings. This gave it the chance to cultivate its own DNA and
independent corporate culture and resulted in it attracting new and younger talent.
Once successful, Bild.de was moved back to Axel Springer/Bild headquarters and
was integrated into the core brand.11
In 2007, management agreed to purchase Bild.de and in 2008 the online firm became 100
percent owned by Axel Springer. Going forward, Döpfner believed that the best way to promote
digitalization within the organization would be to organize all areas (content, brands, services,
etc) in such a way that managers had multimedia responsibility. By assigning Kai Diekmann,
the editor-in-chief of Bild’s paper division, to both the offline and online distribution channels,
the direction and attitude changed from the top. This editor now claimed digital growth as his
success and did everything he could in the paper version of Bild to push its accompanying digital
content. By December 2009, Bild.de had become the market leader by reach.
Idealo: The Initial Investment in the Digital Transformation Strategy
Between 2006 and 2012, Axel Springer’s business model centered around profitability and the
infusion of digitization into the corporate culture. Recognizing that the company’s strength was
in content and not technology, Döpfner intended to achieve this vision through organic growth
and late-stage investments. The CEO’s aim was not to assume complete control of these digital
entities, but rather to provide them with a toolbox of resources, such as content, cross promotion,
technology, advertising, capital for acquisitions, and an international sales infrastructure and
allow them to choose which ones to use to meet their needs. (Axel Springer’s corporate strategy
from 2001-2013 is provided in Exhibit 8.)
11
Interview with Donata Hopfen, April 17, 2014. Subsequent quotations are from the authors’ interview unless
otherwise noted.
Axel Springer executed its first investment in the digital industry by acquiring a 74.9 percent
stake in the online price comparison platform Idealo in 2006. At the time, the company had 22
full-time employees, achieved €8 million per year in revenue, and held the number five position
in its space. The platform supported over 100,000 products and more than 4,300 dealers. Under
the arrangement, the company’s founders would retain ownership in the organization.
Idealo would be the company’s first attempt at infusing a new mentality within the traditional
publisher and represented an important milestone in the firm’s transformation. Döpfner knew
that for his digitalization vision to materialize, it was crucial that this initiative be successful.
Many at Axel Springer had yet to buy-in to the CEO’s change initiative and these initial moves
must be champions of the culture Döpfner wanted prevalent in the organization.
Navigating the Shrinking Offline Classifieds Market
One of the first industry disruptions was in the classified ads’ space, where papers began losing
market share to digital providers. With Internet ads, users could upload pictures and dynamically
refresh their listings and advertisers could track in real-time the returns on their investments.
Axel Springer, however, vowed to remain active in this market due to its predictability and high
margins. Since the key to maintaining market share was contingent primarily upon strong
resources and local sales channels, incumbent firms could often defend their positions.
Axel Springer’s digital classifieds initiatives were initially met with much infighting. The offline
version charged more per advertisement than the online version did and customers consequently
dumped the paper product in favor of its digital counterpart. Jens Müffelmann, head of Axel
Springer’s Electronic Media Division commented:
At that time we had the organization against us. When we started the classifieds
transformation, we earned €50 per real estate advertisement and were trying to
supplant that with €6 per advertisement on the online offering. We would tell real
estate agents: “look, you can get the same advertisement for one-tenth of the price
with the digital version.” The print department was incredibly resentful of this
self-cannibalization and it created fierce battles within the firm. Fortunately,
Döpfner spearheaded the process and helped the movement push forward.12
In March 2012, Axel Springer created a joint venture with the global private equity firm General
Atlantic LLC in an effort to develop the company’s classifieds segment into a leading
international player. This new venture would hold Axel Springer’s digital classifieds business,
including its French real estate portal SeLoger, German real estate portal Immonet, and the pan-
European job portal StepStone. The resulting entity would be called Axel Springer Digital
Classifieds, of which Axel Springer would own 70 percent. Through this arrangement, Axel
Springer intended to leverage General Atlantic as a co-investor and experienced global investor.
12
Interview with Jens Müffelmann, April 15, 2014. Subsequent quotations are from the authors’ interview unless
otherwise noted.
Aligning Strategy and Human Capital
One result of the acquisition strategy was a cultural clash from the integration of two disparate
groups of people: the old school paper publishers and the new generation digital entrepreneurs.
The traditional publishing business was extremely fast-paced and efficient but highly inflexible.
Over decades, this segment had developed a set of procedures, systems, and processes to
optimize the development of a single, paper product every day. Thus, the key challenge for a
leader in the industry was to manage to the status quo. With the digital transformation, this
group was faced with re-inventing itself in terms of products and development cycles. Managers
needed to be more dynamic, agile, and accepting of product changes, an environment that was
completely new to legacy Axel Springer employees.
The mentality ingrained in a digital company was quite the opposite. Management in these firms
wanted autonomy and different management styles, working environments, and ways of
communication. This new world tended to be far less hierarchical and much younger in age than
its old-world counterparts. Thus, inciting knowledge transfer and cohesiveness between the two
mindsets in the organization was extremely difficult. If it were not careful, Axel Springer would
become a schizophrenic organization.
Shaping the Mindsets of Legacy Employees

One way in which Axel Springer attempted to bridge this gap was by helping legacy employees
develop, refocus, and build the competencies needed in the new world. The company began by
implementing new leadership principles that laid the framework for what it expected from its
managers. These new principles included focusing on the employee, providing freedom for staff
to develop and shape new ideas, and opening to change.
Axel Springer ran over 50 workshops, with each manager in the company participating in at least
one course focused on skills development. The firm implemented a mandatory three-day
program for top-tier management. Putting these initiatives in front of all management levels,
including central functions such as human resources, controlling, and legal, helped send a strong
signal to the organization and triggered momentum within the leadership ranks. The executive
team also implemented feedback programs in which managers asked their direct reports for
assessments on their leadership styles and areas of improvement.
Hiring into the Digital Culture

Another way of ingraining the digital mentality into the heritage culture was to hire young,
Internet-minded talent into the organization. For example, one symbolic new hire was Stephanie
Caspar, the managing director of Die Welt. Before she was brought into Axel Springer, she had
founded and managed an online shoe shop. Unlike her predecessor, who was a prototypical print
manager, she had no newspaper or media industry experience.
Promoting Knowledge Transfer

Facilitating knowledge transfer was an additional way of bridging the gap between the two
factions. Axel Springer organized networking events and lecture series, such as “Digital
Campus,” where all of the firm’s digital companies would present themselves to anyone
interested in attending. These were often one or two hour talks in the evening and were usually
attended by over one hundred employees.
SILICON VALLEY: A CATALYST FOR FURTHER REFINING STRATEGIC LEADERSHIP
In May 2012, Döpfner approached Kai Diekmann, editor-in-chief of Axel Springer’s most
important brand, Bild. The CEO had become intrigued with the U.S.’ Silicon Valley and how it
consistently groomed high-functioning and successful organizations. Wanting to know why the
region was such an effective incubator for achievement, Döpfner asked Diekmann to accompany
Peter Würtenberger, CMO of Axel Springer, and Martin Sinner, founder and managing director
of Idealo, on a fact-finding mission to the area to develop new entrepreneurial ideas for digital
growth. In their absences, each manager’s day-to-day responsibilities would be undertaken by
co-managing directors or direct reports. A minimum period of six months was set for the visit.
Initial Findings
The trio arrived in Silicon Valley in September 2012 and immediately began building
relationships with and learning from thought leaders. They focused on understanding the
technologies, trends, cultures, and conditions that made innovation in companies possible. They
found that professionals in the region viewed risk taking and failure differently than those in
Germany did and that entrepreneurs embraced technology, rather than feared it. They were also
introduced to less hierarchical start-up cultures with more fluid communications, and that were
trying to avoid creating the decision hurdles prevalent in bulky, bureaucratic, and traditional
corporations.
Moreover, they realized that media technology in Silicon Valley was two to three years ahead of
that in Germany and that the publishing industry was moving toward digital faster than the
company had expected. Knowing that Axel Springer must press ahead with digitization more
vigorously, the team sought to convince management that a business model change was needed
and, in effect, shatter the confidence of the company that it would be able to maintain the status
quo and succeed. Döpfner aimed to achieve this through a three-day management summit hosted
in Silicon Valley and attended by over 70 top executives of the company. Kai Diekmann, editor-
in-chief of Bild, commented:
After experiencing Silicon Valley’s start-up culture, hierarchies, streamlined

forms of communication, and modest corporate behavior, we realized we needed
to give the summit a motto—“Leaving the Comfort Zone.” Everyone, including
the complete executive board, flew to the U.S. in economy class and we lodged
employees in the less ritzy Tenderloin district in San Francisco. In the beginning
there was much protest, but after better understanding Silicon Valley’s publishing
industry, people understood the need for the reality check. Axel Springer’s
current business model would not survive what the future held.13
13
Interview with Kai Diekmann, April 15, 2014. Subsequent quotations are from the authors’ interview unless
otherwise noted.
Ten months after embarking on their trip, the team returned to Germany, ready to transition Axel
Springer from a traditional publisher into a thriving ecosystem of entrepreneurship.
SECOND STAGE OF STRATEGIC DIGITAL OVERHAUL: 2013-BEYOND
In crafting this second stage of digital growth, Döpfner, as noted before, formulated Axel
Springer’s corporate mission to become “The Leading Digital Publisher” and defined the
company’s business as its branded content and not its distribution channels. He also wanted to
expand the focus of Axel Springer on early-stage investments and entrepreneurship, and generate
revenue through three business models: paid content, marketing, and classified advertising. (See
Exhibit 9 for Axel Springer’s new strategy.)
Another Try at Early-Stage Investing
Beginning in 2011, the company adopted a three-stage approach to early-stage investing and
business development: build, acquire, or partner. One driver of this interest was a desire to
imbue the firm’s culture with innovation by providing visibility into up-and-coming trends and
entrepreneurial cultures. The executive team knew that aside from the industry’s transition to
digital, they needed to stay apprised of how other online companies, start-ups, and new concepts
could disrupt Axel Springer’s business model in the future.
Building into Paid Models: Bild Plus

Many of the firm’s early-stage investments were in internal initiatives arising from existing
divisions within the organization. For example, until 2013 Bild.de was free. Several months
earlier, the firm had decided to purchase a four-year contract for the online rights to the 90-
second to six-minute highlight clips for each game in the Bundesliga.14 Using this as a starting
point in June 2013, Bild introduced Bild Plus, which allowed consumers to access certain content
(such as the highlight clips) for a subscription fee ranging from €4.99 to €14.99 per month.
Whereas some were concerned about the trade-off between product reach and a digital pay
model, the offering achieved excellent results. By May 2014, Bild Plus had over 200,000 paying
consumers and had converted 1.1 percent15 of free online users into paying subscribers. Since
Bild Plus included both Bild’s print and online components, another advantage of this strategy
was to expunge the idea of online versus print in the organization. Axel Springer was therefore
able to rally the entire team behind the idea of paid content. (Bild’s history is provided in
Exhibit 10.)
Acquiring Complementary Offerings: kaufDA

In March 2011, Axel Springer purchased a 74.9 percent interest in kaufDA, a website that
enabled users to search for coupon and promotion deals in their immediate area. This offering
provided a simple to use central marketplace for retail shopping and helped replace the need for
cumbersome promotional print catalogues. Retailers also heavily favored kaufDA’s cost per
14
The Bundesliga was the premier professional soccer league in Germany and was one of the most highly regarded
and most popular leagues worldwide.
15
For context, the NY Times conversion rate was roughly 0.7 percent. Source: Axel Springer.
click revenue scheme. Since companies theoretically paid only for marketing to those likely to
make a purchase, they were more effectively utilizing their advertising spend. This was
preferable to print advertising, where it was much more difficult to associate advertising to sales.
Part of Axel Springer’s allure to kaufDA was the acquirer’s focus on allowing its partners to
retain their autonomy. Axel Springer trusted its entrepreneurs to have the best execution and
strategic mindset to develop their businesses further and made sure not to disrupt the culture and
dynamic that made the startups successful in the first place. This was present in Axel Springer’s
insistence that the founding team remain shareholders in its company. Moreover, as part of the
acquisition agreement, kaufDA retained full control over its sales and marketing functions.
In addition, Axel Springer’s relationships, Bild brand, and history of trust and credibility
provided kaufDA with access to retailers that were previously unobtainable. Reflecting on this
value add, 28-year-old Christian Gaiser, CEO of kaufDA, said:
The first thing we made sure to do as part of the acquisition was meet the person
in charge of all of Axel Springer’s retail accounts, Peter Müller. Müller had been
doing this for over 20 years, had a vast revenue pipeline, and was one of the last
traditional and well-connected salespeople in Germany. Immediately, we got him
involved as an advisor. Because of his top access with high-level retailers he
opened doors for us that were previously closed.16
Axel Springer could also provide strong advice on international expansion by mentoring the
young company on areas such as recruiting, building partnerships, and understanding local
cultures. Perhaps the biggest benefit for kaufDA was in learning how the internal decision-
making processes in large organizations worked and how best to navigate it to reach those with
the power and influence to make purchasing decisions. Axel Springer often helped the start-up
process its workflow and shielded it from uninteresting leads that could potentially overrun the
young organization. This helped kaufDA leverage upside while limiting downside.
Partnering to Meet Innovation: Axel Springer Plug and Play

In 2013, Axel Springer partnered with “Plug and Play Tech Center” in Sunnyvale, California, to
create a Berlin-based accelerator for digital entrepreneurs called Axel Springer Plug and Play.
The three-month program provided office space, €25,000, networking with Axel Springer and
Plug and Play Tech Center leadership, workshops, and mentor opportunities. Axel Springer Plug
and Play ran three programs per year.
This initiative provided Axel Springer with insights into new technologies, connections with up-
and-coming talent, and interesting investment opportunities. Plug and Play created an
environment where start-up CEOs and Axel Springer executives learned from each other and
worked together side by side. This was crucial for refreshing the mindsets of Axel Springer’s
managers. Jörg Rheinboldt, CEO of Axel Springer Plug and Play, explained:
16
Interview with Christian Gaiser, April 16, 2014. Subsequent quotations are from the authors’ interview unless
otherwise noted.
It’s important for Axel Springer to be “infected” by the attitude of how start-ups
make decisions. On a weekly basis these young companies make consequential,
binding choices that, if they are wrong, have a lasting impact on the company’s
future success. A larger company like ours rarely faces these nodes where you
really learn how accountability and responsibility work. This initiative helps us
be aware of our degrees of freedom.17
Optimizing Bild’s Workflow
Perhaps the most important decision to ensuring success as a digital brand was the changing of
Bild’s workflow structure. The company began this process by inviting employees from Bild’s
management team to visit Silicon Valley to take the time to understand Diekmann,
Würtenberger, and Sinner’s findings and create a process for change management. Like the
travelers before them, this group quickly realized that the audience on the paper side was
declining and that the younger generations were met through digital platforms and not through
local magazine kiosks.
Prior to 2013, Bild was governed by a “top-down” process. The editor-in-chief of Bild decided
the content of all of the publication’s pages to ensure that the reading was fluid and conveyed a
consistent tone. This practice no longer applied to the online media realm, where stories were
written as they happened and daily or weekly deadlines were obsolete. To resolve this issue,
Bild instituted a “bottom-up” process. Every department within the organization became a mini-
publishing unit responsible for its own social media, content, and paper design. As a result,
Diekmann was further removed from the decision-making process and the editors-in-chief of
each division became directly responsibility for their divisions’ business lines.
Selling Off Legacy Assets
In July 2013, Axel Springer announced that it had sold several of its strongest traditional print
media products to the German media group Funke Mediengruppe. The transaction included the
newspaper Hamburger Abendblatt, the television program guide, Hörzu, and the Berliner
Morgenpost. This portfolio generated revenues of €512.4 million and accounted for 15 percent
of the company’s total sales in 2012. Axel Springer would receive €920 million ($1.2 billion)
for the divestiture, equating to a sales multiple of roughly 10 times EBITDA.18 Döpfner
intended to use these proceeds to invest in its digital publications, including its efforts to help
strengthen the online presence of its two main publications, Bild and Die Welt.
Selling off heritage assets was received with mixed reviews by the market, with some accusing
Döpfner of betraying Axel Springer’s roots in journalism and its longstanding legacy. Even
within the organization, employees were concerned that this action conveyed indifference toward
17
Interview with Jörg Rheinboldt, April 16, 2014. Subsequent quotations are from the authors’ interview unless
otherwise noted.
18
Robert Budden, “Axel Springer Shares Climb 17% After Regional Titles Disposal,” Financial Times, July 25,
2013, http://www.ft.com/intl/cms/s/0/9008d4ee-f54c-11e2-b4f8-00144feabdc0.html#axzz30WrtOioa (accessed
April 30, 2014).
staff and directly opposed the founder’s vision. The heiress of the media company, Friede
Springer, disagreed, publicly stating that “The old has passed away” and that the publisher
needed to evolve in order not to lose its economic strength.19
EVALUATING THE CHALLENGES OF THE FUTURE
As of 2013, the company had exceeded the goals Döpfner had set out a decade earlier as digital
media contributed 70 percent of the company’s advertising revenue and 61.8 percent of its
EBITDA. Axel Springer’s reach had also grown to support activities in 44 countries and service
98 million unique digital visitors. (See Exhibit 11, Exhibit 12, and Exhibit 13 for Axel
Springer’s segment revenues, EBITDA, and digital portfolio by business line, respectively.) 20
Regardless of this success, Döpfner could not afford to rest on his laurels. The CEO commented:
In business, I work under the rule of only the paranoid survive. I try to take into
account the things that can go terribly wrong to avoid negative surprises. To do
this, I have this kind of self-criticism. I have this constant impatience, insecurity,
and need to question if everything is right. In a way, I think this keeps me down
to earth and exacting; because if you are too self-confident, you lose preciseness.
Operating under this mentality, Döpfner saw several challenges in Axel Springer’s future.
Old Media Content vs. New Media Technology Experts
In August 2013, Amazon.com purchased The Washington Post Company for $250 million.
Döpfner believed that this event delineated the battle lines in a new fight between two players in
branded content: old media content and new media technology experts. Those in the first group
wanted to discover new technology and enter into new platforms to be successful in the digital
world. The latter group, comprised of companies such as Amazon.com, Apple, and Google,
sought to become digital content distributers and had the digital infrastructure in place to do so.
Fighting for Fair Search and Fair Share

Döpfner feared that Axel Springer would ultimately compete with the free-content culture
created by these large technology companies. Whereas he believed that branded content would
never lose its appeal to society, he acknowledged that monetizing it in an evolving landscape
might be difficult and that this would pose a complex structural challenge for the media industry.
The CEO was especially concerned about Google and its tremendous global power and
dominance over the digital world. In April 2014, Döpfner issued a written answer in the
Frankfurter Allgemeine Zeitung21 to Eric Schmidt, Google’s executive chairman, in response to
19
Inge Kloepfer, “The Control Activist Friede Springer” Frankfurter Allgemeine Zeitung, July 28, 2013,
http://www.faz.net/aktuell/wirtschaft/menschen-wirtschaft/zukunft-der-zeitung-die-controllerin-friede-springer-
12308032-p3.html?printPagedArticle=true#pageIndex_3 (accessed May 10, 2014; publication is in Germany).
20
Axel Springer.
21
A national German newspaper.
an earlier published article by Schmidt in which Axel Springer was directly addressed. In the
writing, Döpfner admits Axel Springer’s total dependence upon—and fear of—the Silicon Valley
juggernaut. He explained:
We need to ask ourselves whether competition can generally still function in the
digital age if data are so extensively concentrated in the hands of one party...And
this is precisely the reason why we now need to have this discussion in the
interests of the long-term integrity of the digital economy’s ecosystem. This
applies to competition, not only economic, but also political. It concerns our
values, our understanding of the nature of humanity, our worldwide social order
and, from our own perspective, the future of Europe.22
Döpfner continued by asking Schmidt to act as a positive representative for the change he
thought was needed to preserve the European digital economy. Axel Springer was a large firm
by publishing standards, but was small relative to Google and other well-established technology
companies from the U.S. and abroad (see Exhibit 14 for revenue numbers for several of these
organizations). Thus, this would no doubt be the first of many actions the publisher would need
to take to compete and survive in the digital landscape.
Staying Up-To-Date With Consumer Tastes
Another question the Axel Springer team needed to ask itself was: Is the company producing the
content the consumer wanted? Frank Schmiechen, deputy editor-in-chief of Die Welt, explained:
Should Axel Springer provide the content people want or what the company
thinks is still relevant? This is the most important question a journalist addresses
nowadays, and I’m not quite sure how it should be answered. For example, one
of our deputy editors loves Porsches and started a car blog. After several weeks
his blog is something like top 25 in Germany. It seems that he’s gathering more
attention through this channel than we could through some of our departments.
As a company we need to evaluate why this is happening.23
Sections such as politics, the economy, and sports were established as the best ways for
publications like Die Welt to describe the modern world; but was this the best way to describe
the modern, post-digital revolution era? Popular topics were changing and the younger
generation was responding to peer blogs and websites like Buzzfeed. How was Axel Springer
going to adapt to these trends?
22
Mathias Döpfner, “An Open Letter to Eric Schmidt: Why We Fear Google”, Frankfurter Allgemeine Zeitung,
April 17, 2013, http://www.faz.net/aktuell/feuilleton/debatten/mathias-doepfner-s-open-letter-to-eric-schmidt-
12900860-p4.html?printPagedArticle=true#pageIndex_4 (accessed May 10, 2014).
23
Interview with Frank Schmiechen, April 16, 2014. Subsequent quotations are from the authors’ interview unless
otherwise noted.
Pioneering the Cultural Mindshift
As of 2014, Axel Springer was still in the process of installing the print to digital mentality. The
firm had tried to supplant the polarizing idea of offline versus online with a focus on the stories
themselves. This had proven difficult for those grasping to the legacy habits of the organization
and viewing the product in terms of print headlines, pages, and photos. The digital world
required consistently updated news, flexible wireframes to layer stories, and strong usability.
Journalists, once focused solely on a story, now needed to worry about how that story was best
conveyed.
The company had taken steps to resolve this issue. Jan-Eric Peters, editor-in-chief of Die Welt,
commented:
To be successful in the digital world, you needed to eliminate old workflows. If

you didn’t, everybody would do things the way they always had. We had to think
as hard about "second hour" stories as we did about "second day" stories. That
meant that the entire editorial team had to focus on digital reporting. It needed to
be in the center of their thinking and ideally in the physical center, as well. For
that reason, we built a new newsroom with the digital media section located
directly in the middle. This represented a fresh start and was our most important
step to accelerating a change of mentality in our editorial team.24
Yet, clashes still existed between legacy editors who knew little of technology and website
coders who knew little about content. The complication was therefore: were there actually
techniques to develop a business for online journalism?
Continuing to Expand Via Acquisition
By 2014, Axel Springer had established itself in the market as an organization that sellers wanted
to sell to and be a part of. However, whereas the company had become quite adept at acquiring
and developing assets, consistently finding the Idealo’s and kaufDA’s of the world was not easy.
An increasingly competitive and proficient market had boosted valuation multiples, making it
more difficult for Axel Springer to acquire new assets at reasonable prices. Going forward, the
team needed to develop a strategy to help hedge this movement.
Establishing the Firm’s Identity
Throughout its evolution, Axel Springer was confronted by a series of dichotomies: early-stage
versus late-stage investments; full acquisitions versus partnerships; centralized versus
decentralized management; and single versus multiple cultures. When making future decisions,
the new conflict the company’s executives were faced with was: “What is Axel Springer? Is it a
media-oriented private equity firm or a journalistic-oriented media company?” On the one hand,
the company’s roots were in journalism and content, but on the other it had grown aggressively
24
Interview with Jan-Eric Peters, June 17, 2014. Subsequent quotations are from the authors’ interview unless
otherwise noted.
through strategic acquisition. Inevitably, shareholders would call for a spin-off of the less
profitable business line. How would management stymie dissension interests from two very
different business lines?
CONCLUSION
Based on his review of what Axel Springer had achieved by April 2014, Döpfner was excited
about the additional strategic opportunities digitalization presented, but also remained focused on
positioning the company to persevere through the challenges of the future. He knew he needed
Axel Springer to stay up-to-date with consumer preferences, reaffirm the company’s identity,
and continue to pioneer the cultural transition within the organization. His letter to Google’s
Eric Schmidt in the German national newspaper Frankfurter Allgemeine Zeitung had clearly
stated his strategic concerns and was a first and potentially important move to find strategies and
mobilize allies to deal with the potential threats coming from the giant new media technology
experts. In light of this, he pondered his options and the next digital strategic moves for Axel
Springer in Germany, Europe, and the rest of the world.
Exhibit 1
Axel Springer’s Timeline: 1946-1986
Year Event
1946 Launch of the Nordwestdeutsche Hefte and the radio magazine Hörzu.
1948 Launch of Hamburger Abendblatt, the first daily created by Axel Springer.
1950 The foundation stone of the Hamburg offices in the Kaiser-Wilhelm-Strasse is laid.
1952 Launch of the popular daily Bild.
Axel Springer Verlag buys the publishing house Die Welt, including the daily paper
1953
Die Welt and the Sunday paper Welt am Sonntag.
1956 First edition of Sunday paper Bild am Sonntag.
The foundation stone of the Berlin publishing house is laid. The company acquires the
1959 majority holding in Ullstein AG, including the Berlin newspapers Berliner
Morgenpost and B.Z. and the Ullstein book-publishing business.
1960 Opening of the gravure printing works in Darmstadt.
1965-67 Construction of the gravure printing facility in Ahrensburg near Hamburg.
1966 Official opening of the Berlin headquarters.
1967 Takeover of the radio and TV programme magazine Funk Uhr.
Axel Springer becomes a joint-stock company. Purchase of holdings in Lübecker
1970
Nachrichten.
1971 Holdings in the Bergedorfer Zeitung and purchase of the Elmshorner Nachrichten.
1972-73 Building of the offset-printing plant in Essen-Kettwig.
1976 Established Cora Verlag GmbH & Co. KG, Hamburg, a publisher of popular novels.
First edition of women´s biweekly magazine Journal für Haushalt und Familie - name
1978
changed to Journal für die Frau in October 1980.
Axel Springer acquires a majority holding in Kunst und Technik Verlag GmbH,
1979
Munich, with the periodical Weltkunst and the annual Kunstpreis-Jahrbuch.
Launch of the women's magazine Bild der Frau. Establishment of the top special
1983 publishing house, with periodicals including Tennis Magazin and Fotomagazin.
Launch of the TV magazine Bildwoche.
Official opening of the offset printing facility in Ahrensburg near Hamburg.
1984 Establishment of Aktuell Pressefernsehen & Co. KG in which Axel Springer has a
holding. Investment in the satellite television company SAT.1 Satelliten Fernsehen.
Axel Springer goes public. The publisher Axel Springer dies in Berlin on September
1985
22 at the age of 73.
Establishment of the Axel Springer School of Journalism. Launch of the automobile
magazine Auto Bild. Investment in the local daily Pinneberger Tageblatt. The private
1986 radio station Radio Schleswig-Holstein goes on air; one of its licensees is Axel
Springer, which subsequently invests in six more radio stations. The first licensed
edition of Auto Bild comes out in Italy.
Source: Axel Springer, “The Chronology of Corporate Development,”

https://www.axelspringer.de/en/chronik/cw_chronik_index_en_85763.html (accessed April 28, 2014).
Exhibit 2
U.S. Household Computer Penetration: 1984-2012
U.S. Households With

Year Computer at Home (%)
1984 8.2
1989 15.0
1993 22.9
1997 36.6
2000 51.0
2001 56.3
2003 61.8
2007 69.7
2009 74.1
2010 76.7
2011 75.6
2012 78.9
Source: U.S. Census Bureau, “Current Population Survey, Select Years,” Internet Release Date: January 2014,
(accessed April 28, 2014).
Exhibit 3
Internet Penetration Trend
Source: Internet World Stats, "Internet Growth Statistics," http://www.internetworldstats.com/emarketing.htm

(accessed April 28, 2014).
Exhibit 4
Global Device Penetration Per Capita
Source: John Heggestuen, "One in Every 5 People in the World Own a Smartphone, One in Every 17 Own a
Tablet," Business Insider, December 15, 2013, http://www.businessinsider.com/smartphone-and-tablet-penetration-
2013-10 (accessed April 28, 2014).
Exhibit 5
Traditional Publisher Business Model
Exhibit 6
Publisher Business Model After Digitalization
Exhibit 7
U.S. Newspaper Advertising Revenues ($ Million)
Source: Newspaper Association of America.
Exhibit 8
Corporate Strategy From 2001-2013
Exhibit 9
Corporate Strategy From 2013 Going Forward
Exhibit 10
History of Bild
Source: Axel Springer. Reproduced with permission from Axel Springer.
Exhibit 11
Axel Springer Segment Revenues (€million)
2009 2010 2011 2012 2013

Total Revenues 2,081.4 2,324.1 2,575.7 2,737.3 2,801.4
% of total 100.0% 100.0% 100.0% 100.0% 100.0%
Paid Models 1,560.5 1,599.1 1,617.6 1,582.9 1,521.5
% of total 75.0% 68.8% 62.8% 57.8% 54.3%
Marketing Models 325.9 471.1 576.0 662.8 716.5
% of total 15.7% 20.3% 22.4% 24.2% 25.6%
Classified Ad Models 51.3 107.9 223.1 330.2 402.6
% of total 2.5% 4.6% 8.7% 12.1% 14.4%
Services/Holdings 143.7 145.9 159.0 161.4 160.8
% of total 6.9% 6.3% 6.2% 5.9% 5.7%
Note: As of June 18, 2014, the conversion rate from euros to dollars was approximately €1 to $1.36.
Exhibit 12
Axel Springer Digital Segment EBITDA (€million)
1) For consistency reasons pro-forma according to segmentation used until Q3 2013.
Exhibit 13
Axel Springer’s Portfolio By Business Line
Source: Axel Springer. Reproduced with permission from Axel Springer.
Exhibit 14
Select Company Corporate Revenues (in $million)
2010 2011 2012 2013

Amazon $ 34,204 $ 48,077 $ 61,093 $ 74,452
Apple* 65,225 108,249 156,508 170,910
Axel Springer** 3,867 4,121 4,368 3,861
Daimler AG** 130,628 137,852 150,803 162,709
Facebook 1,974 3,711 5,089 7,872
Google 29,321 37,905 50,175 59,825
Source: gurufocus.com and Daimler AG’s annual statements (accessed April 28, 2014).
Note: Daimler AG was a Germany-based multinational automotive manufacturer, owning divisions such as
Mercedes-Benz.
*Fiscal year ends in September. All other companies have December year ends.
**Financials are reported in euros. Figures in chart have been converted to USD as of the December 31st of the
respective year. Conversion data was derived from the European Central Bank’s website at
http://www.ecb.europa.eu/stats/exchange/eurofxref/html/eurofxref-graph-usd.en.html

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CASE: E-522

AXEL SPRINGER IN 2014: STRATEGIC LEADERSHIP OF THE

COMPANY HISTORY: INCEPTION UNTIL THE DIGITAL REVOLUTION

Axel Springer’s Founding and Imprint

The Rise of a Political Influence

Expanding its Strategic Position and Competencies

THE DIGITAL REVOLUTION

Key Driving Forces

Major Technological Change

Changes in How News Was Consumed

Market and Consumer Taste Changes

Effect on the Publishing Industry

A LIGHTHOUSE OF CHANGE: MATHIAS DÖPFNER

Döpfner Eyes Online Channels

Three Key Success Factors

FIRST STAGE OF STRATEGIC DIGITAL OVERHAUL: 2006-2012

Integrating Bild and Bild.de

Idealo: The Initial Investment in the Digital Transformation Strategy

Navigating the Shrinking Offline Classifieds Market

Aligning Strategy and Human Capital

Shaping the Mindsets of Legacy Employees

Hiring into the Digital Culture

Promoting Knowledge Transfer

SILICON VALLEY: A CATALYST FOR FURTHER REFINING STRATEGIC LEADERSHIP

After experiencing Silicon Valley’s start-up culture, hierarchies, streamlined

SECOND STAGE OF STRATEGIC DIGITAL OVERHAUL: 2013-BEYOND

Another Try at Early-Stage Investing

Building into Paid Models: Bild Plus

Acquiring Complementary Offerings: kaufDA

Partnering to Meet Innovation: Axel Springer Plug and Play

Optimizing Bild’s Workflow

Selling Off Legacy Assets

EVALUATING THE CHALLENGES OF THE FUTURE

Old Media Content vs. New Media Technology Experts

Fighting for Fair Search and Fair Share

Staying Up-To-Date With Consumer Tastes

Pioneering the Cultural Mindshift

To be successful in the digital world, you needed to eliminate old workflows. If

Continuing to Expand Via Acquisition

Establishing the Firm’s Identity

Source: Axel Springer, “The Chronology of Corporate Development,”

U.S. Households With

Source: Internet World Stats, "Internet Growth Statistics," http://www.internetworldstats.com/emarketing.htm

Source: Axel Springer.

Source: Axel Springer.

Source: Newspaper Association of America.

Source: Axel Springer.

Source: Axel Springer.

Source: Axel Springer. Reproduced with permission from Axel Springer.

2009 2010 2011 2012 2013

Source: Axel Springer.

Source: Axel Springer.

1) For consistency reasons pro-forma according to segmentation used until Q3 2013.

Source: Axel Springer. Reproduced with permission from Axel Springer.

2010 2011 2012 2013

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