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Springer has sprung

Written by Javier Maquieira, senior associate 
Edited by David Gaffney, partner
31 August 2021

Good morning,

It’s simply not true that one can’t make money from journalism in the digital age. Just ask Washington heir Robert Allbritton, who has just sold Politico to international media group Axel Springer at an estimated valuation of almost $1bn.
 
This is hardly a surprise, as the German publishing group, which delisted from the regulated market of the Frankfurt Stock Exchange in 2020 to begin “a new phase of growth”, has long been interested in the American political news website.
 
Founded in Washington DC in 2007, Politico is considered one of the most influential sources of information in political circles on both sides of the Atlantic, especially after the creation of its European counterpart, Politico Europe, which Axel Springer co-founded in a joint venture in 2014.
 
The Politico model has proven itself in the last decade, both editorially and financially. In contrast to the trend towards cost cutting and workforce reduction, the news website defends quality and accuracy in journalism, building on a large editorial team of 400 writers and a diversified business model based on advertising and premium subscriptions.
 
According to Axel Springer, 60% of Politico Europe‘s revenues in 2020 came from Politico Pro. Starting at €10,000 a year, this subscription offer distributes targeted information to professionals for a fee that varies depending on the client’s needs.
 
The attractiveness of Politico’s subscription business aside, the German publisher had also been looking to expand Politico Europe but couldn’t do so without the consent of Allbritton, who is now saying farewell to the publication as one of the most successful media investors of the century.
 
With this transaction, the ambitious chief executive of Axel Springer, Mathias Döpfner, has finally become the sole owner of Politico. For the publisher of the confrontational German tabloid Bild and the conservative daily Die Welt, the deal is widely seen to represent the company’s American future.
 
It is also testament to Döpfner’s ambition to “create the leading digital media publisher in the democratic world” by aggressively pursuing investment and growth – an approach that saw him enter a 2015 takeover battle for the Financial Times, which his firm eventually lost to Nikkei.
 
However, with aggressive growth comes great responsibility. Axel Springer still needs to find a top executive to manage not just the new property, but also the mounting labour issues at the publication, where newsroom members are seeking to unionise with the NewsGuild. Should they succeed, this could add to the cost base of the business.
 
As the German saying goes, “aller Anfang ist schwer” (“all beginnings are hard”). Yet something else holds true – away from the scrutiny of public shareholding, Döpfner is likely to benefit from some additional leeway for his longer-term expansion plans.

News

The head of the US central command announced the end of the country’s 20-year mission in Afghanistan last night, coinciding with Tuesday morning in Kabul — the deadline date agreed with the Taliban for full withdrawal. The pace of the airlift slowed significantly as the US turned its focus from evacuating civilians to withdrawing its troops and equipment.
 
The Royal Air Force could be involved in strikes against ISIS-K in Afghanistan, following Pentagon reports that there are at least 2,000 “hardcore” fighters in the country. The head of the RAF told the Daily Telegraph that Britain “will be anywhere where violent extremism raises its head, and is a direct or indirect threat to the UK and our allies.”
 
Scotland’s first minister, Nicola Sturgeon, announced the appointment of the first Green party ministers in any UK government on Monday. If confirmed by the devolved parliament at Holyrood today, Scottish Greens co-leaders Patrick Harvie and Lorna Slater would enter government as minister for zero carbon buildings, active travel and tenants’ rights and minister for green skills, circular economy and biodiversity, respectively.

Business and economy

The Council of the European Union has removed the US from its “white list” of countries for which temporary restrictions on non-essential travel should be lifted, following rising coronavirus infections and hospitalisations. The proposed ban on non-essential travel is non-binding, so each member state will have to decide whether to implement it.
 
The United Nations Environment Agency has declared the end of the sale of leaded petrol in the world, after Alger became the last country to halt its use in cars last month. Leaded petrol is a highly toxic fuel that was widely used for decades until researchers discovered that it could cause heart disease, strokes, and brain damage.
 
China’s video game regulator has ordered a cut in the amount of time minors can spend game-playing down to an hour between 8pm and 9pm on Fridays, weekends, and holidays. The National Press and Publication Administration has announced inspections of online gaming companies will also increase, to check that the time limits are being enforced.

Columns of note

After Afghanistan, Britain can’t keep pretending to “punch above its weight”, argues Polly Toynbee in The Guardian. Instead, it should invest in its soft power, nurturing assets such as arts and educational institutions — areas that currently receive very little financial backing from the UK government. British soft power, Toynbee concludes, just needs to be good enough, in the hope that it can repair the “incalculable reputational damage” made worse by fatuous boasting.
 
Writing in The Times, Natalie Ceeney ponders whose responsibility it is to protect consumers facing big financial decisions against fraud and against themselves. In her view, it is untenable to expect banks to shoulder that burden alone, so a wider approach that brings back trust in regulators after recent scandals is needed. Ultimately, Ceeney argues that regulators need to be better equipped so that consumers trust their advice over that of social influencers. (£)

Cartoon source: The Times

Markets

What happened yesterday?

The London stock market was closed on Monday, coinciding with the summer bank holiday in England and Wales. In the US, the S&P 500 rallied 0.4% by the close in New York, pushed up by technology and real estate stocks. The tech-heavy Nasdaq Composite rose 0.9%.
 
Meanwhile, European stocks held near record highs in early trading on Monday, with the Europe-wide Stoxx 600 finishing 0.1% higher and Germany’s Dax closing up 0.2%.

What’s happening today?

Interims
Ab Ignitis. S
Centralnic
Globaltrans S

AGMs
Apq Global
Edge Perf.h
Iomart
Northern 2 Vct
Puma Alpha Vct.
Puma Vct 11
Puma 12
Rua Life Sci

UK economic announcements
(09:30) Consumer Credit

Int. economic announcements
(07:00) Import Price Index (GER)
(08:55) Unemployment Rate (GER)
(14:00) House Price Index (US)
(14:45) Chicago PMI (US)
(15:00) Consumer Confidence (US)

Source: Financial Times

did you know

Hospitals in Louisiana were unable to evacuate ahead of hurricane Ida because hospitals in surrounding areas were filled with Covid-19 patients.

Parliamentary highlights

House of Commons

The House of Commons is in recess. The House will next sit on 6 September 2021.

House of Lords 

The House of Lords is in recess. The House will next sit on 6 September 2021.

Scottish parliament 

Parliamentary Bureau Motions
 
Topical Questions (if selected)
 
Committee Announcements
 
Members’ Business
Rachael Hamilton: Success of Great Borders River Clean

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