Publishers to compete with Deutsche Post
Three of Germany's largest newspaper groups are joining forces to create what they say will become the largest competitor to Deutsche Post once the country's postal market is fully opened to competition in 2008.
Axel Springer, the publisher of the mass-market Bild tabloid, is teaming up with Georg von Holtzbrinck, publisher of the weekly Die Zeit and financial paper Handelsblatt, regional newspaper group WAZ and a private equity group from Luxembourg to set up a letter delivery group.
The company, which will be run by Gunter Thiel, an experienced logistics manager, is aiming to increase its sales from an expected Euros 100m (Dollars 124m) in 2006 to Euros 1bn in 2010 by eating up market share of the former monopoly. It is the second group in a week to say it would enter the postal delivery market following Otto-Versand of Hamburg. Others are expected.
The combination of three such powerful media groups – with total sales of more than Euros 6bn – highlights the attraction of a liberalised German market and illustrates why Deutsche Post has in recent years tried so hard to expand internationally and into new areas.
That expansion has seen it buy DHL, the parcels group, and last week led to its proposal to take over Exel, the UK logistics company, for Pounds 3.6bn (Dollars 4.5bn) to create a market leader in the sector. People close to the deal said due diligence was ongoing after it was understood Deutsche Post offered a mix of cash and paper, with no more than 30 per cent in shares. It is proposing cost synergies of Euros 200m and has offered a management board seat to Exel's chief executive, John Allan.
Deustche Post reacted calmly to the threat of a new competitor: "This is just normal competition. After the loss of our exclusive licence we will undoubtedly lose market share. But we are already very active in compensating that through our internationalisation."
Mr Thiel told the Financial Times that the new group wanted to offer a nationwide service as soon as possible and would start from next year using the existing licences it owned.
"We will compete by being more efficient and certainly a couple of percentage points cheaper. But we don't want a ruinous price war," he said. "It is always quite difficult to compete against a group that has 96 per cent of the market. But our business will be letters and we will concentrate only on that."
Media groups have been trying to diversify to make themselves less dependent on a weak German advertising market and Mr Thiel said the group was aiming for a double-digit operating margin in 2010.
"These media groups, and others, saw very early on that this was one of the last unliberalised markets. But it is expensive and labour-intensive so they decided to work together," he added.
German newspaper publishers join forces to compete with Deutsche Post
Agence France-Presse English Wire 09-09-2005
BERLIN, Sept 9 (AFP) – Three German newspaper publishers, Axel Springer, Holtzbrinck and WAZ (Westdeutsche Allgemeine Zeitung), are joining forces with a Luxembourg-based management consultancy firm Rosalia to compete with Deutsche Post in the letter delivery market, they announced Friday.
The four partners said in a joint statement that they were setting up a joint venture — in which they would each hold a 25-percent stake — that would compete with the semi-privatised German postal service when it loses its monopoly in the letter delivery sector at the end of 2007.
Head of the joint venture would be Guenter Thiel, former chairman of Luxembourg-based Thiel Logistik and most recently head of the central and eastern European activities of TNT Logistics.
"In the coming years, even before the complete disappearance of the letter-delivery monopoly at the end of 2007, the German postal market is going to grow rapidly," Thiel said.
"Not only will consumers benefit in the liberalisation, but the market players as well who have the corresponding know-how. Our aim is to become the clear number two in the market behind Deutsche Post," Thiel said.
The joint venture was set to start operations at the beginning of next year.
Operations would be based in Berlin, but the company's administrative headquarters would be in Luxembourg.
The venture still has to be approved by the cartel authorities, the statement said.
