Axel Springer says majority owner to keep control if talks succeed

Axel Springer, Europe's biggest news publisher by circulation, insisted that its majority owner would not relinquish control of the company despite merger talks with Germany's biggest listed commercial broadcaster, Pro­SiebenSat.1.

A key question that would need to be resolved in any merger is the future role of Friede Springer, widow of the company's founder, who controls the company.

Axel Springer said on Tuesday that it was pressing ahead with plans to change its legal form into a KGaA, or partnership limited by shares, a structure that would allow Mrs Springer to retain control even if her shareholding fell below 50 per cent.

The discussions, which are at an early stage, would create a media group with a valuation of more than €14 billion, in the hope of bolstering both companies’ push into digital.

It would also create opportunities for the cross-promotion of powerful brands such as Bild, the Axel Springer-owned tabloid that is Europe’s top-selling newspaper, according to people with knowledge of the discussions.

Analysts, however, were sceptical of the value for ProSieben, the bigger of the two companies, in forming a partnership with a business that still relies heavily on newspapers and magazines. Such a move would run counter to the media industry trend of separating print and television businesses.

Though Axel Springer’s newspapers remain profitable, both margins and circulations are declining. Earnings before interest, tax, depreciation and amortisation at its paid models unit – which includes Bild and Die Welt as well as its international press holdings, accounting for about half of the group’s earnings - fell from €250 million to €244 million last year. The paid circulation of Bild, including digital subscriptions, shrank 7.7 per cent to about 2.4m in 2014.

The company declined to comment on what it described as “market speculations”. ProSieben also declined to comment.

– (Copyright The Financial Times Limited 2015)