Axel Springer, the German-based media group considered a leading contender in the auction of the Telegraph and Spectator titles, has cast doubt over whether it will submit a bid in the process to find a new owner for the influential titles.
Its longstanding chief executive, Mathias Döpfner, who led the owner of the daily Die Welt and the tabloid Bild when the business was trumped by a blockbuster £665m offer for the Telegraph by the Barclay brothers in 2004, has said Axel Springer is focused on a digital-only strategy.
“We never comment on M&A [merger and acquisition] speculation but I can tell you that we have defined a digital-only strategy and we remain interested in growing our digital media portfolio,” he said, speaking on Politico’s Power Play podcast, which is hosted by Anne McElvoy. “Digital first, digital only,” Döpfner added.
While the Telegraph has amassed more than 800,000 digital subscribers, it remains one of the UK’s biggest traditional newspaper publishers, with its legacy print business accounting for a major part of total revenues and profits.
Axel Springer is one of about 20 parties to have expressed an interest in the Telegraph and Spectator titles to Goldman Sachs. Goldman is running the auction on behalf of Lloyds bank, which seized the assets from the Barclays in June after being unable to come to an agreement over more than £1bn in unpaid debt.
The Berlin-based group is in possession of a “teaser” pack, documents sent out by Goldman setting out the opportunity for bidders.
Around the end of this week, parties who are considered potentially serious bidders will receive a process letter and information memorandum, which will contain much more detailed information about the operations and financial performance of the Telegraph and Spectator titles.
“At this stage, it is about eliminating the grandstanders,” said one source close to the auction process. “We hope to emerge with a sizeable subset of bidders.”
Historically, Axel Springer, one of Europe’s leading media groups, has had an eye on ownership of a trophy UK newspaper. In 2015, the company was pipped by an 11th-hour bid from Nikkei, Japan’s largest media group, to buy the Financial Times. Nikkei ended up paying £844m. However, since then the company has pivoted and focused primarily on digital-only deals.
After losing out to Nikkei in 2015, it took full control of the digital news site Business Insider, in a $442m (£362m) deal. Two years ago, the company acquired the political news site Politico in a deal reportedly worth $1bn.
This week, bidders expressed concern that the Barclay family’s £1bn “back door” offer could have a “chilling effect” on the official auction.
On Monday, the Barclays confirmed that they would make a £1bn Middle Eastern-backed offer to keep control of the Telegraph and Spectator titles.
The business was seized by Lloyds bank in June after the family failed to reach an agreement over unpaid debt, at a hearing in the British Virgin Islands.
The offer is being made directly to Lloyds as a debt repayment deal, not via the open auction process. “It is a back-door deal that could have a chilling effect on the auction,” said an executive involved in one of the potential bids. “Why should bidders offer 30% to 40% more [than the estimated value of the Telegraph by analysts] at auction to match a side deal?”
