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December 20, 2021updated 30 Sep 2022 10:52am

Insider and Politico owner Axel Springer reveals Covid-19 revenue slide but says business ‘booming’ in 2021

By William Turvill

Axel Springer, the German news publishing giant that owns Insider and Politico, has revealed that its revenues fell by €150m (£125m/$165m) in 2020 as Covid-19 hit the print and advertising markets.

The news company, which is owned by private equity giant KKR, reported a total turnover of €2.97bn last year, down 5% from €3.11bn in 2019.

Axel Springer’s profits fell significantly as well. The company reported an adjusted EBITDA of €653.8m in 2020, down 13% from €751.3m.

However, the publisher has said that business is “booming” this year, particularly in the United States.

Axel Springer’s news media division – which had 9,333 employees at the end of 2020 – generated revenues of €1.75bn in 2020, down 0.5% from 2019. Advertising revenues of €905.3m were up 7%. The department’s adjusted Ebitda was €313.5m, down 0.1%.

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In 2020, Axel Springer’s news media business comprised German titles Bild and Welt, as well as Insider and Insider Intelligence, which includes eMarketer. Also in the division last year were Germany’s Idealo, news aggregator Upday, Bonial, and Eastern European division Ringier Axel Springer Media.

Axel Springer’s news media division acquired Morning Brew in October 2020, and bought Politico for $1bn earlier this year.

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The company revealed new details about its Morning Brew acquisition in the 2020 results filing. Axel Springer said it had acquired a 66% stake in the US newsletter startup for €29.4m ($33m) and that it had agreed “call and put options” that would allow it to buy the remaining 34% in the future.

The initial payment implies a total value of around €45m, but an earn-out rule attached to the deal means Morning Brew’s value will increase if it meets performance targets.

For the purposes of its accounts, Axel Springer has estimated that the deal could ultimately value Morning Brew at €77.9m ($88m), though this amount will vary depending on the business’s performance.

After the acquisition, Morning Brew contributed €3.7m of revenues and €700,000 to the group’s consolidated net income. Axel Springer said that, if Morning Brew had been acquired on 1 January 2020, it would have contributed revenues of €18.5m and profit of €2.5m.

During 2020, Axel Springer’s large German newspaper brands made significant strides in digital subscription sales. BILDplus and WELTplus reached 647,000 paying digital readers in December 2020, up from 568,000 a year before. Axel Springer said that, as of November this year, the figure had risen further to 761,628.

After falling revenues and profits in 2020, Axel Springer said it is expecting to report strong growth for 2021 following a “digital advertising boom” across several markets.

“We expect double-digit growth in sales in 2021, which is one of the highest growth rates since we went public in 1985,” Axel Springer’s chief financial officer Julian Deutz told Reuters last week. He said the US business in particular “is booming and will account for an increasingly stronger share of our revenue”.

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