Developing a digital portfolio through acquisitions and entrepreneurial ventures

Ulrich Schmitz, Electronic Media Division, Axel Springer SE

London, March 2014

Axel Springer SE at a glance

§  Founded in 1946 by Axel C. Springer

§  Headquartered in Berlin

§  Listed since 1985

§  Shareholders: family 60%, free float 40%

§  Active in 44 countries

§  Revenues 2012: 3.3€bn

§  About 13.650 employees

§  >230 newspapers and magazines

§  >160 online offerings

§  >120 apps

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„I will not tire in claiming our share in all existing electronic media and even more in all information systems yet to come.“ Axel Springer, October 1978

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“With regard to electronic media, Springer is completely underdeveloped.”

“... the chaotic web-sandbox of Springer...”

“Europe‘s largest press conglomerate – a mere internet midget. At least they have a strategy now.“

May 1999 May 2000 October 2000

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Axel Springer about a decade ago

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Digitization anchored within the corporate strategy since 2001

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The essentials of the digitization strategy

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Content portals Performance

marketing

Development of a digital map in 2004…

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Classifieds / marketplaces

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… and since then occupying core segments

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Content portals Performance

marketing Classifieds /

marketplaces

Acquisitions and organic investments

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organic

by acquisition

2007 2008 2010 2009 2011 2013 2012 2006

Note: Selection; cumulated figures

by acquisition > 80 organic > 110 Σ > 190

Strategic fit ü Scalable business model ü Profitability ü Experienced management ü Reasonable valuation ü Added value through Axel Springer network ü

Investment criteria

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Financial web applications Finance portal

Infotainment portal Women portal

Product comparison

Performance marketing

Job portal

Portfolio of majority owned market leaders

Real-estate portal

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Recruitment portal Real-estate marketplace Content / classifieds portal Job portal for hospitality

Online brochures

Soccer community

Price comparison

Job portal

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Strong post-acquisition development

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+14% Market CAGR since 2006

Revenues Ø CAGR since acquisition date +22%

+33% EBITDA Ø CAGR since acquisition date

Top 10 digital acquisitions 2006-2012, based on revenues

Market growth: Weighted market CAGR 2006-2013 based on ZenithOptimedia, PwC and HDE; Revenues and EBITDA growth: CAGR since acquisition date based on FC 2013 incl. fully operationally integrated add-on acquisitions on a pro-forma basis

Digital Media: top-line / bottom-line

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Revenue in €m EBITDA in €m

Consolidated figures, 2006-2012 based on Annual Reports, 9M 2012-2013 based on Q3 Reports

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208

378 470

712

962

1,174

823 960

2006 2007 2008 2009 2010 2011 2012 2012 9M

2013 9M

1 14 21 43

86

158

243

166 197

2006 2007 2008 2009 2010 2011 2012 2012 9M

2013 9M

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9M 9M

Digital reach in Europe today

European media peers (in Mio. Unique Visitors)

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Source: comScore, Nov. 2013

18.5

18.8

22.6

25.4

25.8

29.4

35.9

48.9

98.0

Growth YoY

21%

5%

1%

-4%

-6%

10%

0%

-22%

8%

Expansion of strategy

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Building on Leadership

„Early Stage“ “Later Stage”

Broadening the Scope

Kicking off early stage

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Youtube „Axel Springer Media Entrepreneurs“ http://www.youtube.com/watch?v=vlVDUrcqSIU&list=PLy0931-AnAUbjRlkY-aj2eKqJnjq00m78

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Expansion of strategy

Build

Acquire

Partner

A

B

C

Broadening the Scope Building on Leadership

“Later Stage”

Early stage initiatives since 2012

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BILDplus Premium content

Building new business models Examples

A

German Bundesliga

Shopping app for high street

User generated photo & advertising app

Marketplace for interiors & design

Second screen Social TV platform

online travel guide in cooperation with

Acquiring early stage (example Runtastic)

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Each app available as free and pro version. Cumulated total number of downloads Appstore ranking: category “Health & Fitness”, source appannie.com, average ranking 1.9.2013 - 1.12.2013; (by grossing, Runtastic pro)

B

Portfolio of >30 mobile apps

Tracking running, cycling, winter sports etc.

Fitness tripmeter, push-ups, sit-ups etc.

Others pulse meters, timer etc. Apple AppStore

>3,000x distance

earth to moon tracked

>50m App

downloads

Partnering with company builder / Otto Group

E-Commerce Ad Tech Mobile Web Security

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C

App index Browser security Facebook ad management Targeting as SaaS model

Online shop software Car parts price comparison B2B meta yellow pages Realtime advertising

Online shop tires Dietary supplements Art trading platform Club for wine shopping

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Partnering with Silicon Valley Accelerator

Batch II Batch I

Pages live on

Earnings Conversions

C

Axel Springer Plug & Play Accelerator Overview

Pan-European start-up accelerator, founded 02/2013

50:50 Joint Ventre with Plug and Play Tech Center (Silicon Valley)

Three-monthly programme in Berlin, individual follow ups in the Silicon Valley

Substantial programme sequences: assets (25k €), office space, support, coaching, workshops, networking, access to VCs for follow-up financing

Two program cycles per year, each ending with a demo day

Planned to do about 20 Seed Investments (5% share) per year

Third program will start in March 2014

Key facts

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Early stage coverage

Business stage

Size

0

Development

Growth

Team-up

Strategic Product Development

Electronic Media

Scaling

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Early stage coverage

Business stage

Size

0

Development

Growth

Team-up

Strategic Product Development

Electronic Media

Scaling

March, 22-23: next hackathon on mobile media

www.mediahackday.com

Our principles as digital shareholder

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§  Holding structure

§  Operational independency

§  Retaining founders / management

§  Maintaining growth momentum

§  Realistic view on synergy potential

§  No colonial masters

§  No cultural clash

§  Partnership

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Corporate strategy since 2013

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