Daily newspapers will one day provide the most intriguing episodes in the story of how traditional media was tortured and tamed by the digital new wave. But the winners are starting to draw away from the losers in a race many will not finish. Try this hot four of traditional media companies in Europe and the US.
1. Axel Springer
In 10 years, the Berlin-based Axel Springer has been transformed from a spluttering old-fashioned, German press group (with almost 100% of profits coming from a single daily newspaper) into a hugely profitable international, multi-media business spanning newspapers, online, magazines, broadcasting and classifieds. Last year saw profits rise by 16% with EBITDA margins reaching 19%. A straight third of revenues (and half of all advertising) are from digital and about the same proportion of profits comes from outside Germany, with profitable operations right across Eastern Europe, France, Spain, Switzerland, and also India.
The transformation has been wrought by CEO Mathias Doepfner, who has been following the Schibsted lead (see below) in expanding Springer's online classified skills. But no one can forget that Springer's media market domination in Germany grew from Bild, Europe's largest selling tabloid. The paper's conservative views last month prompted Greek politicians to label it as "the most powerful newspaper in the world". Or at least their world.
As Germany wrestled recently with Greek debts, Bild ladled up stories of lazy Greek workers and corrupt, welfare-dependant politicians. That approach probably helps the racy, hawkish tabloid maintain copy sales of three million copies daily - and why it also has 100,000 iPad subscribers. The Axel Springer difference in this century is that Bild is but one part of an increasingly successful, future-proofed media group which understands the digital economy. Its recent £110m acquisition of the market-leading Totaljobs.com from Reed Elsevier marks Springer's belated arrival on the UK's main stage. Like its country's economy, Axel Springer is on an altogether different trajectory to most of its peers.
2. New York Times Media Group
Rupert Murdoch is, to say the least, irked by the owner of the New York Times, the International Herald Tribune, the Boston Globe and 16 other newspapers. It out-competes News Corp's perennially loss-making New York Post and is now facing a fierce battle with his Wall Street Journal to (sort of) become the nation's daily. Its 2010 coverage (believe it or not) reignited Murdoch's UK phone hacking scandal, at the prompting of his nemesis The Guardian. But, more than anything else, the 160-year-old New York daily is audaciously showing the world's largest news organisation (and proprietors everywhere) how to compete in the digital age.
Look at the scale of this unlikely success.
The New York Times has generated almost $250m from its digital services during the 12 months to March 2012, about one-third subscriptions, two-thirds advertising. It now has almost 500,000 digital subscriptions.
The average daily circulation of the New York Times increased dramatically by 73% to 1.6m in the 12 months ended 31 March 2012. The New York Daily News was 9% down in the same period. Circulation revenue has increased by 6% in the past four years.
75% of 2011 weekday circulation came from subscriptions (hard copy and digital) rather than single copy sales.
The significance of these numbers is that they are the clearest indication yet that digital revenues could become substantial enough to fund the high-cost, high-quality journalism that has long been the staple diet of (many) newspapers. There is still a way to go of course - and there will have to be fewer news providers generally for the remaining players to generate substantial profits. But the New York Times is also finding that bundling digital and hard copy subscriptions can be a successful strategy: sales of the daily print edition were actually 1% up during the six months up to March this year.
Those results show crucially that quality newspapers can shift their revenues towards readers and away from advertising as they push into digital. Which is just as well, given the seemingly permanent loss of advertising market share being suffered by most newspapers. US analysts have predicted that New York Times' copy sales/subscriptions revenue will have fully replaced lost advertising by 2014.
Rupert Murdoch may have been reading NYT's digital achievements through gritted teeth, but he is taking notice alright. In a sign that News Corp is testing just how readership revenues can make up for lost advertising in the UK, The Times recently doubled its iPad edition price from £2 to £4 per week.
3. Schibsted Media Group
Oslo-based Schibsted is variously touted as "the world's smartest media company" and is still storming through its journey from news domination in Norway and Sweden to growing media operations and web classifieds in 20 countries including the US where it is giving Craigslist a run for its money.
In the first quarter of 2012, like-for-like profits were up 10% and revenues 5%. Almost 50% of the business is now outside Norway. More than half of all revenues are online advertising. Its web classified is up 19% so far this year. Like all our early winners in the digital race, Schibsted's traditional newspaper business is getting stronger too in important ways: newspaper subscriptions are 4% up, compensating for the fall in retail copy sales.
4. Daily Mail and General Trust
Britain's most successful newspaper group is not a newspaper group at all. The family-controlled, listed group now derives 75% of profits from business media including Euromoney, online information, and events. A single, hardly-known business Risk Management Solutions delivers profit equivalent to two-thirds of the Daily Mail - at three times the margin. The gilded Euromoney (70% owned by DMGT) last year accounted for more than one-third of all operating profit. DMGT is an enviable collection of business media with operating profit margins of 20-30%, and consumer newspapers struggling to reach 10%.
First half profits 2012 from its eponymous national newspapers were 26% down due to lower print revenues and digital promotional activity. National paper revenues were virtually stable. That was a clue to the fact that Mail's 50million (75% ex-UK) online audience is cranking up the revenues but is still a good way from profitability. It is now the world newspaper site leader (ahead of the New York Times, but still behind the Huffington Post). But it is different.
The Mail Online realised early on that huge audiences can be delivered by search engines. It, therefore, uses web analytics slavishly to guarantee that, whatever or whoever is "trending" at any one time are to be found right up there on Mail Online, which is not really the Daily Mail at all. The jury's out (waiting for the profits) but nobody can doubt the spirit of DMGT enterprise it represents.
DMGT is a fascinating £2bn group of semi-autonomous media businesses across the spectrum and in many parts of the world. It manages these with a light (i.e. low-cost) touch from the centre. In its traditional newspaper territory, DMGT's still-growing Metro free dailies have also been successful across the UK. And the Daily Mail and Mail on Sunday continue to be strong competitors in the paid-for newspaper market.
It is inspiring (even reassuring) to see how these strongest and most agile newspaper-centric companies have been able to leverage their brands, content and traditions to reform their businesses. But most will have no such opportunity as the digital revolution continues to shake the foundations of media organisations everywhere.
Media fortune, fame and folly