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Transcript of Roadshow presentation schickler july 2015
Dubai, July 2015
A Strategic Framework for Publishers and Case Studies
from Leading Publishers in the World
SCHICKLER Media Consultants
July 2015 Page 1
All over the world publishers experience the shift in media industry and face similar
challenges.
Trend Summary
The global media industry faces big changes
and needs radical transformation
July 2015 Page 2
Publishers react to these challenges in different ways. With our long experience of over
30 years we have found and analyzed best practices worldwide.
Best Practices from all over the World
July 2015 Page 3
Developing
new
businesses
Optimizing
the core
business
7
6
5
4
3
2
The SCHICKLER Strategic Layer Model was developed from those international best
practices. It contains 7 different layers.
1
Operational Excellence Core-Business 1
Digitalization Core-Business 2
3 Consolidation Core-Business
Thematic Verticals / Marketplaces 4
Transaction based business models 5
Infrastructure-Services 6
Diversification 7
SCHICKLER Strategic Layer Model
cut it into halves the „Onion Layer Model“ Take an Onion
July 2015 Page 4
Layer 1: Operational Excellence
Core Business traditional revenue
Diversification new revenue
1
July 2015 Page 5
Operational Excellence means focusing on the performance and long term profitability
of the core activities through optimization and modernization.
Layer 1 – Operational Excellence
A SCHICKLER Benchmarking analysis has shown that operational
excellence programs can improve EBITDA by up to 10% points
Cost Base Restructuring Revenue Improvement
Operational
Excellence
Lean Processes
& Structures
Outsourcing
Centralization
Structures
& Skills
Systems &
Sales Tools
Product Portfolio
Optimization
and Rationaliza-
tion through…
+
Modernization
and Professio-
nalization of…
July 2015 Page 6
Brief description
Type of Publisher: national
Number of Titles: ca. 30
Revenue 2013: 428m SFR
# Employees: ca. 1.500
Regional Focus: CH, AT, DE
The Neue Züricher Zeitung is top-notch at operational excellence. They constantly focus
on their core business and outsource all non-core-functions.
Cost Base Restructuring
Centralization Outsourcing Processes &
Structures
All back office
services (Finance,
IT, HR)
One news desk for
all regional titles
central reader
marketing
Delivery outsourced
to post office
Printing outsourcing
in progress
Constant focus on
Benchmarks and
Best Practices
By outsourcing their logistics and print functions NZZ is one of the
most consequent publishers in focusing on core business.
Best Practice Layer 1: NZZ for Operational Excellence on Costs
July 2015 Page 7
SCHICKLER BENCHMARKING PROCESS
Benchmarking the performance with best in class practices is a key to find operational
excellence.
Approach to Operational Excellence: Benchmarking
Gap: -25%
Deciding project
scope and collecting data
Gather KPIs for
Benchmarking
Localize results
and align with management
Prioritize efficiency
drivers & detail actions
1 2 3 4
Best in class
Your company
We recommend a low-key approach to start with
It will give you a feeling of where to dig deeper but not influence your daily work
July 2015 Page 8
Core Business traditional revenue
Diversification new revenue
2
Layer 2: Digitalization of Core Business
July 2015 Page 9
Layer 2 deals with the radical transformation towards a full digital publishing model.
Focus lies on managing and monetizing the structural shift.
Layer 2 – Digitalization of Core-Business
Adver-
tising
Copy
Sales
Reader
Offers
International Best Practices show that even traditional regional newspapers
can achieve a Digital revenue share of > 10% within 3 years
Today‘s Business
More and
new Content
Seamless
Workflows
Integrated
Structures
Modern
Skills
1 2
3 4
Tomorrow‘s Business Transformation
Cross media
Marketing Services
Print Ads
Online Ads
Mobile Marketing
Paid-for Content
Print Content
Digital Content
Data Access
Transaction Business
E-Commerce
E-Business
Reader Shops
July 2015 Page 10
Schibsted has managed to create digital dominance. Their increasing digital revenues
make up for the decreasing offline businesses.
Best Practice Layer 2: Schibsted for Digitalization of Core Business
“The print advertising market continues to decline rapidly. Our job is
to adapt the cost base to the market development, and at the same
time make sure we are at the forefront when it comes to online
product offerings.“
Schibsted Norge Mediahouse Revenues 2011 – 2013* in MSEK
4.990 4.754 4.384
589 732 943
2011 2012 2013
Revenuesonline (core)
Revenuesoffline (core)
- Rolv Erik Ryssdal, CEO
Brief description
Type of Publisher: regional /
national
Number of Titles: ca. 30
Revenue 2013: 15bn NOK
# Employees: ca. 6.900
Regional Focus: Internat.
Contains only Schibsted’s subscription titles and VG; numbers represent combined revenue from advertising and circulation sales; Source: Schibsted Website
Stabilizing the shrinking core business through digital revenue growth
Schibsted
Publishing
Business
Revenues*
July 2015 Page 11
SCHICKLER DIGITAL FITNESS PROGRAMM®
The Digital Fitness Program enables publishers to start or improve their digitalization
process based on a proven and “hands-on” three steps approach.
Approach to Digitalization: Digital Fitness Program
Increase daily reach
of website
Modernize Ad
Products
Optimize Sales
Structures
Implement
Steering Systems
A B C D
Involvement of all major departments in the whole organization
Increase revenues from
Digital Advertising
Generate revenues with
E-Commerce offers
Establish Paid-for
Content
Modul 1 Modul 2 Modul 3
July 2015 Page 12
Core Business traditional revenue
Diversification new revenue
3
Introducing Layer 3: Consolidation of Core Business
July 2015 Page 13
Horizontal and vertical integration is a key driver for strengthening the market position
or improving the performance.
Various international best practices have demonstrated that an aggressive
acquisition approach paths the way regional market dominance
Packaging/
Production Site
Distributor
Ad Agency
Layer 3 – Consolidation of Core-Business
Corridor for vertical acquisitions
Corridor for horizontal acquisitions
Different
region
Different
language Competitor A Competitor B Core Product
July 2015 Page 14
Madsack went from publishing one title in central Germany to being the dominant
publisher in northern Germany. They created significant size through acquisitions.
150% Revenue growth form 2006 to 2012.
3rd largest share of daily newspaper subscribers in Germany.
5th largest circulation volume in Germany.
Best Practice Layer 3: Madsack for Consolidation Strategy
Before Consolidation After Consolidation
Centralization of…
Editorial desk
Sales Support
Administration
Hannover
Brief description
Type of Publisher: regional
Number of Titles: 47
Revenue 2013: not public
# Employees: ca. 4.400
Regional Focus: DE
July 2015 Page 15
SCHICKLER CONSOLIDATION MECHANISM®
Approach to Consolidation: Preparing with three steps
With a simple three step model, publishers can find their tailor made consolidation
strategy.
Top
Performer
Glass
Bead
Cinderella
Poor
Dog
Att
rac
tive
ne
ss
of
Ma
rke
t &
Cu
sto
me
rs
Productive efficiency
of target
Innovation
Efficiency Market
orientation
Processes
Structure
Sales Force
…
…
…
…
…
…
1 2 3 4
Innovation
Market
Orientation
Efficiency
„Who are we?“ „Who‘s available and has portfolio fit?“ „Is organization fit given as well?“
…if multiple targets are available
…if no or only some targets are available
Akquisition
Strategy
Scanning
Routine Relation-
ships
Target
Register
Annual process
Self Assessment Identification and/or
Classification of Targets Feasibility Check
1 2 1
Functional Target Rating
Weighted Target Score
Opportunity approach…
Valuation approach…
July 2015 Page 16
4
Core Business traditional revenue
Diversification new revenue
Layer 4: Thematic Verticals and Market Places
July 2015 Page 17
Owning market places and thematic dominance is a necessity to stay competitive
within fast changing consumer behavior
Layer 4 – Thematic Verticals / Market Places
Typical Thematic Verticals
for Publishers
Best practice publishers manage to significantly increase their average reader
monetization – and at the same exploit new customer segments
Cars
Health & Fitness
Beauty
Real Estate
Hospitality & Travel
Food
Financial Services
Thematic
Dominance UGC
Communities Marketing
Content
Professional
Content
Services
Classifieds
Advertising Events
E-Commerce
Thematic
Dominance
July 2015 Page 18
The BBC has built the strongest Food content proposition across the UK by
establishing their brand on various online and offline channels.
Best Practice Layer 4: BBC for Thematic Dominance
1.6m weekly readers and +18m Unique Users per month
Strong monetization-approach trough various paid-for products
Strong cross-referencing through all products and channels
Dominant „Food“ content supplier in UK
Brief description
Type of Publisher: national
Number of Titles: 20 (magazines)
Revenue 2014: 3.7bn GBP
# Employees: ca. 20.000
Regional Focus: UK
ø£50
£4.25
ø£20
£5-£500 £2.15
PayTV
ø£2
free
Print Mag
Recipe
Books Events Special Offers
iPad Mag
TV Shows
Recipe App
July 2015 Page 19
SCHICKLER PRIORITISATION APPROACH
To find the perfect spot for launching a thematic vertical you need to analyze it from
three different angles.
Approach to Thematic Dominance
Readers‘
Interests
Market
Potential
Content
& Sales
Strengths
Readers Research
Market Assessment Capability Assessment
Contains the most likely promising
topics to reach a dominant
market position.
Field
of best
Chances
Priority Theme List
1. Real Estate
2. Automotive
3. Food
4. Financial Services
5. Beauty
…
86%
82%
75%
58%
Score
…
July 2015 Page 20
5
Core Business traditional revenue
Diversification new revenue
Layer 5: Transaction based Business Models
July 2015 Page 21
Owning platforms where consumers and businesses search and buy goods and services grants further revenue potential.
With double digit growth rates transaction based business models are not only a
viable revenue source – the also help to diversify away from core business
B2C
C2C
B2B
G2C
G2B
Layer 5 – Transaction Based Business Models (Examples)
July 2015 Page 22
Axel Springer SE has managed to create strong revenue opportunities through trans-
action based business models. 70% of Springer’s profit results from digital activities.
Best Practice Layer 5: Springer SE for Transaction Based Business Models
One of the leading providers for
price and product comparison
Zanox is the leading performance
advertising network in Europe
Rev: 479 Mio. Euro (2013) Rev: 53 Mio. Euro (2012)
Idealo Zanox
52% of overall revenues and 70% of total profit result from digital
activities.
Advertising revenues result by 3/4 out of digital
Brief description
Type of Publisher: international
Number of Titles: ca. 160
Revenue 2013: 2.8bn EUR
# Employees: ca. 12.800
Regional Focus: International
July 2015 Page 23
“JUST START” APPROACH for E-Commerce Models
Pick an internationally proven business model that does not yet exist in your market.
Pick an internationally
proven business model “Just start”
Starting early gives you the chance to build a strong market position.
Internationally successful transaction based business models can be taken as blue print.
It will help you build a dominant market position.
Minimum Viable Product
Approach to Transaction Based Business Models: “Just Start”
Improve
July 2015 Page 24
6
Core Business traditional revenue
Diversification new revenue
Layer 6: Infrastructure Services
July 2015 Page 25
Providing online and offline infrastructure services means utilizing a company’s assets
and exploiting market trends to serve B2B customers
Layer 6 – Infrastructure Services
International Best Practice Publishers realize already >20% of
their revenue offering services to third parties
Printing/
Production HR Marketing IT … … Function
Potential
Infrastructure
Offering
Third Party
Printing
Payroll
Services Ad Sales
IT
Hosting
… … …
July 2015 Page 26
Bertelsmann, one of the largest media houses worldwide, has built Arvato. A company
that bundles all shared services and offers them very successfully to third parties.
Arvato started as subsidiary of Bertelsmann to centralize services.
They used their free capacities to offer their services to others.
Arvato now serves 12 industries, publishing being just one of them.
Best Practice Layer 6: Arvato for International Outsourcing Services
Creation CRM Customer
Services E-Commerce
Finance IT Print SCM
Brief description
Type of Publisher: none
Number of Titles: none
Revenue 2013: 4.4bn EUR
# Employees: ca. 66.400
Regional Focus: worldwide
July 2015 Page 27
SCHICKLER Capability Assessment®
The market-relevant competences are assessed with regards to their potential of being
offered to third parties.
Approach to Infrastructure Services: Analysis of Strengths and Weaknesses
Criteria Weighted Score Commercial Value
1 2 3 4
Accounting
Call Center
Creative Serivces
Facility Management
…
Assessment Selection Modelling
Assessing internal services regarding their strengths, weaknesses and business potential.
July 2015 Page 28
7
Core Business traditional revenue
Diversification new revenue
Layer 7: Diversification
July 2015 Page 29
New Businesses grant the widest diversification and aim at occupying attractive
business fields that ensure long term growth and profits beyond the existing portfolio.
Branded
Use of
Branding
Non-
Branded
Digital Non Digital
Basic Business
Model
Examples
Branded / Digital
E-Learning online portal
Online research services
…
Non-Branded Digital
Couponing platform
Shopping Clubs
…
Branded / Non Digital
Insurance Services
Travel fairs
…
Non Branded / Non-Digital
Advertising Agencies
Mobility Solutions (e.g. bike rental)
New Business Investment Matrix
Layer 7 – New Businesses
The Sächsische Zeitung in Germany is already generating >40% of
their revenue from businesses outside the publishing core
July 2015 Page 30
The Sächsische Zeitung is a regional publisher diversifying within non-digital
businesses.
Best Practice Layer 7: Diversification
Main Premise: Strengthening the core brand
Focus on diversification through “non-digital/branded” activities
Already >40% of revenues generated from outside publishing
business
Muss noch
gefüllt
werden
Limousines
Tourism
Ticketing
Fairs
Legal Advice
Key-Finder Service
Rent-a-Bike
Logistics Services
Diversification Activities (selection)
Brief description
Type of Publisher: regional
Number of Titles: 1
Revenue 2013: not public
# Employees: ca. 500
Regional Focus: DE
July 2015 Page 31
SCHICKLER EXPANSION GRID
The “Expansion Grid” identifies those new businesses that are most likely to be
successful within your organization. They will be assessed by five dimensions.
Approach to New Businesses: Expansion Grid
Localization
Organizational
Fit
Trust
Scalability of
Investment
Complexity of
Market
July 2015 Page 32
7
7-Layer Strategy Model
Developing
new
businesses
Optimizing
the core
business
6
5
4
3
2
1
Operational Excellence Core-Business 1
Digitalization Core-Business 2
3 Consolidation Core-Business
Thematic Verticals / Marketplaces 4
Transaction based business models 5
Infrastructure-Services 6
Diversification 7
July 2015 Page 33
3 Years Modernization Plan („Strategy Onion“)
The layers can be applied separately or combined. Depending on individual company
type there can be various strong approaches to modernizing the business.
Typical Ways of Improvement
Maximum
Efficiency
Driving
Innovation
High Quality
Content
Approach Key Goals
Efficient cost structure and processes
Margin improvement through centrali-
zation and Economies of Scale
Outsourcing of non core functions
Layer 1
Layer 1: Operational Excellence
Layer 1: Operational Excellence
Layer 3: Consolidation Core Business
Layer 6: infrastructure Services
Market dominance through product
development
Transformation of core business
New revenue streams to diversify risk
Layer 2: Digitalization of core Business
Layer 4: Thematic Verticals
Layer 5: Transaction based BM
Layer 7: Diversification
ILLUSTRATIVE
High quality journalism on all
platforms
Cost efficient organization
Broader voice and reputation
Layer 1: Operational Excellence
Layer 2: Digitalization of Core Business
Layer 3: Consolidation Core Business
Which layer combination appears most suitable for your organization?
July 2015 Page 34
SCHICKLER Management Consultants is a leading expert for newspaper publishers.
We focus on operational excellence and strategic growth for our clients.
SCHICKLER – Professional Expertise in the Publishing Industry
A worldwide unique
benchmark database
All areas are covered
by a multi-level
benchmark system
Founded by former board member
of Gruner + Jahr (Bertelsmann)
Focus on media industry,
more than 500 projects
in the last 10 years
Consulting team consists of
former Newspaper CEOs and
experienced consultants
Deep knowledge of
core processes
Wide set of best
practice examples
Digital strategies for
Newspaper Publishers
Revenue enhancement
strategies
Operational Excellence in Newspaper Companies Strategic Growth of Newspaper Companies
Digital Fitness Programs
Long experience in
implementing revenue
strategies in Newspaper
Companies
July 2015 Page 35
Schickler has a leading expertise in the media industry in Europe.
We are market leader in the German speaking countries.
References
Rankings are for Germany, Austria and Switzerland
* Source: Horizont Ranking of the 100 largest German media companies (2009), without public corporate media
** Source: Schickler Market Survey „Zeitungsverlage in Deutschland – Newspaper Publishers in Germany“, 2010
*** Source: Horizont Ranking of the 100 largest German media companies (2009), without public corporate media
Top 12
Magazine Publishers***
67%
Schickler Clients
Top 100
Media Companies*
52%
Schickler Clients
Top 100
Newspaper Publishers**
75%
Schickler Clients
We have worked for > 250 media companies and > 150 publishing houses.
Our customer base includes TV and radio stations, online publisher, print publisher and
E-Business companies
Top 12
Electronic Media
70%
Schickler Clients
July 2015 Page 36
Our client portfolio consists of over 200 Media and E-Business companies - here are
some examples.
July 2015 Page 37
Media is in our DNA – all partners at SCHICKLER have longstanding experience in the
media business and lead a team of over 50 SCHICKLER consultants.
SCHICKLER Management
More than 20 years within TIME industry
Has led more than 300 media projects
Elected among the 100 most important media managers in Germany
Consultant to German government in media topics
Has been with SCHICKLER for over 10 years
Broad international experience
Strong focus on structural and strategic topics, as
cooperation, reorganizations, digital strategies
and go-to-market approaches
More than 20 years of management experience
Focus on digital strategies, sales strategy and sales efficiency.
Former head of digital at Mecom Group plc,
(International Media Company, London, UK)
Over 20 years of management experience with
media companies
Expert on go-to-market and growth topics
Former managing director of Handelsblatt
Verlagsgruppe and Tagesspiegel in Berlin.
Professor for Digital Technologies and Business
Models in Berlin
Expert in developing business models in the
areas of online content, B2B and B2C media
European Officer of an internationally known US
venture capital fund
12 years of consulting experience in media
companies
Mentor for operational excellence in the
Pro7Sat1-Accellerator Program (biggest TV
company in Germany)
Lecturer in various media panels
Rolf-Dieter Lafrenz Alexander Kahlmann
Peter Skulimma
Joachim Liebler Prof. Dr. Robert Daubner
Christoph Hüning