Markus heads Digital at Holtzbrinck Publishing Group and in that time has been involved in more than 50 M&A deals. He will be one of more than 40 speakers at the Digital Innovators’ Summit in Berlin, taking place from 20-22 March 2016 (the main Summit is on 21 and 22 March). See the preliminary programme, speakers confirmed so far and/or register to attend.
In his presentation at the DIS Summit he will talk about what investors are looking for from digital media companies and the role of M&A in expanding established company’s portfolios. Here he shares some thoughts with Ashley Norris.
What are the key criteria you look for when investing in a publishing company? Is it all about digital content?
It is all about innovation and new business opportunities driven by the digitalisation of value chains, products and consumption habits. Traditional models within the publishing world are increasingly under pressure from completely new approaches to solving problems. Whatever the scope, we look for game changing models and companies that have the potential to be leaders in their segment.
Are there any key trends emerging that you think make digital content companies attractive to investors and buyers?
Content is still king, especially with the growing shift towards digital communication in B2C as well as B2B sectors. Relevant quality content will be a decisive differentiator for consumers and companies. As the borders between content containers – from books to instant messages – dissolve, new products and business models will arise. I strongly believe this trend offers a lot of opportunities to publishers as well as investors.
Do you think that European content start-ups are as attractive to investors as US ones? Do US digital media startups have inherent advantages?
We see a lot of attractive companies that have innovative technologies, a global market focus and outstanding entrepreneurial experience, which originate in Europe. Although for some businesses the US, with its huge homogenous domestic market and more adventurous consumer base, may be the better launch pad. I think startups which focus their business models solely on the US face tougher competition and may miss growth potential in other big economies. For us internationally scalable models are the most attractive opportunities.
Are app-based businesses still attractive to investors like your? Or do publishing companies need broader offerings?
Again, we look for businesses with the potential to disrupt and lead their niche. The shift to mobile is one of the most invasive megatrends and mobile formats like apps offer interesting new solutions to consumer problems and use cases. The backbone of a long-term robust business model requires a deep integration of value creating instances. Narrow approaches are more likely to subsidised or overhauled. As investors we require a clear long-term vision and roadmap towards market leadership. It all starts somewhere, often with just an app.
What deals in the digital publishing world have you found to be inspiring? Both ones you worked on and others?
The merger of Springer Science+Business Media with the majority of Macmillan Science and Education (Holtzbrinck Publishing Group) was an important strategic step for our group as it formed a market leading business on global scale and was a truly inspiring deal. The newly formed company Springer Nature employs 13,000 people in over 50 countries and has a turnover of € 1.5 billion. It was also one of the biggest transactions in the publishing industry in 2015.
What advice would you to give to anyone starting up a digital publishing company?
Don`t do it. Unless you have done your homework, know your market, have gathered the best people and are ready to invest all your time and money in your vision.
Do you think it is still possible for news start-ups to follow, say, a Mashable, which was begun in one person’s bedroom, to become a global media player? Or have those days gone?
We have seen an increase in the frequency, speed and impact of truly disrupting developments in well-established industries, which has been mainly driven by digitalisation. This offers opportunities for startups, as well as for traditional businesses, to change and enter existing markets (or even create new ones) and to reach a significant size in a very short time. Many of the next decade’s global players haven’t even been founded yet.
Do you think we are going to start see more European publishing companies investing in, and purchasing, US companies like Springer did with Business Insider?
It is true that the whole industry – especially in Europe – is facing growth challenges. The digitally driven market developments have outpaced organic change of traditional business models. So I am sure we will see intensified M&A activities in the near future that will help make up for lost innovation speed.
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