World: Media Analysis - Gruner & Jahr expands reach beyond its German homeland

Emma Barns looks at how Europe's biggest publisher performs around the globe.

As Europe's largest publisher, producing more than 120 publications in ten countries, it's perhaps surprising that Gruner & Jahr remains low profile.

Majority-owned by Bertelsmann, G&J is headquartered in Germany where it has a strong domestic presence. But with more than 60 per cent of its revenue coming from non-German titles, its positioning is "the world's most international magazine publisher".

Yet across the globe, the G&J empire is patchy to say the least. Its strongest businesses outside of Germany are the American G&J USA publishing company and Prisma Presse in France. It also publishes newspapers and magazines in six other European markets including Spain, Poland and Russia, as well as farther-flung emerging markets such as China, where it publishes Car & Motor and Fitness.

Its portfolio spans the range, from women's weeklies to scientific magazines, parenting publications to teen titles. Recent launches include a bi-weekly TV guide in France, Tele 2 Semaines, and the international expansion of its science segment with the launches of GeoFocus in Russia and Quest in the Netherlands.

G&J's other offerings include the German news weekly magazine Stern, from which a TV show has been produced. In February 2000, it launched a partnership with Pearson with a 50 per cent stake in the Financial Times Deutschland. Following an 11 per cent rise in its circulation (to 91,000) last year, FT Deutschland's future looks more secure.

G&J has pledged to invest more than 50 million euros in new magazines in 2004. Dr Bernd Kundrun, its chairman and chief executive, promises: "We will continue to develop innovations and pursue our international expansion. In 2003, we used our innovation offensive to scout trends and successfully create publishing momentum in Germany and beyond." Kundrun estimates G&J will introduce up to 20 new titles across the globe this year.

Yet despite its "world's most international publisher" sell, G&J is notably absent from the UK. This has not always been the case: until October 2000, G&J published five titles including Prima, Best and Prima Baby. These were scooped up by The National Magazine Company, which beat IPC in an 11th-hour deal worth £100 million.

So why did G&J withdraw from the UK, having been present for 14 years since 1986 and boasting strong titles? In short, its later efforts such as Your Home were not as successful as its first forays into the UK market.

In the end, a lack of investment in the hugely competitive UK market saw G&J's circulations shrink, making a buyout the most tempting option.

G&J has not completely ruled out re-entry into the UK market but a reappearance any time soon looks unlikely.

Specific new areas of interest and expansion are not something G&J is willing to discuss. Alexander Adler, the European spokesman for the company, will only say: "We will continue to expand operations in the countries we are present in by launching new magazines, mostly along our strategy of further developing line extensions."

Under the same proposition, G&J might also enter new European magazine markets, as well as consolidate its position in the US where it owns a clutch of big family and parenting titles.

Yet, in the US over the past year, G&J has been under an intense media spotlight following the revelation of its overstatement of sales for the teen magazine YM, followed by the well-documented closure of the Rosie O'Donnell-fronted title Rosie.

Rosie, a joint venture between G&J and the US chatshow host O'Donnell, ended in a messy courtroom battle. In a spat of sueing and counter-sueing, details of the running of the title were revealed, including the knowing overstatement of its circulation. The debacle resulted in a senior management reshuffle with the US chief executive, Daniel Brewster, being sacked and replaced in the interim by the president of G&J's international magazine division, Axel Ganz. The senior vice-president of consumer marketing, Diane Potter, was also forced to resign.

Brett Stewart, the senior vice- president and director of strategic print services at Universal McCann in the US, says: "G&J needs to do some damage control following the challenges it faced in the US." The general feeling certainly seems to be that the publisher would be better off consolidating what it currently publishes before launching and expanding its operations across the pond.

G&J's announcement last month that it had slashed its rate base for YM by 25 per cent and its assurances that it has put in place a series of checks and balances suggest it has recognised that a careful and cautious strategy is its best course of action in the US. As far as the US is concerned, it remains to be seen whether the fallout will damage its long-term prospects.

In the meantime, with 50 million euros burning a hole in its pocket, it's worth looking out for what G&J does next.

G&J AROUND THE WORLD

Brands: In Germany, G&J's most well-known products are the weekly magazine Stern, the women's magazine Brigette and the business magazine Capital.

In the German newspaper sector its most high-profile title is the joint venture with Pearson, Financial Times Deutschland.

In the US, Parents and Fitness are two of its flagship titles.

Markets: In addition to its three main markets (Germany, France and the US), G&J has international holdings in Spain, Poland, the Netherlands, Austria, Russia, Hungary, Romania, Serbia and Montenegro, China, Italy and Slovakia.

Employees: 11,350, worldwide.

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