Media: FT seeks German readers

Analysis

WALDEMAR SCHAEFER, joint editor of the German business daily Handelsblatt, did not sound especially nervous yesterday at the news that he would soon be competing against a German-language edition of the FT, complete with an English (but German-speaking) editor. He laughed: "Is there space for them? I think they are going to find the competition is very strong."

If anybody yet knows when the new paper will be launched, or even what it will be called, they are not saying. Yesterday, the FT finally confirmed the open secret that the German FT was a definite runner. The new details are: it is to be printed on pink paper, and published in a joint venture with Gruner & Jahr, publisher of the established Capital economic and business monthly, and a subsidiary of Bertelsmann, Europe's largest media group; and start-up costs are estimated at DM170m. Schaefer thinks it will cost twice that.

The FT and their German allies are entering a torrid market. New publications have been launching in a flurry to attract Germany's expanding new class of equity investors, who have proven a hungry audience for business news. This year's launches have included Springer's Euro am Sonntag, a weekly newspaper, and the German regional press has also been bolstering business news coverage.

But the German FT will be the biggest launch so far and a test of both Pearson and Gruner & Jahr's ability to succeed with a testing cross-cultural and media joint venture. The newspaper is expected to be launched alongside a website which will be integrated with FT.com, the Financial Times Internet channel. It will be edited by Andrew Gowers, former deputy editor of the FT. It is expected to include both a strong business report as well as information orientated to investors, although this alone will not distinguish it dramatically from Handelsblatt.

The English-language FT has been published in Germany for more than a decade. But it still sells only around 20,000 copies a day, compared to 150,000 for Handelsblatt, published in Dusseldorf.

By reputation, Germans have not been excessively interested in business news, provided the mark in their pocket stayed strong. Their personal investments have traditionally been in boring, reliable bonds. But as the yields of fixed income investments have fallen, Germans have surprised many with the enthusiasm of their conversion to the joys of investing in shares. This has all recently been stimulated by the launch of the single European capital market denominated in the euro. The rush to serve this new market has in turn stimulated public interest. Publishers have swarmed to the honey pot.

English only takes you so far in Germany. Most Germans can make no more sense of an English-language newspaper than can most Britons cope with a weighty copy of Stern (also published by Gruner & Jahr). While the English- language FT and the Wall Street Journal have been must-reads for bankers in Frankfurt and a handful of senior people, neither paper is relevant to most managers or investors. Half the FT's English-language circulation in Germany is said to be a bulk sale to Lufthansa.

The new launch will be a test for Handelsblatt, quintessential organ of German capitalism. They are unlikely to prove a pushover. Its circulation has grown steadily but not spectacularly. Is it complacent in its market or ripe for new competition? Or are there only 150,000 people a day ready to buy a financial paper in Germany?

Pearson's objective is to command a portfolio of euro zone newspapers and web sites, including editions of the FT in English and German, Les Echos in France, and Expansion in Spain. But their start-up in Germany is more testing than the acquisition of established titles in France and Spain, which were simply a matter of establishing the right price. The FT's adventure in Germany will be a test of the pink 'un's fitness to rule business news in Euroland as it has in Britain.

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