09. 01. 2013

German Newspaper Bankruptcy a Sign of the Times

Frankfurt, January 9, 2013 (Speiegel) - The Frankfurter Rundschau, one of Germany's most venerable dailies, has filed for bankruptcy, citing massive losses and falling circulation. The paper had been struggling for years, but its demise is nonetheless a bad omen for the country's newspaper industry, warn commentators.

In a blow to Germany's media industry, publisher Druck und Verlagshaus Frankfurt am Main on Tuesday announced the bankruptcy of one of Germany's 10 largest national newspapers, the flagship Frankfurter Rundschau.

First published on Aug. 1, 1945, it was only the second newspaper to be granted a publishing license by Germany's western allies. For the subsequent 67 years, the Frankfurter Rundschau enjoyed a reputation as an influential newspaper sympathetic to the left-leaning Social Democratic Party, with a circulation of more than 400,000 at its peak. But the past decade saw circulation shrink to 118,000 nationwide, amid a steady decline in advertising revenues and print subscriptions.

To observers, the fate of the paper is symptomatic of a wider malaise afflicting Germany's media landscape: Last month, German news agency dapd filed for insolvency, while a decline in advertisements has also hit the business daily Financial Times Deutschland. A decision on the newspaper's future is expected to be made at a board meeting next week.

Behind the Times

The insolvency of the loss-making daily Frankfurter Rundschau puts some 500 jobs in jeopardy, but according to a statement released by ownership, "massive revenue losses in the advertising and print business" left no option but to declare bankruptcy.

The newspaper -- which is partly owned by the major German publishing house DuMont Schauberg and by the Social Democratic Party -- has long been making losses and rumors of an approaching bankruptcy had been making the rounds in recent months. A note posted on the paper's website insists, however, that the paper will carry on despite the insolvency. German commentators say the paper's undoing was partly the result of negative trends facing newspapers around the world and partly the result of shoddy management.

The left-leaning Die Tageszeitung writes:

"It is an historic event: Tuesday's announcement that the Frankfurter Rundschau was bankrupt marks the first insolvency of a traditional national paper in post-war newspaper history. ..."

"This is a particularly harsh blow for a country like Germany, which enjoys unparalleled press plurality even in the area of print media. The newspaper industry is under massive pressure across the world. In the US, the death of the newspaper began years ago. The reasons are a dearth of young readers and more significantly, the drop in advertising revenue."

"But the roots of the demise of this once mighty left-leaning daily lie much deeper. Those responsible missed the opportunity to modernize it. The Frankfurter Rundschau stood for a fossilized, pro-union brand of journalism that neither reflected the times nor invited debate. ..."

"But other papers are struggling too. One of the biggest questions facing the industry is what can be done about the 'give-away' culture that has been established by the Internet: Are enough people willing to pay for quality reporting?"

"Yesterday was not a good day for our democracy, which is allowed to thrive because it is protected by critical journalism. The FR might be the first quality paper to announce bankruptcy, but it won't be the last."

The center-right daily Frankfurter Allgemeine Zeitung writes:

"One cannot say that publishing house M. Dumont Schauberg did not try everything it could, allegedly pumping more than €130 million into the paper. But the revamped paper's concept did not catch on. This year, it is reported to have lost €16 million."

"This shouldn't come as a surprise. The paper's switch from broadsheet to tabloid format was not its only major leap. It was an equally major leap when the paper that used to be the favorite breakfast reading of left-leaning West German civil servants reinvented itself as a trendy big city paper. According to insiders, The FR was slow to catch up with German reunification and also struggled to keep its head above water in the digital world, not that it was the only one. It should have heeded Mikhail Gorbachev's dictum that life punishes those who come too late. In this case, the punishment was inflicted by the readers -- those who have fallen away and those whom the newspaper cannot reach."

The business daily Financial Times Deutschland writes:

"The bankruptcy of this flagship left-leaning newspaper marks the spectacular failure of a strategy pursued by many German newspaper publishers: Instead of investing in the digital future of its print operations, numerous publishers have been concentrating primarily on cutting costs to ensure the short-term stability of returns on their print operations. But in the case of the Frankfurter Rundschau, share-holders had long since exhausted the savings potential."

"Like almost all dailies, the FR has been suffering from its readership's shift away from the print edition in favor of the free online service, losing almost half of its print subscribers in the last 10 years. While the FR provides a highly praised tablet version, which users pay for, there are still too few tablets on the market for sales of app subscriptions to compensate for the many losses in distribution income experienced in recent years."