Interview with Rolf Heinz, Président of Prisma Media
At the end of 2009 Rolf Heinz took over as head of Prisma Media in France. For close a year now he has additionally been responsible for all Gruner + Jahr’s foreign businesses in Europe.
Since then Heinz has not only maintained the publisher’s top position on French newsstands, but has gained market share in a challenging environment and established a digital division that is both innovative and profitable. Heinz has defied all the doomsayers and has shown that it is possible to make money in the digital world with print brands. And he has a clear goal in mind: to create an integrated, multimedia media vehicle of the future that combines the qualities of a magazine with those of the various digital media, and therefore appeals to and moves people like Prisma Media’s French magazine brands do today. The Bertelsmann editorial office met Rolf Heinz to talk business.
Mr. Heinz, by buying a stake in AdVideum – the biggest transaction in your company’s history – and launching the French edition of the “Harvard Business Review” within just a few days of each other, Prisma Media delivered a very strong start to the year...
Rolf Heinz: ... and one that also says a lot about our strategy. Both steps clearly show the direction we are taking Prisma Media in. On the one hand, our product campaign will continue unabated. We are launching new magazines, continually refreshing our existing titles, and also developing a variety of digital offerings that enable us to meet the needs of our target groups as best as possible. In doing this, we rely on our strong brands, which reach more than two-thirds of all French people. On the other hand, we are acquiring new businesses in growth segments, provided this will lead us to a strong competitive position in a faster, better way and bring important, complementary skills into the company. This is the case, for example, in the areas of technology, video and the monetization of digital businesses – and therefore with AdVideum, France’s leading marketing company for video advertising. AdVideum has more than 300 premium brands under contract, including all of the country’s major newspaper and magazine brands. We began by acquiring a 70-percent stake in the company. Having already acquired a majority stake in Mobvalue, the leading premium marketer of mobile ads in France, a year ago, we now lead the mobile advertising and online video advertising markets. I firmly believe that video and mobile are the two major growth areas of the future, where we can make good money with creative marketing.
And yet, at the same time you are launching a very traditional, print magazine with the "Harvard Business Review." Is there still room for it on French newsstands?
Rolf Heinz: There’s room for outstanding new products, even if the French magazine market is structurally in decline. It has recently shown a weaker development than in Germany or Austria, but slightly better than in Spain or Italy. In 2013, we had to cope with a ten-percent drop in newsstand and ad sales across the market. This downward trend is irreversible. For us this means that we have to be better than the market and win market shares. Efficient costs and structures are an important basis. But it’s not enough to just do our homework; it’s crucial that we are innovative, that we create new things and offer our content across all relevant media and channels, in customized form in each case.
Is this approach paying off?
Rolf Heinz: Yes, it is. In the past two years Prisma Media finally gained market share again across all sectors. From 2012 to 2013 alone, we increased our market share in newsstand sales, which make up two thirds of our sales, from 23.5 to 23.8 percent. Our share of the subscription market increased from 12.4 to 12.9 percent, and in print ads from 21.1 to 21.6 percent.
What about the digital business?
Rolf Heinz: During the same period we increased our revenues by more than 70 percent, organically by 25 percent. In 2013, we generated ten percent of Prisma Media’s total revenues with our digital business. That’s ten times more than in 2009. This year we’re going to pass the 15-percent mark, thanks to our stake in AdVideum. And the most important thing about this is that while our digital business sustained a loss of €6 million in 2009, in 2013 we recorded €5 million in profits there. Four years ago, hardly anyone would have thought us capable of this development, this turnaround. It has shown that money can be made in the digital world with strong print brands. A prerequisite is that you think and go much further than when merely extending a brand onto the Internet.
How specifically did you do that?
Rolf Heinz: Soon after taking office, I set up a separate digital business unit and ran it like a startup. We recruited digital entrepreneurs and experts with complementary know-how to strengthen our existing teams, especially in the key areas of technology and marketing. They run the business entrepreneurially, with a focus on sales and earnings, and not as a marketing activity or a pure extension of the print portfolio. While responsibility for the brands and content remained with the publishing groups and editors, we pooled responsibility for the establishment, operation and monetization of the digital business. The development of the unit, and the fact that today the digital business produces yields roughly the same returns as the print business, speaks for itself – and for our digital start-up.
What factors have turned out to be crucial for you in the digital business?
Rolf Heinz: Over time, we’ve seen the emergence of four critical factors for being commercially successful in the digital media business: having a technology edge, high reach, low-cost content and a strong relationship with customers. At least three of the four must be fulfilled in order to make money in the digital domain long-term.
Is there a project at Prisma Media that fulfills these factors?
Rolf Heinz: Yes, the prime example is our digital business at Télé Loisirs, which now has the highest return on sales of all of our publishing products. The brand has an extremely large reach, the listings content can be created at low cost, and technologically we have always been one step ahead of the competition, for example with our app, which lets users easily program their TV system at home through remote control functions. There are days when this app reaches more than a million unique users, and its monthly mobile reach is greater than that of Facebook in France.
Why is success in the digital business so important for your publishing company?
Rolf Heinz: Because the future belongs to this business. We are witnessing a convergence of media that opens up entirely new creative and entrepreneurial opportunities. Text, image, video, audio content, social interaction, gaming, e-commerce – on a digital platform, all this can be merged into a new whole, a new user experience. My personal ambition is to work with our team to develop a new kind of media vehicle, a multimedia magazine. No one knows better than us how to make a good, emotional, appealing magazine. When, in addition to texts and pictures, our editorial teams now simultaneously think about video, and editors produce video and audio content in our studio, this is only the beginning. We want to set publishing standards in the digital media world as well. There’s a saying I like to keep in mind: The best way to predict the future is to invent it.
And the print business?
Rolf Heinz: The print business as a whole will remain in structural decline, but in our case it will continue to earn good returns for a long time yet. Our efforts center on increasing the value of the company. In the context of structurally declining print markets, this means that the focus is not on revenue growth, but on increasing the revenue share contributed by our growth businesses, and on a sustained positive earnings development.
Is that so easy to do?
Rolf Heinz: No, it involves hard work on our magazine business, too. At Prisma Media, we still generate a good 80 percent of our revenues with traditional print magazines. We are number two in this market and intend to expand our market position, overtake Lagardère and become the market leader.
How do you intend to do this?
Rolf Heinz: By constantly working on our existing magazines and simultaneously launching new ones. After lots of changes at the top in recent years we have the best editors-in-chief for our titles, and passionate editorial teams that research and write on the best topics, shoot the most wonderful photos, design the most fantastic covers and have the right instincts for what people want to read in France, week after week and month after month. The result is a portfolio of titles that outsells those of all other competitors, especially on newsstands.
What is the current weighting within this portfolio? What are Prisma Media’s most important magazines?
Rolf Heinz: Our biggest titles in terms of circulation and advertising revenues are also our most profitable titles: The women's magazine "Femme Actuelle," the people magazine "Gala," and the three TV guides "Télé-Loisirs,” “Télé 2 Semaines" and "TV Grandes Chaînes." In the second tier are the magazines "Capital,” “Geo,” “Ça m'intéresse,” “Prima" and "Voici," all of which set themselves apart from their competitive environment with their unique concepts and have become part of the French cultural landscape.
You mentioned the launch of new titles. Besides the many line extensions, Prisma Media recently launched a whole new magazine with "Neon." How is "Neon" doing?
Rolf Heinz: "Neon" has gone down very well with the young French crowd. It has a paid circulation of 50,000 copies and we aim to break even by next year after a manageable level of investment. By Prisma standards, "Neon" is a relatively small, very innovative journalism project with a positive appeal for our publishing company both internally and externally. In the first year after launch we won the French Publishers Association’s Innovation Award and we regularly receive fan mail from readers of the magazine – some written collectively. It’s also important to us that we can reach a young, attractive target group with a lot of potential with the magazine.
This was followed by the French edition of "Harvard Business Review," after a promising trial run. Do you have any more new titles or re-launches in the pipeline for 2014?
Rolf Heinz: We do. After the successful relaunch of "Gala" and "Management" in 2013, 2014 will be the year of women's magazines – we’re working on revamping them at the moment. We are also planning further line extensions, that is, the launch of new magazines based on our powerful brands. In the past three years we’ve launched 15 new line extensions such as "Ça m'intéresse Histoire,” “Geo Art" and "Femme Actuelle Jeux Extra" – titles that generated positive earnings from the outset. The next launch is “Gala Beauty," a quarterly magazine about the subject of beauty, personified by celebrities. It is a thing of beauty itself, published in a large format and with a generous, spacious layout and design. Like “Gala Croisette,” a special daily magazine published to accompany the Cannes Film Festival, this is an exclusive title with an “event-scale” feel. At "Gala Beauty" we are partnering with three cosmetics chains who will be giving their customers the magazine as a free bonus with purchase, which gives us a very high circulation and a target group-specific approach at the same time.
And will there be any brand new magazines?
Rolf Heinz: There will in 2014. We are working on three specific projects, but I can’t say any more about them at the moment.
Can you tell us how you go about developing such new magazines?
Rolf Heinz: In the vast majority of cases, with our existing editorial teams, fueled by our own ideas and under our own steam. We have so many creative talents in our editorial teams who keep coming up with new ideas for new magazines, that it’s a real pleasure to work with them.