UPDATE 2-Axel Springer's digital push makes up for declining print

Tue Aug 5, 2014 8:54am EDT

* Q2 core profit up 8.2 pct at 147.8 mln vs 147 mln forecast

* Had 260,000 digital subscribers for flagship papers

* Shares up 5.7 pct, leading sector index (Adds CEO, analyst comment, background)

By Harro Ten Wolde

FRANKFURT, Aug 5 (Reuters) - German publisher Axel Springer's push into digital media continued apace in the second quarter, with revenue from online advertising and web portals making up for falling print circulation.

Newspaper publishers are shifting to digital publishing as consumers increasingly use smartphones and tablet computers to consume news and information, but the industry has been struggling to establish a profitable online business model.

Earlier this year, Axel Springer completed the sale of a cluster of newspapers and magazines to German privately-held peer Funke Mediengruppe.

Its digital business now accounts for more than half of its revenue. In the second quarter, digital represented more than 65 percent of core profit.

The publisher of Germany's top-selling daily, "Bild", said on Tuesday its earnings before interest, tax, depreciation and amortisation (EBITDA) rose 8 percent to 147.8 million euros ($198 million), in line with analyst forecasts.

Growth came mainly from its real estate and job portals, which includes brands such as StepStone, Immonet and SeLoger.

"Axel Springer is making good progress in migrating its business to digital," said DZ bank analyst Harald Heider. "We expect strong organic growth as well as growth through acquisitions," he added, keeping a "buy" rating on the stock.

Axel Springer's shares jumped 5.7 percent, the biggest gainer in an index of European media companies, which was up 1.1 percent.

The Berlin-based publisher changed the Bild website to a so-called "freemium" model last year, with some content remaining free and items such as exclusive interviews, stories and photos subject to a charge.

It has also introduced a paywall for some online content of its flagship national daily Die Welt, following in the footsteps of several papers like the Financial Times, the Wall Street Journal and Britain's Times newspaper.

The publisher said it now had more than 260,000 digital subscribers, including 209,000 for Bild and 53,000 for Die Welt.

"In the old model, it would have taken us a decade to build such a client base," said Chief Executive Mathias Doepfner. "The fact that we reached this level in such a short period of time is proof to us that we are on the right track."

Analysts said the transition was also helped by the strength of the Bild newspaper brand, which has an average daily circulation of 2.4 million copies.

Axel Springer said it still expected revenue to rise by a mid-single digit percentage this year. ($1 = 0.7451 euros) (Reporting by Harro ten Wolde; editing by Tom Pfeiffer)