German publisher G+J braces for major ad slowdown

FRANKFURT, Oct 31 (Reuters) - German publishing house Gruner+Jahr is preparing for a major slowdown in advertising by slimming down its portfolio of magazines worldwide and cutting company expenditures by around 20 percent in 2009.

"In the light of the financial crisis growth and margin outlooks for all publishers for this and next year are significantly subdued," Chief Executive Bernd Kundrun said in a letter to management seen by Reuters on Friday.

"A similarly strong decline in advertising business in such a short time has rarely been seen before," Kundrun said.

Earlier this week three of the world's largest ad groups -- Publicis (PUBP.PA), Interpublic Group (IPG.N) and Aegis (AEGS.L) -- issued warnings about an industry slowdown. The advertising market is now at risk of suffering its biggest slowdown since 2001.

Kundrun said the company would discontinue all those titles from its portfolio in the coming weeks that did not stand a chance of surviving the global financial crisis.

"I am sure that other media companies will follow with similar measures," Kundrun said.

Gruner+Jahr, Europe's largest publishing and printing company, is owned by media conglomerate Bertelsmann [BERT.UL]. It owns around 280 magazines and newspapers in 22 countries and generates over 50 percent of its revenues abroad.

Kundrun added that company costs for expenses, travel and events will be reduced by 20 percent in 2009.

Kundrun said, however, that he was optimistic the Hamburg-based publisher would benefit from the current situation in the long run.

"I firmly believe that we will see a media consolidation in the coming years. That will allow a strong company like G+J to make acquisitions which recently would have only been possible at inflated prices."

G+J had been among those bidding for the trade magazines unit of Anglo-Dutch publisher Reed Elsevier (REL.L) (ELSN.AS) but pulled out last month according to media reports. The company has declined to comment.

G+J, known for its flagship weekly Stern and the women's magazine Brigitte, last year reported sales of 2.83 billion euros ($3.62 billion) and an operating profit of 264 million euros. (Reporting by Nicola Leske; Editing by Greg Mahlich)