Mecom to buy its way to number three in Germany

By Nicola Leske

FRANKFURT, Aug 19 (Reuters) - London-based Mecom Group (MEC.L) is looking for further potential acquisitions in Germany's fragmented newspaper industry as it aims for the number three spot among the country's newspaper publishers.

"The German newspaper market with around 300 regional publishers is very attractive," said Peter Skulimma, former managing director of Mecom's German unit BV Deutsche Zeitungsholding (BVZ) and now head of Mecom's digital strategy. Skulimma declined to be drawn on details, saying merely that there were talks with interested parties but there was nothing concrete for the time being.

The group, which already owns regional newspapers in Hamburg and Berlin, would be interested in papers of a similar size, he said, citing the Saechsische Zeitung as an example.

"There is much more on the market than one would think," Skulimma said in an interview with Reuters.

The paper -- one of the few surviving dailies from former east Germany and based in Dresden -- belongs to publishing house Gruner+Jahr, part of media giant Bertelsmann [BERT.UL].

"I think, however, we will see an acquisition of an online target before we see another print buy because we want to broaden our online portfolio," he said.

BVZ, which is among the top 15 newspaper publishers in the world's fifth largest newspaper market, recently bought online newspaper Netzeitung for an undisclosed sum. Skulimma said Netzeitung will make a profit for the first time by the end of this year.

"But I do not think we will pay the kind of price for a target similar to what has been paid in the past weeks and months," he added.

In July, Stuttgart-based publisher Holtzbrink offered to buy Internet search engine Abacho AG for 56 million euros, or nearly 13 times the online firm's annual sales of 4.4 million euros.

DOMESTIC PUBLISHERS DISADVANTAGED

According to studies by Ernst & Young and A.T. Kearney many small regional publishers will be put up for sale as family-owned papers lack successors keen to continue the business or because they do not have sufficient resources to invest in digitalisation.

This year, Hamburg publishing family Voigt sold its 75 percent stake in Braunschweiger Zeitung to the WAZ group for an estimated 160 million euros.

The country's largest national paper Sueddeutsche Zeitung is expected to be sold as early as this year as well, with the five owners reportedly hoping to fetch up to 1 billion euros.

By 2025, studies forecast 80 to 100 of Germany's regional publishers will disappear.