Vorarlberger Medienhaus is facing two critical challenges: ongoing digitalisation and identification of new growth markets.
But Eugen A. Russ, owner and managing director, sees the Austrian-based VMH as on its way to becoming a lean, digital media company. He says VMH not only invests in news, but also pursues a portfolio strategy.
VMH’s business operations include newspapers, printing presses, Internet, telephony, book trade and radio. VMH Group comprises more than 60 newspapers, numerous online propositions and radio stations in Austria, Hungary and Romania. Moreover, its subsidiary, Quoka, is the market leader in the classifieds market, publishing 18 weekly papers in Germany, with circulations of 600,000 copies monthly.
The financial crisis did not greatly affect the Austrian newspaper market; it suffered by only 2 percent from 2007 to 2009. On average, Austrian publishing companies achieved a 9 percent gross operating surplus in newspaper publishing in 2007, due to low paper prices and stable subscriptions in Austria.
VMH must enter new markets to find new revenue. The most important future growth segments for VMH are Eastern Europe and its digital business. Russ says he expects print to grow only through an increase of VMH’s market share, and sees the future of VMH in online niche markets. For example, VMH owns mascus.de, the most important website for construction vehicles in Europe.
Russ pursues a strict digitalisation strategy and wants VMH to earn 25 percent of its total revenue with digital content. Currently, 50 percent of VMH’s employees work in the online business division and it employs 50 engineers to maintain Web and tablet applications.
“The leading websites in Europe display local content,” Russ says. VMH is therefore uniquely positioned due to its local focus. Russ sees the future of monetisation in high quality content needs.
“High quality content will find a buyer, but online news needs a different business model,” he says, adding that he doesn’t believe advertising alone is sufficient.
Although the iPad could offer the ideal solution, Apple demands a 30 percent share and there exists significant national tax in Austria. Russ says he believes increased ownership by Apple in news distribution would threaten the industry entirely, as it relies on democracy and a diversity of perspective.
The biggest strength of VMH is its entrepreneurial workforce and profit-centred approach.
“Every entity in VMH has to be profitable.” In the long run this would make VMH more successful than companies that do not separate between online and offline business, he says. “Newspapers won’t be dead in the future – at least not in Europe … the newspaper industry faced several technological disruptions like TV already, but it always found a way to survive.”
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