Strategic Fields of Investment Activity
Looking at the German media companies, it becomes clear that digital transformation in the media industry is strongly propelled by M&A projects. In the context of strategic digital transformation, thinking often takes place within a framework of three visual fields:
- Digitalization of the core business
- Digital expansion of the core business
Despite all the lack of clarity, we have attempted to designate investment activities to these fields. Axel Springer’s investment focus has developed over the years from ad sales to paid content/services. The company is not seeking to diversify, but instead aiming to digitally expand its core business. Fifty-five percent of all agreements listed by Axel Springer are assigned to this area. The change in the search focus can be explained by the fact that only a few targets in the classifieds context (expensive) are still to be acquired. A similar progression can be seen at Ströer: 50% of Ströer’s listed investments can be attributed to digitally expanding its core business, and 24% to diversifying its portfolio. ProSiebenSat.1’s strong e-commerce investment strategy requires that 89% of all listed contracts are allocated to the field of diversification.
A study conducted by LSP in 2016 about corporate venturing activities of the same German media houses from 2006 to 2015 emphasizes these activities. Of all 428 listed agreements, 65% of them referred to targets from business models unrelated to the media industry. 38% of all contracts related to e-commerce. In fact, ProSiebenSat.1 had 75% tied to unrelated agreements and 53% linked to e-commerce.