SPIEGEL-Verlag Rudolf Augstein GmbH & Co. KG

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SPIEGEL-Verlag Rudolf Augstein GmbH & Co. KG

Brandstwiete 19
D-20457 Hamburg
Germany
Telephone: (49) (40) 3007-2869
Fax: (49) (40) 3007-2966
Web site: http://www.spiegel.de

Private Company
Incorporated: 1947 as Spiegel-Verlag GmbH
Employees: 1,106
Sales: DM 691 million ($330 million) (2000 est.)
NAIC: 51112 Periodical Publishers; 51312 Television Broadcasting; 51211 Motion Picture and Video Production

SPIEGEL-Verlag Rudolf Augstein GmbH & Co. KG publishes Der Spiegel. With a circulation of over one million, Der Spiegel is one of Germany’s two major weekly news magazines. More than 270 journalists in nine domestic departments and 23 offices abroad deliver content for Der Spiegel. Besides its flagship publication, the company puts out four other periodicals: kulturSPIEGEL, Germany’s largest cultural magazine; UniSPIEGEL, a magazine targeted at university and high school students published six times a year; SPIEGELreporter, a monthly magazine featuring reports, essays and interviews; and the business monthly manager magazin in which publisher Gruner + Jahr AG & Co. has a 24.9 percent share. In cooperation with book publishers and record labels, SPIEGEL-Verlag publishes alma-nachs, chronicles, CD-ROMs, and audio CD collections. SPIEGEL-Verlag’s subsidiary SPIEGEL TV produces TV news shows and documentaries which are broadcast on major German commercial TV channels. The company’s Internet activities are organized under the umbrella of SPIEGELnet AG. Employees own one-half of SPIEGEL-Verlag; company founder Rudolf Augstein and Gruner + Jahr each own 25 percent.

Rudolf Augstein Becomes a Journalist After World War II

Rudolf Augstein’s interest in politics reached back to high school. While attending the liberal arts and science-oriented Kaiserin-Auguste-Victoria high school in Hannover in 1941, Augstein, the son of a man in the photography business, questioned in an essay that Germany would be able to win the then-ongoing World War II. After graduation from high school Augstein started out as an apprentice newspaper journalist at the Hannoverscher Anzeiger. However, the war interrupted his journalistic career before it even began. In April 1942, Augstein was called up for war service, working as a radio operator and later as an artillery spotter on the Eastern front. Wounded, Augstein became a prisoner-of-war of the U.S. Army for a short time before he returned to his destroyed hometown in the British zone. Augstein applied for an editorial position at the Hannoversche Nachrichtenblatt, a newspaper licensed by the British authorities. British Press Officer John Chaloner, exactly one year Augstein’s elder, gave him the job after Augstein passed Chaloner’s assessment test: Chaloner had requested that every applicant puzzle together a layout from newspaper clippings and write two essays, one about national and one about international politics, which he then evaluated with the help of employees whose German was better than his.

Twenty-two year old Chaloner worked for the British Information Control Unit, whose task it was to establish a brand-new system of print and radio broadcasting media in the British zone. He came up with another idea—to publish a weekly German news magazine. In spring 1946, Chaloner put together an issue of Diese Woche —German for “this week”—with the help of two German secretaries who were fluent in English. In the summer he and his co-workers from the Publications Production Unit, lawyer Henry Ormond and glass factory manager Harry Bohrer, who had both escaped from Nazi Germany to Britain because they were Jewish, began to look for people who could put this idea into practice. The first one they approached was Rudolf Augstein. When Augstein asked the three British officers what they meant by a news magazine, they showed him the British News Review and said that it was something like that. It wasn’t clear at all how much he would get paid and where the magazine would be printed, but Augstein agreed.

From Woche to Der Spiegel

While Chaloner approached all the British authorities that had to approve his project and Ormond started looking for paper, printing ink, rotation presses, and vehicles for distribution, Bohrer gave the prospective writers who had never before seen a news magazine a crash course in more casual writing than they were used to in their newspapers. Based on the writing style of the U.S. TIME magazine, Bohrer showed his inexperienced twenty-somethings how to enrich the news stories’ essential facts with background information and how to present them in a more personal style. The first two test issues were printed in late October and early November 1946. However, when the British authorities tried to delay the project, Chaloner decided to start in November without their permission. Permission was given after the first issue on November 16—under the condition that the magazine would be censored before publication.

The young editorial crew was inspired by the idea to not bow down before any authority and took it’s new job of “objective reporting” very seriously. They reported about extra rations of meat and sweets being distributed in Britain while the Germans were starving; about German prisoners of war who were working in French coal mines; about highly qualified German professionals being shipped to the Soviet Union; and about British companies stealing German patents. Beginning with the third issue, the magazine was censored word for word by British authorities in Berlin. When the other three Allies protested energetically against the “British paper,” Chaloner handed the magazine over to Augstein, who was leading the team, along with the request to come up with a new name—literally over night. Augstein came up with Der Spiegel and he, together with his colleagues Roman Stempka and Gerhard R. Barsch, received a temporary publishing license from the British authorities. Harry Bohrer told Augstein that the license agreement still contained a censorship clause and encouraged Augstein to request a change. Augstein, who did not speak English, went back to the British Officer, put a pen in the officer’s hand and “helped” him cross out the censorship clause. Germany’s first news magazine was born. The first 15,000 copies of Der Spiegel published on January 4, 1947, sold out quickly. Officially priced at one German Reichsmark, they sold for up to fifteen times that much on the black market. By 1948, the SPIEGEL print run was up to 65,000 and reached over 121,000 in the year 1952 when the magazine moved headquarters from Hannover to Hamburg.

Reporting and Causing Scandals in the 1950s and 1960s

Right from the beginning, Augstein’s SPIEGEL took on as a major task criticism of the postwar West German government led by Christian Democrat Konrad Adenauer. In 1948 Augstein, the publisher and editor-in-chief, started writing an acerbic political column under the pseudonym Jens Daniel. Investigative journalism became one of Der Spiegel’s hallmarks and the magazine frequently reported about affairs and political scandals. When the magazine reported in 1950 that members of the Bundestag, the German parliament, had accepted bribes to vote for Bonn as West Germany’s new capital, the whole republic paid attention. Consequently, the Bundestag formed the “SPIEGEL Committee” which tried in vain to shed light on the affair. In the following decade, Augstein’s magazine reported about several other domestic political scandals. One of its targets was Franz Josef Strauss, Adenauer’s defense minister.

SPIEGEL stories about Strauss covered his many attempts to put his own will above the law and to help some of his friends with positions or references. They also criticized his military politics which were aimed at arming the West German Bundeswehr with nuclear weapons. SPIEGEL’s 41st issue of 1962, which was published on October 8, featured an article titled: “Limited Readiness for Defense.” The article reported on the NATO maneuver “Fallex 62,” criticized Strauss’ military concept, and showed that his army was not in very good shape. The piece was not only based on information from Alfred Martin, a member of the military General Staff, but it had also been checked by Social Democrat’s military expert and later-chancellor Helmut Schmidt and even by the German intelligence unit BND.

However, the German chancellor and his defense minister accused the magazine makers of systematic treason for financial gain. On Strauss’ order and with the help of the Spanish police, the author of the article, SPIEGEL staff writer Conrad Ahlers, was arrested in Spain where he was on vacation. He flew back to Germany afterwards where he was immediately arrested by German police. On the evening of October 26, 1962, about three dozen police officers marched into the SPIEGEL offices, sealed them, confiscated documents, and arrested editor-in-chief Claus Jacobi, and other staff. Augstein, who had already left for the day, was warned by his chief economic editor and turned himself in to police on the following morning. Only when it was pointed out to the leading police officer that he might be responsible for a million-Deutschmark loss if the issue the magazine was trying to finish that Friday night did not appear, did he let editors, messengers and printers finish their job. The federal attorneys required upcoming issue number 44 to be inspected by them before publication to prevent another possible “crime.”

Company Perspectives:

DER SPIEGEL is Germany’s leading news magazine and the largest in Europe. It is politically independent, being answerable to no one but itself and its readers, and it is not associated with any political party or business group. In the future, our key aim remains to expand and consolidate DER SPIEGEL’s market leadership on the editorial, sales, and advertising levels, while at the same time establishing sophisticated, high-quality publications and products in both the new and the old media.

Unexpectedly, the event caused a sudden wave of solidarity in Germany and was critically commented on by the media abroad. Shortly after the occupation of SPIEGEL’s offices, other Hamburg-based print media offered their threatened colleagues office space and typewriters. Under chaotic conditions, they kept putting out their magazine. The 700,000 print run of the SPIEGEL number 45 sold out shortly after publication. When Chancellor Adenauer refused to accept the protest resignation of Free Democrat Justice Minister Wolfgang Stam-mberger, the Free Democrats demanded a thorough investigation. For three days at the beginning of November, the affair was discussed in the German parliament. The leading figures gave contradicting testimony while Strauss pretended to know nothing. Only bit by bit did the true story emerge. The debate did not get to the truth, but the government was harshly criticized by the German media. As a result of the internal conflict between the people involved, the government dissolved in only a few days time.

The affair that was designed to break the SPIEGEL finally fell back on its creator Franz Josef Strauss. The man who had been working hard towards becoming German chancellor not only lost his defense minister post, but was forced out of national politics. At the end of November 1962, the most significant event in the magazine’s history was over and SPIEGEL operations went back to normal. However, Rudolf Augstein was held in jail until February 1963. Finally, in May 1965, two and a half years after Augstein and his colleagues had been arrested, the law suit against him and Ahlers was called off for insufficient evidence. The last of about 150 of Augstein’s Jens-Daniel-columns appeared on April 24, 1967. It was an obituary for Konrad Adenauer.

SPIEGEL Employees Become Co-Owners in 1974

SPIEGEL-Verlag’s co-owners changed several times before an enduring structure was established for the company in 1974. Three years later, its co-owners Barsch and Stempka left. Hamburg-based publisher John Jahr stepped in and took over 50 percent of the company’s shares. Twelve years later, Jahr sold half of its shares to Richard Gruner who owned a printing business, while Rudolf Augstein bought the other half. In 1969, when SPIEGEL moved to its new headquarters in Hamburg’s Brandstwiete, Gruner sold his shares back to Augstein for DM 42 million and Augstein became the company’s sole owner. (In the meantime, Gruner together with the Jahr brothers formed a new company, Gruner + Jahr, which later became one of Germany’s major publishing houses.) In 1971, Augstein (once again) sold a 25 percent share of his business to Gruner + Jahr.

For several years, there had been discussions going on among SPIEGEL employees about getting more influence on the company’s business. Left-wing liberals and journalists who called themselves socialists especially favored a bylaw that would guarantee certain rights in decision-making. However, Augstein came up with an even more radical idea. Within the next two years he drafted and promoted a company structure which made SPIEGEL employees co-owners of the enterprise. This model not only awarded employees the right to a say in major business decisions, but also a share of the responsibility for their consequences. In 1974, Augstein handed a 50 percent share of the company over to its employees.

Every SPIEGEL employee who had worked for the company for at least three years could elect to become a shareholder in the Kommanditgesellschaft Beteiligungsgesellschaft für SPIEGEL-Mitarbeiter mbH & Co. which owned about half of SPIEGEL-Verlag. According to the new organization’s bylaws, major decisions among owners required at least three-quarters of all votes, which meant that all three owners had to agree. Such decisions included hiring and firing editors-in-chief and directors of the company, approving annual budgets and balance sheets, changes in the magazine’s principal concept and new business ventures. The rights of the employee-owners were represented by five directors elected for a three-year period who fulfilled these duties in addition to their regular jobs for no extra pay. At the end of the business year, every employee-owner received a part of the 50 percent profit share, based on their years of service and annual income. The additional profit-sharing income was mainly seen as a means of saving extra money for retirement since SPIEGEL didn’t offer a pension plan. Despite several attempts by top managers to get rid of the employee-ownership model, the company’s organizational structure endured.

New Print Products and Venturing into TV in the 1980s

As early as 1970, SPIEGEL-Verlag started getting new ventures off the ground. That year the company together with McGraw-Hill founded the new subsidiary manager magazin Verlagsgesellschaft which started publishing manager magazin. The new magazine provided business information to top level managers. McGraw-Hill left the partnership in 1973, but the magazine took off and in 1986 Gruner + Jahr joined the venture. By 1989 the magazine’s circulation had reached almost 88,000. In a joint venture with Harvard Business Review, manager magazin contributed to the German version of the Review.

Key Dates:

1947:: The first issue of SPIEGEL magazine is published.
1951:: Publisher John Jahr and editor-in-chief Rudolf Augstein become co-owners of SPIEGEL-Verlag.
1962:: As the result of a news story critical of the government, German police occupy SPIEGEL offices and arrest staff.
1971:: Rudolf Augstein sells a 25 percent share in his enterprise to publisher Gruner + Jahr.
1974:: SPIEGEL-Verlag employees become co-owners of the company.
1988:: The first SPIEGEL TV show is broadcast on the RTL channel.
1994:: The SPIEGEL magazine goes online.
2000:: Internet subsidiary SPIEGELnet AG is established.

In 1988, SPIEGEL-Verlag published the first issue of SPIEGEL SPEZIAL, a magazine that provided in-depth reports on a particular subject or theme. Until 1994, SPIEGEL-Verlag published 21 issues of SPIEGEL SPEZIAL. From 1994 on, it was published monthly, first as SPIEGELspecial and since 2000 as SPIEGELreporter. In May 1995, SPIEGEL-Verlag started producing SPIEGEL Kultur Extra, a cultural supplement for SPIEGEL subscribers. The supplement was designed as a cultural guide to Germany, with reports and interviews; theater, music, movie, and book reviews; and an extensive calendar section. SPIEGEL Kultur Extra later became kulturSPIEGEL and boosted the number of SPIEGEL subscriptions. In 1998, SPIEGEL-Verlag launched another new print title—the UniSPIEGEL. The new magazine was published six times a year and covered subjects of interest to high school and university students. Students who subscribed the SPIEGEL received UniSPIEGEL for free.

When commercial radio and television broadcasting was introduced in West Germany in 1984, SPIEGEL-Verlag took a chance by expanding into the new market through a cooperation with Development Company for Television Programs (DCTP). DCTP offered SPIEGEL-Verlag certain time slots on major commercial TV networks RTL and SAT.1. On May 8, 1988, for the first time, SPIEGEL-Verlag’s TV-show SPIEGEL TV MAGAZIN, a 40-minute political news magazine, was broadcast on RTL. In 1991, SPIEGEL-Verlag launched TV subsidiary SPIEGEL TV GmbH and one year later the company acquired a share in DCTP. In January 1993, SPIEGEL TV launched a number of new TV formats which were broadcast on the VOX channel. Beginning in 1994, SPIEGEL TV started producing the channel’s TV news and developed the news report magazine PRESSE TV for Swiss TV network SF2. In 1996 SPIEGEL TV subsidiary a + i art und information GmbH was founded, a TV production company for programming that didn’t carry the SPIEGEL label. In the following years a + i was involved in the production of two successful TV shows: Wa(h)re Liebe, a late-night erotic show for VOX and high profile talk show Johannes B. Kerner Show for public broadcaster ZDF. In 2000 a + i took over 50 percent of ASPEKT Telefilm-Produktion GmbH, a company that produced movies, reality soaps, and documentaries for TV.

Challenges in the 1990s

After 45 years of a de facto monopoly, Der Spiegel was suddenly confronted with a competitor. In January 1993, Munich-based publisher Hubert Burda launched his own weekly news magazine FOCUS. Unlike SPIEGEL’s lengthy articles, the new magazine featured shorter pieces with plenty of images and graphs. FOCUS offered attractive rates to advertisers and soon gained a considerable circulation which by 1996 had reached 800,000. Media experts estimated SPIEGEL-Verlag’s 1993 losses in advertising revenues at 15 to 20 percent. Over the years, FOCUS gained more and more readers and, according to one media analysis, had caught up with SPIEGEL by 1999.

The Internet age began for the SPIEGEL on October 25, 1994. On that day the first electronic edition of the magazine was published online. According to SPIEGEL-Verlag, SPIEGEL was the world’s first online news magazine, launched one day before Time’s online version. Subsidiary a + i art und information started working on online editions of manager magazin in 1996. In September 2000 SPIEGEL-Verlag founded SPIEGELnet AG as the group’s Internet holding company. SPIEGELnet AG organized under its umbrella SPIEGEL ONLINE GmbH, manager magazin ONLINE GmbH, development company portal 100 internet GmbH and Quality Channel GmbH, a company that marketed SPIEGELnet’s web sites and other sites with high-quality content. In 2000, Rudolf Augstein was awarded the title “Journalist of the Century” by Germany’s media trade journal Medium Magazin, based on the votes of 100 high-profile journalists.

Principal Subsidiaries

SPIEGEL TV GmbH; manager magazin Verlagsgesellschaft mbH (75.1%); DCTP Entwicklungsgesellschaft für TV-Programme mbH (12.5%); Klassik Radio GmbH & Co. KG (8.1%); a + i art and information GmbH & Co. television productions; ASPEKT Telefilm-Produktion GmbH (60%); STORY HOUSE Productions GmbH (35%); SPIEGELnet AG (86%); SPIEGEL ONLINE GmbH; manager magazin ONLINE GmbH; Quality Channel GmbH; portal 100 internet GmbH.