German publisher Burda Holding GmbH has announced plans to pull its money out of Europe Online SA, the struggling pan-European, Internet-based online service.
The announcement is a blow to Luxembourg-based Europe Online, since Burda is its largest single shareholder and the last major European publisher involved in the project. UK publisher Pearsons and France's Matra Hachette pulled out of the online venture last year.
Dissatisfied with Europe Online's sluggish development and complicated shareholder structure, Burda has decided to develop its own online business. "In light of the possibilities to develop our own services it is no longer responsible to permanently tie capital and creativity to a project that is too complicated to navigate," Burda says in a statement.
Burda will create its own Internet editorial team and systems services subsidiary that will develop Internet products for its leading print magazines, the company says. Burda says it is witholding further financing in Europe Online, but has not given a timetable for selling its current shares.
In April Burda put pressure on Europe Online to streamline its complicated holding structure, allowing the company to react more quickly to changing market demands. "That reorganisation so far could not be accomplished," Burda says. "Consequently Burda will concentrate its investments more on the development of its own Internet-services in the German market," the company says.
In response, Europe Online will step up its efforts to create a more flexible ownership structure, a company spokesman says. "We are discussing taking on additional partners, especially from the telecommunications and online services industry," says Europe Online spokesman Alexander Fink.
"CompuServe is one possible partner," he says, declining to discuss the character of a possible Europe Online-CompuServe partnership. Europe Online is currently held by Burda; AT&T Interchange; Dr. Schwarz-Schilling GmbH; Meigher Communications LP of the US; Luxembourg-based State Investment Bank and State and Savings Bank; and investment companies Stratinvest, Luxempart and Virtual Tectonics. Burda has a 26% stake, while the other investors each hold between 7% and 13%.