The Classified Ad Might Have Read Something Like: “Largest Swiss Media Company Looking to Expand Its East European Operations Seeks Former German Chancellor To Open Political Doors.” Ringier Welcomes Gerhard Schroeder to Work in Zurich
Philip M. Stone November 27, 2005
In a mighty coup for Michael Ringier, chairman of the Swiss publishing empire that carries his name, and at the same time delivering as good a blow as any at his arch-rival, Germany’s Axel Springer, former German Chancellor Gerhard Schoeder has agreed to advise Ringier on international political affairs and spend one or two days a week at Ringier headquarters in Zurich starting in January.
Salary or exact working hours were not disclosed. “You don’t work out a contract over a 40-hour week with a person like that.” Ringier said in a statement.
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Widely reported and now taken as simple truth, ad spending world side – except in Asia and except for the internet - is shrinking. Aegis, a division of media buyer Carat, recently revised downward its ad spending forecasts for 2005. But you might have missed the part about Central and Eastern Europe.
It was September, 1993. Circulation of the Times broadsheet was continuing its spiral downwards with no end in sight, so owner Rupert Murdoch resorted to that old standby in times of circulation crisis – he cut the newsstand price by 30%. That single move is credited today, 12-years later, with causing such a financial bloodbath for all of the UK national quality broadsheets that they have yet to recover fully. And it also literally changed the face of most British quality national newspapers.
All was happiness in Munich when the long negotiated deal was announced bringing Germany’s most profitable television operator under the wing of Germany’s biggest newspaper publisher.
SBS Broadcasting re-takes its stake in Prima TV and acquires two radio stations in Romania, citing benefits expected from 2007 EU entry.
Ringier CEO Martin Werfell told a Zurich media conference that 2004 may be the company’s most successful. Just three weeks earlier Ringier closed down the well-respected, but heavily loss-making 36-year-old Hungarian newspaper, Magyar Hirlap.
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The news comes on top of Ringier CEO Martin Werfeli telling an annual media meeting last week that Ringier expects that 2004’s record revenues that had relied on a 40% revenue increase from its East European operations -- have increased by another 10% this year on the back of further growth of its east and central European publications.
In Ringier’s European division, the Czech Republic accounts for 37.5% of the revenue followed by Hungary, 26 %, Romania, 17%, Slovakia, 13.6%, and Serbia 5.9%. Ringier tabloids, based on a diet of sex and scandal, are number one in all five countries. It has more than 40 newspapers and magazines in the region.
Ringier is particularly looking for expansion in East Europe since its Swiss home newspaper market is somewhat in turmoil. The once might Blick that was the country’s circulation leader for years, has now fallen to second place by a large margin to the free tabloid 20 Minutes. Blick had even switched from broadsheet to tabloid itself and that may have helped to stabilize its circulation with just a 19,000 reader decline in the last reporting period to 717,000, but 20 Minutes still raced ahead to a circulation of 948,000 compared to 782,000 a year ago.
Ringier is now said to be working on publishing its own free tabloid for the German speaking part of Switzerland.
So hiring Schroeder to open doors in East Europe, where the company now gets about two-thirds of its revenues and sees further growth opportunities, is a very smart move. Ringier said the working relationship will “develop”, adding, “I am convinced that Schroeder’s international experience will enrich our firm, in that publishers also have to be politically active.”
Most likely Schroeder will accompany Ringier and other senior management on high-level business and political meetings in East Europe. Not too many people will turn down the chance to meet the former German chancellor.
Schroeder and Ringier have been friends for many years, and Schroeder last year spoke at the annual Swiss publishers meeting.
"Goodbye, Angela. Hello, Switzerland"
Gerhard Schroeder
The Ringier announcement was made just one day after Angela Merkel took over as German Chancellor and Schroeder had resigned his seat in Parliament.
In its leading market, the Czech Republic, Ringier publishes Blesk, a tabloid that is the circulation leader with some 520,000 circulation, well ahead of second place Mlada fronta Dnes with nearly 300,000 circulation.
But two new players are now in the field. Ringier itself is introducing a free tabloid today, and last month the Sip tabloid debuted charging well under the market at 17 European centimes a copy, and is considered even more sleazy than Blesk using the same sex and scandal formula..
A Blesk manager said, “New tabloids have appeared in the past but never caused any harm to Blesk. We are not worried.”
Ringier dominates newspaper publishing in Hungary, publishing the top selling Blick tabloid with more than 300,000 circulation and the more traditional Nepszababadsag at around 190,000 circulation. It has just seen off Axel Springer’s attempt to get a toehold in the newspaper market with Springer pulling the plug on its one-year old daily Reggel that tried to position itself between the two Ringier newspapers. Springer had set a circulation target of 55,000 by the end of this year but admitted those targets could not be met.
But Ringier has had political problems in Hungary, particularly when last year it closed down the Magyar Hirlap newspaper in a messy public relations disaster. The newspaper eventually reopened a couple of weeks later under management of former staff.
One market that Ringier must be kicking itself about for leaving to Springer is Poland. Springer introduced the tabloid Fakt, in October, 2003 and it almost immediately became the country’s leading circulation newspaper and now has about 536,000 circulation daily.
It, too, uses the usual sex and scandal formula, but in Poland, where there are still strong anti-German feelings due to World War II atrocities, anti-German stories are still very popular. In spite of its ownership, Fakt is usually right in there at the front of the anti-German charge.
Until Fakt came along local publishing group Agora had the leading daily, a respectable broadsheet, Gazeta Wyborcza. It now lags behind Fakt by about 100,000 copies daily. But Agora in November launched a new Berliner sized newspaper aimed at finding its niche between Fakt and Gazeta Wyborcza and Agora says it has committed €20 million for its success.
In a market that also enjoys two free tabloids, it has the makings of a fascinating old-fashioned newspaper war.
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