A Rocky Sea Heaves All Boats

Michael Hedges July 1, 2013 Follow on Twitter

Challenging times call for decisive action. Some media operators choose to stay the course, albeit with fewer resources. Others take the opportunity to cut and run. Shareholders like that if buyers can be found. The other option is to wait and maybe that ship will come in.

As Croatia becomes the 28th Member State of the European Union its media sector certainly needs a boost. Sour economics plague what was a robust market, though small, only five years ago. Per capita GDP (gross domestic product) has fallen from US$15,700 in 2008 to US$12,970 in 2012, according to IMF (International Monetary Fund) statistics. Media worker’s salaries have fallen 40% since 2008, said the IREX report on media sustainability in Croatia (April 2013). It’s a pain everybody has felt.

Europapress Holdings (EPH), the biggest Croatian publisher, is facing an existential crisis as falling revenues forced the company to rely on bank loans to continue essential services. EPH publishes leading daily Jutarnji list, regional daily Slobodna Dalmacija, weekly news magazine Globus and others. WAZ Group (Germany) is a 50% shareholder.  Croatia’s other major publisher is Styria Media Group (Austria) with dailies Vecernji list and 24 sata plus business daily Poslovni dnevnik.

The precarious status of the EPH financial condition, estimated at HRK 600 million (about €80 million) and mostly long-term debt, caused creditors to block company accounts in June for about ten days. Authorities unblocked the accounts as “continued implementation of enforcement caused irreparable damage to the debtor,” reported the Croatian Journalists Association (HDH) (June 5). Media watchers jumped to criticize the company for spending as much as HRK 5 million (about €675,000) for promotional advertising, reported poslovnipuls.com (June 13), while salaries remain unpaid.

The knock-on effect of financial instability raises questions about journalism in Croatia. “We are a highly indebted country, with highly indebted citizens, with a highly indebted media,” noted media lawyer Emil Havkic in the 2013 IREX report. “If you are taking bank loans to pay salaries to your employees, as many media outlets are doing, then it is not likely that you would criticize this bank.”

Media regulator Council for Electronic Media closed the tender for three new national coverage television concessions last week. This led one Croatian media watcher to observe that “Croatia needs more television channels like it needs a space program,” quoted by HDH (June 25). Television revenues fell to HRK 702 million (about €95 million) in 2012, eight percent lower than 2011 and more than 25% lower than in 2008. All ad spending dropped to HRK 1.48 billion (about €200 million), 10% lower than 2011 and roughly 40% lower than 2008. Greek media giant Antenna Group, already invested in Serbia, Slovenia and Montenegro, is high on the list for at least one of the new channels.

Croatia’s two biggest privately owned television operators have, fortunately, deep pockets. Central European Media Enterprises (CME), owner than TV Nova, has reported challenging revenues in Croatia for years. Local reports had CME selling Croatian and Slovenian assets by the end of 2012, which did not happen. The RTL concession expires in 2014 and, though vigorously denied by RTL Group; there is an expectation that once renewed the Croatian operation will be on the block. In 2012 the Electronic Media Council threatened to revoke the RTL TV license unless Croatian language subtitles were added to Serbian language programs.

Dismal economics have taken a toll on smaller media operators. Kapital Network, a locally owned business channel, had its license revoked in October 2012 for non-payment of HRK 6 million (about €800,000) owed to transmission supplier Odasiljaci i Veze (OIV). The channel faded to black in January. Analogue transmission for national channels ended in 2010.

EU accession and promises thereupon have, in recent years, attracted foreign investors with deep pockets. Many in those new Members States have courted the big names. And so Croatian media noted the arrival of Rupert Murdoch’s yacht at the Zadar marina (Vecernji list, June 27) just ahead of this past weekend. But, alas, it was only Leonardo DiCaprio renting.

See also in ftm Knowledge

Western Balkans - The Struggle For Order And Independence

ftm reporting explores media development and investment in Serbia, Montenegro, Bosnia / Herzegovina, Croatia, Macedonia and Albania. Emerging from conflict broadcasters, publishers and governments face ghosts of the past to forge a new future. Includes Resources, 78 pages PDF (February 2013)

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