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The State of the Print Media in the World
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There’s Good Money To Be Made In East European Media As The Europeans, Americans, and Even the Locals Can Attest And Not Too Many Days Pass That There’s Not A Big Deal AnnouncedIn just the past few days Russia’s Prof-Media announced it had bought Rambler TV in Moscow, and then it launched a bid for all of Rambler because of its digital activities, and, oh yes, it also bought TV3 for around $500 million. Then there’s Bauer Media Invest that purchased a 56% stake in Broker FM Group, Poland’s largest radio group, and SBS Broadcasting has announced the completion of its acquisition of the Radio Express network in Bulgaria.Back in the US, Ronald Lauder, the cosmetics heir, has just seen his $40 million investment in Central European Media Enterprises (CME) that started in 1994 now valued at $380 million. He just sold half his shares for $190 million. And those deals just scratch the surface. European media groups such as Germany’s Axel Springer, Switzerland’s Ringier, and Finland’s SanomaWSOY are all heavily invested in East Europe. Ringier’s European operations, for instance, provided 374 million Swiss Francs (€235 million, $300 million) revenue in 2005. Its biggest market is the Czech Republic, followed by Hungary, Romania, Slovakia and Serbia. This year it has launched a newspaper in Ukraine and the first free newspaper in Romania. Not that everything goes smoothly. In Romania, for instance, Ringier’s top selling Libertatea has suffered a mass resignation of staff who followed chief editor Adrian Halpert to oil and gas magnate Dinu Patriciu’s growing media empire. Patriciu owns the quality newspaper Adevarul and the tabloid Averea which is said to be planning on a relaunch, perhaps with a new name. Some 75 journalists quit Libertatea though only 51 joined Halpert . Another reason for the mass walk-out – Ringier was paying its journalists around €500 monthly whereas their new employer offered around 50% more.
Axel Springer concentrates on Hungary, Poland, the Czech Republic, Russia and Romania, but it is its Polish activities that draw the most interest. In October, 2002, Springer launched the spicy tabloid Fakt that within two months became the market leader with a circulation of more than 500,000. . Not satisfied with that it launched last year a quality newspaper named Dziennik whose business plan called for circulation of 150,000 by the end of the first year. After just seven months its circulation is more than 200,000. That caused no end of grief to local Polish media company Agora, publisher of the second highest circulation newspaper, the quality broadsheet Gazeta Wyborcza. It had lowered its newsstand price by 45% fearing Dziennik could steal some of its readers and that price move came right after the company blew some €10 million by launching Nowy Dziea (New Day) last November only to kill it three months later when the stock market voted with its feet against further marketing investment. The result of all that was that its share price has fallen 50% over the year and it was the worst performer this year on the Warsaw Stock Exchange. But it has just surprised analysts by announcing a third quarter net profit of 7.7 million zloty (€2 million, $2.6 million) when the market expected a loss of 2.1 million zloty (€550,000, $700,000), and the shares jumped 7%. Fighting Dziennik and closing Nowy Dziea has caused some 250 jobs to go this year with promises of more cost cutting next year, but Gazeta Wyborcza has maintained its 400,000 circulation. Springer, meanwhile, appears to have gotten it right when it said there was a place in the market for a different type of newspaper that would largely draw upon new readers, and it is maintaining a 200,000 circulation. Wanda Rapaczynska, Agora’s CEO, boasts that Agora has 42% of the press advertising market while Dziennik has just 1%. On the broadcast scene in Poland, German publishing group Bauer has purchased 56.33% of Broker FM, the country’s largest radio group that includes RMF FM, the most popular station in the country. Also attractive to Bauer is that Broker FM holds one-third of the shares in popular portal Interia.pl. Bauer already publishes women’s magazines in Poland, some weekly tabloids and TV guides. And take a look at what has been cooking in Russia. Prof-Media, the country’s largest diversified media holding company bought Rambler TV in Moscow for $23 million, and no sooner did Rambler say it was going to invest that money in its digital operations than Prof-Media bought 48% of the entire company for around $230 million and intends buying another 6% for control once the competition authorities approve. Since billionaire owner Vladimir Potanin has a close relationship with the Kremlin that shouldn’t be too difficult. Rafael Aklopov, director general of Prof-Media, says the Rambler investment puts Prof-Media firmly into the Internet business. And if that wasn’t enough the company also bought TV-3 network for a price said to be between $500 million - $550 million. On the magazine front SanomaWSOY continues to see Russia as a leading international market. It made a €142 million investment last year buying up Independent Media that published 31 magazines including the Russian version of Cosmopolitan and three newspapers, including the English language Moscow Times, in Russia and Ukraine. The company continues to launch new magazines such as Gloria in the market. In Bulgaria, SBS Broadcasting, controlled by private equity firms Permira and KKR with the Dutch Telegraaf Media Group holding a 20% stake, completed this week its acquisition of the Radio Express network, adding nine new cities to SBS’s existing Bulgarian operations. The purchase means that SBS now covers all of Bulgaria’s major cities with one or more radio stations. Earlier in the year SBS had bought the national radio networks Vitosha, Veselina, Radio Atlantic in Sofia and Radio Ritmo in Plovdiv. It also operates the leading KissFM and Magic FM network in Romania. And for those wondering how Ronald Lauder could afford $135 million in June to buy Gustav Klimt’s portrait of Adele Bloch-Bauer for what was then the highest price ever paid for a single painting, they need look no further than his investment in Central European Media Enterprises (CME) in which he recently sold half his holdings for $190 million Lauder got into eastern Europe very soon after the iron curtain fell apart. He picked up TV licenses in Slovakia, Romania Ujkraine and Slovenia but it is TV Nova in the Czech Republic that has turned into the real money-maker. It accounts for one-third of CME’s net revenue and 44% of its television cash flow. All of which seems to indicate that those who got into the market early have made a killing, but there are still a lot of players out there who believe the good times have only just begun. |
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