The Times Raises Its Newsstand Price 5p, Ending The 12-Year UK Quality Newspaper Price War; But In Eastern Europe Newspaper Wars By Free and Paid Tabloids Are In Full Swing

The Times this month, 12 years after it began the war, raised its newsstand price to 60p matching its quality newspaper competition. The war might continue, but no longer via cut prices under which no one really won, but rather on journalistic quality (and size) of the newspaper.

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I Say, I Say, The Times Ain’t What It Used To Be!
In the UK when one talks about the “quality” press it is synonymous with the broadsheets. Does that mean the 216-year-old Times is no longer a quality newspaper? Rupert Murdoch, who made his newspaper fortune with tabloids, now has one more in his stable. He has turned The Times “compact” (that’s tabloid to you and me!)

The initial 30% price cut was just the beginning. Others followed, and at one time the paper sold for 20p. The other quality papers believed they had no choice but to follow suit as much as they could. But Murdoch had the deepest pockets. He knew he could go down the most and hold out the longest.

At one point in 1998 the UK Parliament considered banning what it called “predatory pricing” of newspapers but the newspaper amendment to the Competition Bill was removed before the Bill went for a vote.

As if a low newsstand price wasn’t hitting publishers badly enough, the advertising recession was in full swing by the late 90s, and newspapers cut back on staffing and expenses, something they are continuing to do to this day. And then came Metro and people got used to the idea that newspapers should not just be cheap – free was better. And if that wasn’t bad enough there was the Internet with all those quality newspaper sites available at no charge.

As far as the Times was concerned, however, the lower price achieved its immediate goal. It stopped the circulation slide and at one stage circulation that had hovered around 400,000 jumped as much as double. The other quality papers had no choice but to try and follow suit. Those who could not afford to go as far suffered the penalty – the Independent, for instance, saw its circulation drop by about one-third.

So then the Independent tried something new for the UK. It started experimenting with a change in newspaper size, and it eventually became the first UK national quality newspaper to make the switch to compact. Because it was the first, it got the most circulation ride for the move and now enjoys about a 20% circulation uplift as a result.

So then The Times, after printing broadsheet and compact for about a year took the plunge itself and became only a compact, and while it its circulation gains are not near as much as the Independent, they have stabilized with about a 4% gain in what remains a difficult market. The Guardian turned to the Berliner size (a hybrid between broadsheet and compact) this month leaving just the Daily Telegraph and the Financial Times as full-sized daily broadsheets with many asking for how long.

And so with the Times’ 5p price hike the price war has ended. Truth is, no one can afford a price war now. All are making multi-million pound investments in color printing presses. The Guardian Berliner size paper, trying to arrest circulation lows of around 360,000, is all color via new German-bought presses for London and Manchester at an investment of some £80 million. With those types of investments publishers can no longer afford to be silly with their cover prices – not even Mr. Murdoch.

So while one war ends with barely a whimper, in Eastern Europe the competition remains fierce with tabloid fighting tabloid, free newspaper fighting free newspaper. And it is some of Europe’s largest publishing houses such as Ringier and Axel Springer that got into Eastern Europe soon after the Iron Curtain came down who are now right in the thick of battle.

In Hungary, where Ringier basically owns the top selling daily newspapers, Axel Springer jumped in with its new daily Reggel that is said to be on target to achieve a 50,000 plus circulation by the end of the year.

Ringier founded the tabloid Blesk (Lightning) in 1992 and it quickly became the circulation leader with more than 500,000 circulation. In 1997 along came Metro, choosing Prague as its first city outside its native Sweden, and the newspaper became a big success and now enjoys circulation of about 245,000 daily.

The two have lived in some harmony for eight years, but now Ringier has announced its challenge by introducing before Christmas its own free tabloid newspaper with a target of 250,000 copies distributed Monday – Friday. In all there are about 1.6 million daily newspapers sold in the Czech Republic. The big question will be if the new Ringier free tabloid attacks Metro as intended, attracts new readership, or whether Blesk might get hurt in the crossfire.

The last thing Ringier would really want is to hurt Blesk; it is a real cash cow. Already for the first half of this year its advertising revenue is up some 16.7% to around €37.5 million, and what newspaper in Western Europe wouldn’t love to see that type of percentage increase?

Advertising details have not been announced but there should be no surprise if Ringier offers packages to include the new free newspaper as well as Blesk, and that might be a real challenge to Metro. It faced a similar type of challenge in its hometown, Stockholm, when Bonnier went head-to-head with its own free tabloid, and it took substantial investment to remain competitive.

In Poland, the quality newspaper Gazeta Wyborcza, established in 1989, was the dominant newspaper in the country until Axel Springer came along in October, 2003 and launched the tabloid Fakt. Within two weeks it became the country’s circulation leader and it today sells around 536,000 copies daily, about 100,000 more than Gazeta Wyborcza.

So now Agora SA, Gazeta’s publisher that also publishes a very successful free Metro tabloid newspaper with 520,000 circulation, is said by the Warsaw Business Journal to have decided to fight fire with fire by launching soon its own down-market paid tabloid, aimed at the young, particularly women.

Since tabloid readers are known to show little loyalty but rather go for the most scandalous headline, that competition in Poland might make even an old tabloid hand like Mr. Murdoch blush!

Nowy Dzien Fails To Achieve Circulation Target; Folds After Three Months - February 23, 2006

Agora today closes down Nowy Zdzien, barely three months after its launch, because it has failed to reach its circulation targets and shareholders didn’t want to throw more good money after bad. Agora management said the newspaper needed a circulation of 250,000 to survive, but it had achieved only 190,000 in November and December and the numbers had not improved in January.

Agora had announced lower Q4, 2005 results because of Nowy Dzien’s poor launch numbers. The new paper is said to have lost €7.2 million in Q4 following its November 14 launch.

Just a few days ago an Agora’s vice president said he expected the newspaper to break even in 2008 and that the company planned an additional €12 million promotional spend.

Polish shareholders, however, were not happy with those losses nor the talk of further investment in the paper, and they punished Agora’s shares dragging them down 17% this week. That got the attention of the company’s management board and it decided Feb. 21 that the paper’s last issue would be Feb. 23. The shares rose 3.5% on that announcement.

Agora Launches Berliner-Sized Newspaper – November 18, 2005

Agora has launched Nowy Dzien (New Day) as a Berliner-sized newspaper in Poland and says the newspaper will be profitable if it achieves a circulation of 250,000 or more. It is spending some €7 million in Q4 on the launch, which it says will depress 2005 results, and it expects to spend around €10 million in 2006 for promotion and marketing.

It says in the early days that print runs and returns are expected to be high. “The objective is to saturate the market,” the company said in a statement.

The business plan calls for the newspaper to break even in 2008, and Agora says it has committed between €15 million - €20 million in net cash as an upfront investment and to cover subsequent operating losses.

First issues of the newspaper appeared directed at the young, and particularly the female market.

Fakt, a tabloid in the Bild spirit published by Axel Springer, leads Poland’s daily circulation with some 536,000. In second place, with about 433,000 circulation, is Agora’s own up-market broadsheet, Gazeta Wyborcza. So Nowy Dzien is being positioned directly in between, making Poland – where the advertising market is very healthy -- a fascinating market to watch tabloid, Berliner, broadsheet and two free tabloids go head to head.

Springer Pulls Plug On Hungary’s Reggel – November 4, 2005

Axel Springer has announced that it is shutting down its one-year-old Reggel (Morning) newspaper because it has failed to meet various operating targets in the tough Budapest newspaper market

There had been great surprise a year ago when the German publisher launched Reggel, saying it thought it had spotted a particular niche in the very tough Budapest market for a modern quality newspaper that would fit in between the top selling Blikk tabloid and Nepszababadsag, a more traditional newspaper, both published by Ringier, the Swiss publishing house.

The German publisher set Reggel various targets including a 55,000 circulation by the end of this year. “Targets we set out could not be reached,” according to a Springer statement.

In April, Reggel’s chief editor was replaced because of the newspaper’s then low circulation. Of the 50,000 newspapers published daily, 30,000 were then said to be promotional.

Ringier said earlier this year that Blikk had increased its leadership in the market in spite of Reggel’s launch.

Springer still claims to be the largest publisher in Hungary with 20 magazines and 10 other newspapers.

Agora Confirms New Daily But Says It Will Not Be a Down Market Tabloid – October 6, 2005

Polish media group Agora has confirmed it will launch a new newspaper this year, but says it will not be a down-market tabloid that competes directly with Springer’s market leading Fakt, but rather will be a mid-market newspaper looking to fill a niche for new newspaper readers.

Poland currently has four national newspapers – two of them so-called “quality” newspapers and two tabloids. Agora is targeting its new newspaper in between. “We are not going to compete for readers with other dailies, but rather fill a niche and broaden the readership in Poland,” Wanda Rapaczynska, Agora’s CEO, told a news conference.