East Europe Is Still The Prime Battlefield For European Publishers With Axel Springer Launching In Poland An Upscale Daily, Dziennik, Just Six Weeks After Agora dropped its Upscale Nowy Dzien.

Philip M. Stone April 13, 2006

No sooner does Poland’s Agora drop its three-month-old up market Nowy Dzien (New Day) because shareholders were up in arms over its losses, then along comes Axel Springer saying it is launching its own upscale broadsheet in Warsaw on April 18, with the paper said to be modeled on Springer’s successful Die Welt brand in Germany.
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Number 1 in Poland

Springer already publishes Poland’s circulation leader, the tabloid Fakt with some 520,000 circulation. Making a success of its new Dziennik (Daily) not only would strengthen its position in Poland but it directly takes on the country’s largest publisher, Agora, and its 450,000 circulation, up-market broadsheet, Gazeta Wyborcza.  

Agora is still suffering from its humiliation in February of closing down Nowy Dzien (New Day) just three months after launch. When launching the Berliner-sized newspaper in November Agora said it would be profitable if it achieved a circulation of 250,000 or more and it promised strong marketing support for at least a year. 

But it only got to 190,000 circulation and even though management wanted to continue, shareholders started bailing out– shares fell 17% in the newspaper’s final week before management reversed course abruptly and closed the paper down. On the day it closed, Agora’s shares rose 7%, but they are still down by a third this year and had lost 7.7% over the past five days as word leaked of Springer’s plans.  But shares rebounded by 3.5 percent on the official announcement when Wanda Rapaczynska, Agora CEO said that “Gazeta” was well prepared for the entrance of “Dziennik”.

Whereas Agora said Nowy Dzien needed a 250,000 circulation to be profitable, Springer says it is looking only for 150,000 – 160,000 from Dziennik, and is targeting “a young and educated readership that is interested in Polish, European, and international issues,” according to a Springer statement. Even so, it will probably need to get about half of its circulation from Gazeta Wyborcza’s readership, and that will be a tall order. .

Springer hopes the six-day-a week Dziennik will do as well as quickly as Fakt did with its launch in October, 2003. Within two months it overtook Gazeta Wyborcza to become the top selling Polish newspaper.  On the other hand, while Fakt has brought in readers it hasn’t done that well with the advertisers. It is thought to have just 6% of the advertising market compared to Gazeta Wyborcza’s 41%.

Not everything has been rosy for Springer in East Europe. Last November it shut down its one-year-old Reggel (Morning) newspaper because it failed to meet various operating targets in the tough Budapest newspaper market.

There had been great surprise a year earlier when Springer decided to take on Swiss publisher Ringier that has the main newspaper toehold in the Hungarian market. Springer 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.

Reggel failed, however, to meet various targets including only a 55,000 circulation and Springer threw in the towel, but the company still claims to be the largest publisher in Hungary with 20 magazines and 10 other newspapers.

Ringier is doing well in East Europe. 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.

Nordic publisher Schibsted, owner of the 20 Minutes brand, has been busy buying properties in Russia and Lithuania. It acquired 66.7 percent in Regional Independent Newspapers Co., the owner of St. Petersburg’s Moy Rayon (My District) free newspaper network for $3.3 million. It plans to invest another $7.7 million to launch the newspaper also in Moscow. 

Schibsted has also extended its investments in Lithuania, buying a 99.99% stake in the free Lithuanian daily paper 15min for an undisclosed sum. Launched last September, 15min is published five days a week with a circulation of 85,000 in Vilnius and in Kaunas, the country’s second-largest city.

Schibsted already holds a 67% stake in the magazine publishing group Zurnalu Leidybine Grupe, and a 51% stake in the LT newspaper.

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Springer Launches New Polish Daily; Gazeta Wyborcza Lowers Its Price to Match - April 24, 2006

Dziennik, Axel Springer’s new tabloid intended for an upscale market, has hit the stands in Poland and is already causing its prime competitor, Gazeta Wyborcza (GW), some financial problems.

Three days after Dziennik launched Agora, owner of GW, lowered its newsstand price by around 50% to match the new paper’s 1.50 zloty price (0.38 Euros). That in turn saw a one-day 7.8% drop in the value of Agora shares as investors believe the lower price indicated that some GW readers had defected and they figured lowering the newsstand price for the rest of the year could mean around a 35-40 million zloty (some €9-10 million) fall in expected Agora 2006 profits – a drop of about 50%.

Agora is stuck somewhere between a rock and a hard place. The general feeling in Warsaw is that there is little expansion left to gain new newspaper readers. So if a new paper hits the market the likelihood is that the majority of its readers will come from existing publications. And since Dziennik was priced so much below GW, management felt it either had to drop its price or risk a large loss of readers.