http://www.iwpr.net/index.pl?archive/bcr3/bcr3_200304_419_5_eng.txt
German Media Giant Dominates Balkans
Massive investment by a German publisher is revolutionising media in
the Balkans, but opinion is divided over the merits of the
transformation.
By Julie Poucher Harbin in Vienna and Sarajevo, Elena Yoncheva in
Bulgaria, Vera Didanovic in Serbia, and Drago Hedl in Croatia (BCR No
419, 01-04-03)
Germany's WAZ media group is pumping millions of dollars into former
state newspapers in Bulgaria and the former Yugoslavia, giving ailing
titles a new lease of life. Yet there are fears the takeovers could
lead to a suffocating monopoly, concentrating media in the hands of a
few powerful businessmen.
The opening up of media to western investors in the early and mid-
1990s offered a fresh start to many papers in eastern and south-
eastern Europe. Unprecedented levels of investment and exciting new
formats seemed a sure-fire way of making them more competitive and
attracting a new readership. But have these hopes been justified? Or
has western ownership of large sections of the press come at too high
a price?
Many western countries have experienced the downside of having too
few owners in control of too many newspapers. This must be a
particular worry in the Balkans, where an absolute state monopoly
over the press is still very recent. Papers are generally on a weak
commercial footing, and the regulatory environment is still nascent.
The press is an important opinion-former in the Balkans, but
historically it has been very vulnerable to political pressure. As
wealthy foreign media companies move in to buy up leading titles,
many fear that one form of monopoly ownership and political bias
could simply be replaced by another - that of big business.
There are concerns that smaller players will be driven out of the
market, and that with them will go true pluralism of expression.
Editorial freedom may be curbed as much by the demand to "dumb down"
as by overt political pressures.
In this special report, IWPR looks at how one of the major players
now in the Balkans, Germany's WAZ media group, has operated in three
countries. We have taken Bulgaria, Croatia and Yugoslavia (now Serbia
and Montenegro) as our examples, because media development has moved
at a different pace in each country despite many common concerns. Of
the three, Bulgaria has the longest experience of WAZ involvement in
the press, while for Serbia it is still a novelty.
THE RISE OF WAZ
WAZ is a German media giant built on the success of the Essen paper
Westdeutsche Allgemeine Zeitung, from which it takes its initials.
The media group already published a wide range of daily papers and
magazines across Germany, Austria and Hungary before it went into
south-east Europe in 1996.
Since that time, it has become the unchallenged leader among foreign
media investors. Pumping millions of euro into publishing houses and
printing plants in the region since the mid-90s, WAZ owns an
additional 13 papers and numerous magazines in Bulgaria, Croatia,
Yugoslavia and Romania.
A few figures should suffice to show the scale of WAZ's conquests. In
Bulgaria it controls a third of print publications and nearly half
the print advertising market. In Croatia the group, together with its
local partner, have between one third and one half of the daily paper
and magazine market respectively.
In Serbia it owns half of the major publishing house that puts out
the prominent Belgrade daily Politika. With investments on the cards
in Montenegro and northern Serbia, it is only the beginning of their
expansion plans there.
Add to this the majority stake that WAZ has obtained in two leading
Romanian papers, National and Romania Libera, since 2001, and you
begin to get the picture.
And it is not over yet. In an interview for IWPR, Dr Markus Beermann,
who is in charge of WAZ's operations outside Germany, said his firm
is looking forward to a boom in the print market all across south-
east Europe. "It has been an enormous challenge for us investing in
the Balkans," he said. "But we are sure we are on the right track."
UNSTOPPABLE?
In the tough economic aftermath of communism and civil war in the
Balkans, the group's huge budget gave it virtually a free hand to buy
up major papers and spruce up both their look and their content with
the help of better journalists attracted by higher wages.
Refurbishing obsolete printing presses allows the Germans to slash
production and distribution costs.
Such economic clout has naturally given rise to concerns that across
the region, WAZ is seeking a monopoly over papers, distribution
systems and advertising revenue. A trade union representative of the
group's German workforce put it bluntly:
"WAZ is almost unstoppable," Horst Leroi warned a trade union seminar
held in Zagreb in 2001. "Wherever it goes, it buys more and more,
taking over newspapers, printing firms and distribution networks,
destroying the competition or merging with it. Then it rationalises
and creates publishing and marketing pools. And wherever possible the
number of employees is reduced. Everything is directed towards one
single goal: maximum profits."
There's some evidence to support this harsh view. Take Bulgaria,
where the group has had more time to establish itself as dominant
player than in Croatia or Serbia.
BULGARIA: AGGRESSIVE BUSINESS, TIMID REGULATION
WAZ first entered the Bulgarian market in 1996. Two years later, it
owned the country's biggest dailies and controlled three-quarters of
the print media market, with shares valued at 50 million euro. Its
subsidiary, WAZ Media Group Bulgaria, owned the Media Holding
company, which publishes the biggest circulation daily, Trud, as well
as another publishing group, Press Group 168 Hours, that prints the
popular daily 24 Chasa and the weekly 168 Chasa.
This sweeping success did not go unnoticed by the authorities. In
1999, Bulgaria's anti-monopoly agency, the Committee for the
Protection of Competition, CPC, decided that WAZ had breached
legislation prohibiting ownership of more than 35 per cent of the
country's media by any one firm. As a result, the group was forced to
divest itself of most of its shares in Media Holding. It sold 65 per
cent to Bulgarian, Austrian and Swiss investors, and held on to 35
per cent.
The redistribution apparently brought the Germans back within the
law. That's certainly the way the CPC sees it. Its chairman, Nikolay
Pavlov, told IWPR in an interview that WAZ no longer has an ownership
monopoly. Its share of the market is now somewhere between 30 and 37
per cent, he said. He also said the group no longer has an
advertising monopoly - a view which contrasts sharply with his
commission's 1999 ruling that WAZ controlled 70 per cent of the print
advertising market.
Dr Beermann, too, rejects any talk of a monopoly. "The WAZ Group
holds an important share in the print media market, but is far away
from keeping a dominant position," he said. "Over and above that, the
print titles of our subsidiary company in Bulgaria are in keen
competition with each other."
This view is not shared by all Bulgarians. There is still a
perception that the biggest papers are in German hands, that WAZ
continues to monopolise print and advertising, and that, as a result,
independents cannot compete. This is borne out by the fact that WAZ
Media Group Bulgaria still fully owns Press Group 168 Hours and the
Exprint printing house, which prints all WAZ publications, including
24 Chasa and Trud.
Even if it does not technically have a monopoly, WAZ is still accused
by its critics of trying to squeeze rival publications out of the
market. In Bulgaria it distributes its papers on a sale-or-return
basis. Distributors thus tend to order more papers from the German
publisher and less from its competitors, who do not have a sale-or-
return policy and charge retailers the full amount however many they
sell. Add to that the fact that WAZ papers cost less, and it is easy
to see why Georgy Gotev of the low circulation Sega daily thinks the
group's sales policy could spell disaster for publications like his.
"They could destroy us very soon. We will disappear," Gotev told
IWPR.
But not all the blame is directed at WAZ itself. Some say that after
its initial tough stance, the CPC went soft on tackling WAZ's hold
over print media.
"We do not accuse WAZ, which is just doing its business," says Vesela
Vaceva, who heads BAREM, an association of local papers. "We accuse
the CPC, which allows this monopoly in the press."
This view is echoed by Radostina Konstantinova, deputy editor of
Monitor, one of the major competitors of leading WAZ titles.
"It is true that the WAZ monopoly is killing the Bulgarian press,"
she told IWPR. "We can't do anything in this situation, because the
only institution which could stop this monopoly, the CPC, is not
reliable."
CROATIA: CONTACTS OVER COMPETITION
As in Bulgaria, so also in Croatia WAZ appears to have come close to
an effective monopoly over the national press. The group's joint
venture with Croatia's Europa Press Holding, EPH, is today the
leading newspaper and magazine publisher.
Croatia was a natural target for WAZ investment, with a relatively
advanced economy already closely tied into German markets. In 1998,
WAZ spent 16 million euros acquiring 50 per cent ownership in EPH. At
the time, EPH already owned and published the daily Jutarnji List,
the weeklies Globus, Glorija, Arena, Mila and Auto Klub, and the
profitable Croatian editions of Cosmopolitan, Playboy and OK.
Analysts say that despite this impressive portfolio, EPH needed the
merger to obtain an injection of cash to support the ailing Jutarnji
List. That investment seems to have worked; today, Jutarnji List is
the country's second highest selling daily (after Vecernji List,
which is owned by Austria's Styria media group rather than WAZ).
And that is only one paper; across the entire Croatian market,
EPH/WAZ is a powerhouse, holding a 35 per cent share of the daily
newspaper market and 46 per cent of the magazine market, according to
WAZ officials.
Although the limit for market share is set at 30 per cent in Croatia,
the government body charged with safeguarding fair competition, the
Agency for Protection of Market Competition, has not stepped in thus
far.
Mladen Cerovac, the agency's deputy chief, told IWPR that though
EPH/WAZ controls more than 30 per cent of the print market, they are
not breaking the law, because they have not "abused their dominant
position".
The agency's powers are limited, and it can act only to prevent abuse
of monopolies, rather than the monopoly itself. It says it has not
seen evidence that EPH/WAZ is acting unfairly towards the
competition.
SERBIA: POLITICIANS AND PUBLISHERS
WAZ's entry into the Serbian market was fairly dramatic: it bought 50
per cent of the Politika publishing house, which owned Politika, a
leading paper - and one-time mouthpiece of Slobodan Milosevic - as
well as two other dailies, 14 magazines and printing and distribution
systems. The deal, concluded in March 2002, cost WAZ 12.5 million
euro.
But there were immediate questions in the press about why it had
risked so much money investing in a set of low-circulation
publications from which short-term profits were unlikely given the
depressed state of the economy. According to one estimate (cited in
Der Spiegel in August 2002) the new venture, called Politika
Newspapers and Magazines, has debts of 100 million euro.
Darko Ribnikar, editor-in-chief of Politika Newspapers and Magazines,
acknowledges that the company was not in great shape at the time of
the deal.
"During the Milosevic regime, we lost a lot of our reputation, so
they took a certain risk in taking on a company which had lots of
employees, was technologically backward, used old machinery, and had
a tarnished reputation."
It is widely believed that the late Serbian prime minister, Zoran
Djindjic, was instrumental in brokering the deal.
Djindjic had been on good terms with WAZ's managing director, Bodo
Hombach, dating back to the days when he was in the Serbian
opposition, and Hombach was co-ordinator of the Stability Pact for
South Eastern Europe.
There was widespread speculation in the Serbian press that once it
was no longer under Milosevic's grip, Politika was seen as a
potential political vehicle by the new Serbian premier - and that he
encouraged his friends at WAZ to help him get control of it.
Supporters of this view point to the rather timely appointment of
Nenad Stefanovic, formerly PR chief for Djindic's Democratic Party,
to a senior position at Politika shortly before the deal was
concluded.
The Germans categorically rejected these allegations. Hombach and
another WAZ director, Erich Schumann, put out a press statement in
June 2002 saying, "We deny the rumours alleging secret negotiations
with top Serbian officials." The decision was "not influenced by any
interest group whatsoever," the statement said.
"The claims against Mr Hombach, the director of WAZ, are also untrue
and fabricated, and this can be easily proved. We reiterate that WAZ
is an independent, non-partisan media company whose decisions are
guided exclusively by economic and publishing criteria."
Hombach turned down IWPR's offer of an interview, but Politika's
Darko Ribnikar defended him vigorously when IWPR raised these charges
with him.
"There's nothing wrong with Mr Djindjic and Mr Hombach being friends,
but that has nothing to do with it," Ribnikar said. "Djindjic's role
was simply that he brought all the chief editors to a meeting with
the German businessmen, and it turned out that we found common ground
with WAZ."
WAZ has yet to turn the business round and make money on its Serbian
acquisitions. It is early days yet, and unusually, the new management
at Politika Newspapers and Magazines has not tried to improve the
bottom line by slashing jobs, even though they recognise that the
firm is overstaffed. Nor have they axed Politika's weaker stable-
mates, opting instead to resuscitate some ailing titles.
Despite its problems, Politika itself remains the most important
Serbian daily. By October 2003, its circulation had recovered to
about 150,000, a significant increase on the end of the Milosevic
era, when it had sunk to 100,000, but still well down on the 250,000
enjoyed in earlier years.
"We have got back the respect and confidence of the readers,"
Ribnikar told IWPR. "People trust us again."
Without waiting for Politika to turn a profit, WAZ is moving ahead
with expansion plans, especially outside the capital. The group is
close to tying up deals with the publishers of the Montenegrin daily
Vijesti and the Novi Sad paper Dnevnik.
REGIONAL COVERAGE
All this suggests a repetition of the pattern in Bulgaria, which has
seen rapid growth of WAZ's influence in the regions.
"WAZ is making the media market more competitive, but they represent
a real danger for the local press," said Milen Valkov, who heads the
Union of Journalists in Bulgaria.
New regional editions of Trud and 24 Chasa in Bulgaria are selling at
prices that match or undercut their rivals, and are capturing most of
the regional advertising revenue. Editors of rival papers claim this
amounts to a death sentence.
Tzvetan Todorov, editor of the Lovech paper Naroden Glas,
explained, "It is impossible to edit a normal newspaper in an
abnormal market environment. WAZ's dumping prices are killing our
chance to get advertisements."
In January 2003, WAZ Media Group Bulgaria completed a new print house
in Varna, which will print local editions of its main papers. Spas
Spasov, in charge of advertising at the Varna daily Narodno Delo,
doesn't know how his paper will compete.
"We can barely survive because of WAZ's print monopoly," Spasov
says, "but the biggest threat to us is the monopoly over the
advertising market."
Hary Kasabov, the chief editor of Cherno More, is not so pessimistic,
but is still wary of WAZ's cost-cutting tactics.
"I am not afraid of WAZ competition here in Varna because we are
still the news leaders," he says, "but this month we had to drop the
price of our newspaper by 25 per cent."
Meanwhile, 30 local papers have formed an association called BAREM to
combat the trend. Its head, Vesela Vaceva, said, "Our goal is not
just to withstand the WAZ monopoly, but to withstand all possible
future monopolies in the media."
COMMERCE AND CONTENT
Public opposition to the relentless advance of WAZ is muted by the
fact that it has injected so much money into the cash-strapped
Bulgarian media sector. Between 1996 and 2000, WAZ investments in
Bulgaria totalled around 50 million euro, and it expects to invest
another 30 million in new technology, new magazines and better
working conditions for staff.
Journalists working for the group's papers have no complaints either.
They are paid up to 30 per cent more than elsewhere.
WAZ journalists also say the new management, and the economic
stability it brings, make for less intrusion into editorial
independence. As Violeta Simeonova, political analyst for 24 Chasa,
told IWPR, "I think the chief editors are less tempted to make up
their own private policies. There are fewer political directives."
Speaking about WAZ's operations in the Balkans as a whole, Dr
Beermann told IWPR that the firm is confident editorial content is of
a "good standard" and that its staff are fully aware of "serious
journalistic principles based on journalistic freedom".
An expert on media in the Balkans, Oliver Money-Kyrle, who is Project
Director for the International Federation of Journalists, agrees-up
to a point.
"In the past, one always talked about interference, censorship,
either through the government or by local press barons, who had
strong political interests or strong business interests that would
heavily influence the editorial policy of their media for their own
political or business ends," he told IWPR. "Clearly if you have
foreign media ownership, that pressure is relieved from the
journalists."
But Money-Kyrle says journalists in Bulgaria do face hidden
pressures, "Because of the weaker civil society and because of the
weaker journalist organizations, there's less pressure on the media
owners to maintain the quality of the journalism. It becomes a purely
commercial venture."
Some readers and parts of the media in the Balkans believe WAZ is
guilty of "dumbing down". It is one thing to give somewhat tired
publications a more colourful and modern look, say these critics, but
quite another to lower journalistic standards and introduce a staple
diet of sensationalism and sleaze, all in the name of profit.
One journalist from 24 Chasa, who asked IWPR not to use his name,
said, "We're prepared to print anything that attracts attention.
First, we started with naked women, although we're supposed to be a
serious newspaper. Then, we started to print sensationalist stories,
many of which are not proven.
"We are publishing too many crime stories and human interest stories,
but not serious analysis. We are told nobody wants to read them."
So what do the readers think? Architect Georgi Hadjinikolov buys both
Trud and 24 Chasa because he follows politics. But he's critical of
both of them.
"Most of the information they carry is totally superficial," he
said, "and there is a shortage of serious analysis."
Judging from the people IWPR spoke to in Serbia, the overall verdict
seems more positive. After all, almost anything would be an
improvement on the Milosevic years. With the end of overt political
control, Politika's writers have greater editorial freedom. Add to
that the improved look of the paper, and you have a winning formula.
Nikola Cubrilo is a loyal supporter of Politika, and never stopped
buying it in the Milosevic years, but "since the German money came,
it looks much better - I like it."
"No other daily in Serbia compares with Politika," she says. "It's
serious and professional."
Unlike Cubrilo, Marija Zivancevic did abandon the paper when the
propaganda got too much for her, but she started buying it again
after Milosevic fell.
"Since then it's been looking better every day," she said.
POWER IN A VACUUM
Whatever its critics say, it is clear that WAZ has been a breath of
fresh air for its Serbian press partners. But it is likely that rival
newspapers - which are just as keen to develop as vigorous
independent media - will find their very existence threatened by
WAZ's economic might and its hard-nosed sales policies, as seems to
be happening in Bulgaria.
These countries don't have the luxuries of healthy economies and
tough legislation, which in western Europe help offset the worst
excesses of anti-competitive business practice.
People in the region are sensitive to issues of media control and
ownership. Some fear that the press revolution that has allowed so
many independent voices to be heard may also bring monopolies, which
curb this diversity.
Julie Poucher Harbin is a freelance journalist in Sarajevo. Elena
Yoncheva is a prominent television journalist in Bulgaria. Vera
Didanovic is a journalist with the Belgrade weekly magazine Vreme.
Drago Hedl is a journalist for the weekly Feral Tribune in Split,
Croatia.
[Note: IWPR is an anti-Yugoslav report service financed by Western
fundations and institutions. CNJ]
German Media Giant Dominates Balkans
Massive investment by a German publisher is revolutionising media in
the Balkans, but opinion is divided over the merits of the
transformation.
By Julie Poucher Harbin in Vienna and Sarajevo, Elena Yoncheva in
Bulgaria, Vera Didanovic in Serbia, and Drago Hedl in Croatia (BCR No
419, 01-04-03)
Germany's WAZ media group is pumping millions of dollars into former
state newspapers in Bulgaria and the former Yugoslavia, giving ailing
titles a new lease of life. Yet there are fears the takeovers could
lead to a suffocating monopoly, concentrating media in the hands of a
few powerful businessmen.
The opening up of media to western investors in the early and mid-
1990s offered a fresh start to many papers in eastern and south-
eastern Europe. Unprecedented levels of investment and exciting new
formats seemed a sure-fire way of making them more competitive and
attracting a new readership. But have these hopes been justified? Or
has western ownership of large sections of the press come at too high
a price?
Many western countries have experienced the downside of having too
few owners in control of too many newspapers. This must be a
particular worry in the Balkans, where an absolute state monopoly
over the press is still very recent. Papers are generally on a weak
commercial footing, and the regulatory environment is still nascent.
The press is an important opinion-former in the Balkans, but
historically it has been very vulnerable to political pressure. As
wealthy foreign media companies move in to buy up leading titles,
many fear that one form of monopoly ownership and political bias
could simply be replaced by another - that of big business.
There are concerns that smaller players will be driven out of the
market, and that with them will go true pluralism of expression.
Editorial freedom may be curbed as much by the demand to "dumb down"
as by overt political pressures.
In this special report, IWPR looks at how one of the major players
now in the Balkans, Germany's WAZ media group, has operated in three
countries. We have taken Bulgaria, Croatia and Yugoslavia (now Serbia
and Montenegro) as our examples, because media development has moved
at a different pace in each country despite many common concerns. Of
the three, Bulgaria has the longest experience of WAZ involvement in
the press, while for Serbia it is still a novelty.
THE RISE OF WAZ
WAZ is a German media giant built on the success of the Essen paper
Westdeutsche Allgemeine Zeitung, from which it takes its initials.
The media group already published a wide range of daily papers and
magazines across Germany, Austria and Hungary before it went into
south-east Europe in 1996.
Since that time, it has become the unchallenged leader among foreign
media investors. Pumping millions of euro into publishing houses and
printing plants in the region since the mid-90s, WAZ owns an
additional 13 papers and numerous magazines in Bulgaria, Croatia,
Yugoslavia and Romania.
A few figures should suffice to show the scale of WAZ's conquests. In
Bulgaria it controls a third of print publications and nearly half
the print advertising market. In Croatia the group, together with its
local partner, have between one third and one half of the daily paper
and magazine market respectively.
In Serbia it owns half of the major publishing house that puts out
the prominent Belgrade daily Politika. With investments on the cards
in Montenegro and northern Serbia, it is only the beginning of their
expansion plans there.
Add to this the majority stake that WAZ has obtained in two leading
Romanian papers, National and Romania Libera, since 2001, and you
begin to get the picture.
And it is not over yet. In an interview for IWPR, Dr Markus Beermann,
who is in charge of WAZ's operations outside Germany, said his firm
is looking forward to a boom in the print market all across south-
east Europe. "It has been an enormous challenge for us investing in
the Balkans," he said. "But we are sure we are on the right track."
UNSTOPPABLE?
In the tough economic aftermath of communism and civil war in the
Balkans, the group's huge budget gave it virtually a free hand to buy
up major papers and spruce up both their look and their content with
the help of better journalists attracted by higher wages.
Refurbishing obsolete printing presses allows the Germans to slash
production and distribution costs.
Such economic clout has naturally given rise to concerns that across
the region, WAZ is seeking a monopoly over papers, distribution
systems and advertising revenue. A trade union representative of the
group's German workforce put it bluntly:
"WAZ is almost unstoppable," Horst Leroi warned a trade union seminar
held in Zagreb in 2001. "Wherever it goes, it buys more and more,
taking over newspapers, printing firms and distribution networks,
destroying the competition or merging with it. Then it rationalises
and creates publishing and marketing pools. And wherever possible the
number of employees is reduced. Everything is directed towards one
single goal: maximum profits."
There's some evidence to support this harsh view. Take Bulgaria,
where the group has had more time to establish itself as dominant
player than in Croatia or Serbia.
BULGARIA: AGGRESSIVE BUSINESS, TIMID REGULATION
WAZ first entered the Bulgarian market in 1996. Two years later, it
owned the country's biggest dailies and controlled three-quarters of
the print media market, with shares valued at 50 million euro. Its
subsidiary, WAZ Media Group Bulgaria, owned the Media Holding
company, which publishes the biggest circulation daily, Trud, as well
as another publishing group, Press Group 168 Hours, that prints the
popular daily 24 Chasa and the weekly 168 Chasa.
This sweeping success did not go unnoticed by the authorities. In
1999, Bulgaria's anti-monopoly agency, the Committee for the
Protection of Competition, CPC, decided that WAZ had breached
legislation prohibiting ownership of more than 35 per cent of the
country's media by any one firm. As a result, the group was forced to
divest itself of most of its shares in Media Holding. It sold 65 per
cent to Bulgarian, Austrian and Swiss investors, and held on to 35
per cent.
The redistribution apparently brought the Germans back within the
law. That's certainly the way the CPC sees it. Its chairman, Nikolay
Pavlov, told IWPR in an interview that WAZ no longer has an ownership
monopoly. Its share of the market is now somewhere between 30 and 37
per cent, he said. He also said the group no longer has an
advertising monopoly - a view which contrasts sharply with his
commission's 1999 ruling that WAZ controlled 70 per cent of the print
advertising market.
Dr Beermann, too, rejects any talk of a monopoly. "The WAZ Group
holds an important share in the print media market, but is far away
from keeping a dominant position," he said. "Over and above that, the
print titles of our subsidiary company in Bulgaria are in keen
competition with each other."
This view is not shared by all Bulgarians. There is still a
perception that the biggest papers are in German hands, that WAZ
continues to monopolise print and advertising, and that, as a result,
independents cannot compete. This is borne out by the fact that WAZ
Media Group Bulgaria still fully owns Press Group 168 Hours and the
Exprint printing house, which prints all WAZ publications, including
24 Chasa and Trud.
Even if it does not technically have a monopoly, WAZ is still accused
by its critics of trying to squeeze rival publications out of the
market. In Bulgaria it distributes its papers on a sale-or-return
basis. Distributors thus tend to order more papers from the German
publisher and less from its competitors, who do not have a sale-or-
return policy and charge retailers the full amount however many they
sell. Add to that the fact that WAZ papers cost less, and it is easy
to see why Georgy Gotev of the low circulation Sega daily thinks the
group's sales policy could spell disaster for publications like his.
"They could destroy us very soon. We will disappear," Gotev told
IWPR.
But not all the blame is directed at WAZ itself. Some say that after
its initial tough stance, the CPC went soft on tackling WAZ's hold
over print media.
"We do not accuse WAZ, which is just doing its business," says Vesela
Vaceva, who heads BAREM, an association of local papers. "We accuse
the CPC, which allows this monopoly in the press."
This view is echoed by Radostina Konstantinova, deputy editor of
Monitor, one of the major competitors of leading WAZ titles.
"It is true that the WAZ monopoly is killing the Bulgarian press,"
she told IWPR. "We can't do anything in this situation, because the
only institution which could stop this monopoly, the CPC, is not
reliable."
CROATIA: CONTACTS OVER COMPETITION
As in Bulgaria, so also in Croatia WAZ appears to have come close to
an effective monopoly over the national press. The group's joint
venture with Croatia's Europa Press Holding, EPH, is today the
leading newspaper and magazine publisher.
Croatia was a natural target for WAZ investment, with a relatively
advanced economy already closely tied into German markets. In 1998,
WAZ spent 16 million euros acquiring 50 per cent ownership in EPH. At
the time, EPH already owned and published the daily Jutarnji List,
the weeklies Globus, Glorija, Arena, Mila and Auto Klub, and the
profitable Croatian editions of Cosmopolitan, Playboy and OK.
Analysts say that despite this impressive portfolio, EPH needed the
merger to obtain an injection of cash to support the ailing Jutarnji
List. That investment seems to have worked; today, Jutarnji List is
the country's second highest selling daily (after Vecernji List,
which is owned by Austria's Styria media group rather than WAZ).
And that is only one paper; across the entire Croatian market,
EPH/WAZ is a powerhouse, holding a 35 per cent share of the daily
newspaper market and 46 per cent of the magazine market, according to
WAZ officials.
Although the limit for market share is set at 30 per cent in Croatia,
the government body charged with safeguarding fair competition, the
Agency for Protection of Market Competition, has not stepped in thus
far.
Mladen Cerovac, the agency's deputy chief, told IWPR that though
EPH/WAZ controls more than 30 per cent of the print market, they are
not breaking the law, because they have not "abused their dominant
position".
The agency's powers are limited, and it can act only to prevent abuse
of monopolies, rather than the monopoly itself. It says it has not
seen evidence that EPH/WAZ is acting unfairly towards the
competition.
SERBIA: POLITICIANS AND PUBLISHERS
WAZ's entry into the Serbian market was fairly dramatic: it bought 50
per cent of the Politika publishing house, which owned Politika, a
leading paper - and one-time mouthpiece of Slobodan Milosevic - as
well as two other dailies, 14 magazines and printing and distribution
systems. The deal, concluded in March 2002, cost WAZ 12.5 million
euro.
But there were immediate questions in the press about why it had
risked so much money investing in a set of low-circulation
publications from which short-term profits were unlikely given the
depressed state of the economy. According to one estimate (cited in
Der Spiegel in August 2002) the new venture, called Politika
Newspapers and Magazines, has debts of 100 million euro.
Darko Ribnikar, editor-in-chief of Politika Newspapers and Magazines,
acknowledges that the company was not in great shape at the time of
the deal.
"During the Milosevic regime, we lost a lot of our reputation, so
they took a certain risk in taking on a company which had lots of
employees, was technologically backward, used old machinery, and had
a tarnished reputation."
It is widely believed that the late Serbian prime minister, Zoran
Djindjic, was instrumental in brokering the deal.
Djindjic had been on good terms with WAZ's managing director, Bodo
Hombach, dating back to the days when he was in the Serbian
opposition, and Hombach was co-ordinator of the Stability Pact for
South Eastern Europe.
There was widespread speculation in the Serbian press that once it
was no longer under Milosevic's grip, Politika was seen as a
potential political vehicle by the new Serbian premier - and that he
encouraged his friends at WAZ to help him get control of it.
Supporters of this view point to the rather timely appointment of
Nenad Stefanovic, formerly PR chief for Djindic's Democratic Party,
to a senior position at Politika shortly before the deal was
concluded.
The Germans categorically rejected these allegations. Hombach and
another WAZ director, Erich Schumann, put out a press statement in
June 2002 saying, "We deny the rumours alleging secret negotiations
with top Serbian officials." The decision was "not influenced by any
interest group whatsoever," the statement said.
"The claims against Mr Hombach, the director of WAZ, are also untrue
and fabricated, and this can be easily proved. We reiterate that WAZ
is an independent, non-partisan media company whose decisions are
guided exclusively by economic and publishing criteria."
Hombach turned down IWPR's offer of an interview, but Politika's
Darko Ribnikar defended him vigorously when IWPR raised these charges
with him.
"There's nothing wrong with Mr Djindjic and Mr Hombach being friends,
but that has nothing to do with it," Ribnikar said. "Djindjic's role
was simply that he brought all the chief editors to a meeting with
the German businessmen, and it turned out that we found common ground
with WAZ."
WAZ has yet to turn the business round and make money on its Serbian
acquisitions. It is early days yet, and unusually, the new management
at Politika Newspapers and Magazines has not tried to improve the
bottom line by slashing jobs, even though they recognise that the
firm is overstaffed. Nor have they axed Politika's weaker stable-
mates, opting instead to resuscitate some ailing titles.
Despite its problems, Politika itself remains the most important
Serbian daily. By October 2003, its circulation had recovered to
about 150,000, a significant increase on the end of the Milosevic
era, when it had sunk to 100,000, but still well down on the 250,000
enjoyed in earlier years.
"We have got back the respect and confidence of the readers,"
Ribnikar told IWPR. "People trust us again."
Without waiting for Politika to turn a profit, WAZ is moving ahead
with expansion plans, especially outside the capital. The group is
close to tying up deals with the publishers of the Montenegrin daily
Vijesti and the Novi Sad paper Dnevnik.
REGIONAL COVERAGE
All this suggests a repetition of the pattern in Bulgaria, which has
seen rapid growth of WAZ's influence in the regions.
"WAZ is making the media market more competitive, but they represent
a real danger for the local press," said Milen Valkov, who heads the
Union of Journalists in Bulgaria.
New regional editions of Trud and 24 Chasa in Bulgaria are selling at
prices that match or undercut their rivals, and are capturing most of
the regional advertising revenue. Editors of rival papers claim this
amounts to a death sentence.
Tzvetan Todorov, editor of the Lovech paper Naroden Glas,
explained, "It is impossible to edit a normal newspaper in an
abnormal market environment. WAZ's dumping prices are killing our
chance to get advertisements."
In January 2003, WAZ Media Group Bulgaria completed a new print house
in Varna, which will print local editions of its main papers. Spas
Spasov, in charge of advertising at the Varna daily Narodno Delo,
doesn't know how his paper will compete.
"We can barely survive because of WAZ's print monopoly," Spasov
says, "but the biggest threat to us is the monopoly over the
advertising market."
Hary Kasabov, the chief editor of Cherno More, is not so pessimistic,
but is still wary of WAZ's cost-cutting tactics.
"I am not afraid of WAZ competition here in Varna because we are
still the news leaders," he says, "but this month we had to drop the
price of our newspaper by 25 per cent."
Meanwhile, 30 local papers have formed an association called BAREM to
combat the trend. Its head, Vesela Vaceva, said, "Our goal is not
just to withstand the WAZ monopoly, but to withstand all possible
future monopolies in the media."
COMMERCE AND CONTENT
Public opposition to the relentless advance of WAZ is muted by the
fact that it has injected so much money into the cash-strapped
Bulgarian media sector. Between 1996 and 2000, WAZ investments in
Bulgaria totalled around 50 million euro, and it expects to invest
another 30 million in new technology, new magazines and better
working conditions for staff.
Journalists working for the group's papers have no complaints either.
They are paid up to 30 per cent more than elsewhere.
WAZ journalists also say the new management, and the economic
stability it brings, make for less intrusion into editorial
independence. As Violeta Simeonova, political analyst for 24 Chasa,
told IWPR, "I think the chief editors are less tempted to make up
their own private policies. There are fewer political directives."
Speaking about WAZ's operations in the Balkans as a whole, Dr
Beermann told IWPR that the firm is confident editorial content is of
a "good standard" and that its staff are fully aware of "serious
journalistic principles based on journalistic freedom".
An expert on media in the Balkans, Oliver Money-Kyrle, who is Project
Director for the International Federation of Journalists, agrees-up
to a point.
"In the past, one always talked about interference, censorship,
either through the government or by local press barons, who had
strong political interests or strong business interests that would
heavily influence the editorial policy of their media for their own
political or business ends," he told IWPR. "Clearly if you have
foreign media ownership, that pressure is relieved from the
journalists."
But Money-Kyrle says journalists in Bulgaria do face hidden
pressures, "Because of the weaker civil society and because of the
weaker journalist organizations, there's less pressure on the media
owners to maintain the quality of the journalism. It becomes a purely
commercial venture."
Some readers and parts of the media in the Balkans believe WAZ is
guilty of "dumbing down". It is one thing to give somewhat tired
publications a more colourful and modern look, say these critics, but
quite another to lower journalistic standards and introduce a staple
diet of sensationalism and sleaze, all in the name of profit.
One journalist from 24 Chasa, who asked IWPR not to use his name,
said, "We're prepared to print anything that attracts attention.
First, we started with naked women, although we're supposed to be a
serious newspaper. Then, we started to print sensationalist stories,
many of which are not proven.
"We are publishing too many crime stories and human interest stories,
but not serious analysis. We are told nobody wants to read them."
So what do the readers think? Architect Georgi Hadjinikolov buys both
Trud and 24 Chasa because he follows politics. But he's critical of
both of them.
"Most of the information they carry is totally superficial," he
said, "and there is a shortage of serious analysis."
Judging from the people IWPR spoke to in Serbia, the overall verdict
seems more positive. After all, almost anything would be an
improvement on the Milosevic years. With the end of overt political
control, Politika's writers have greater editorial freedom. Add to
that the improved look of the paper, and you have a winning formula.
Nikola Cubrilo is a loyal supporter of Politika, and never stopped
buying it in the Milosevic years, but "since the German money came,
it looks much better - I like it."
"No other daily in Serbia compares with Politika," she says. "It's
serious and professional."
Unlike Cubrilo, Marija Zivancevic did abandon the paper when the
propaganda got too much for her, but she started buying it again
after Milosevic fell.
"Since then it's been looking better every day," she said.
POWER IN A VACUUM
Whatever its critics say, it is clear that WAZ has been a breath of
fresh air for its Serbian press partners. But it is likely that rival
newspapers - which are just as keen to develop as vigorous
independent media - will find their very existence threatened by
WAZ's economic might and its hard-nosed sales policies, as seems to
be happening in Bulgaria.
These countries don't have the luxuries of healthy economies and
tough legislation, which in western Europe help offset the worst
excesses of anti-competitive business practice.
People in the region are sensitive to issues of media control and
ownership. Some fear that the press revolution that has allowed so
many independent voices to be heard may also bring monopolies, which
curb this diversity.
Julie Poucher Harbin is a freelance journalist in Sarajevo. Elena
Yoncheva is a prominent television journalist in Bulgaria. Vera
Didanovic is a journalist with the Belgrade weekly magazine Vreme.
Drago Hedl is a journalist for the weekly Feral Tribune in Split,
Croatia.
[Note: IWPR is an anti-Yugoslav report service financed by Western
fundations and institutions. CNJ]