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Germany: Media Concerns Eager To Invest More In Eastern Europe

Over the past decade, German newspaper and magazine publishers have progressively expanded across Eastern Europe. Unprecedented levels of investment and new formats seemed a sure way of improving local publications' competitiveness and attracting new readers. But some question whether German ownership of a large percentage of the region's press is coming at too high a price.

Prague, 20 June 2003 (RFE/RL) -- Westdeutsche Allgemeine Zeitung (WAZ), which already is the dominant publishing house for newspapers in Southeastern Europe, plans to expand its activities in the region.

WAZ's director, Lutz Glandt, last month told the "Financial Times Deutschland" that his group was soon to take over three of the leading newspapers in Macedonia: "Dnevnik," "Utrinski Vesnik," and "Vest."

Also, the German media concern from Essen is about to take over the newspaper "Dnevnik" in Novi Sad, the capital of the northern Serbian province of Vojvodina.

Last March the group concluded a strategic partnership -- 50 percent of the shares and the so-called golden vote in financial and commercial matters -- with Montenegro's daily "Vijesti."

Further to the north, WAZ is also set to take over the influential Hungarian weekly news magazine "Heti Vilaggazdasag."

These projects reveal the general interest of German publishers -- including WAZ, Axel Springer, Rheinische Post Media, Verlagsgruppe Passau, Gruener & Jahr, and H. Bauer -- in Eastern Europe. They are offering a fresh start to many papers in the region, pumping in millions of euros. Yet there are fears the takeovers could lead to a suffocating monopoly, concentrating media in the hands of a few powerful concerns.

In the 1990s, at a time when they were receiving huge benefits, German media groups diversified their activities, moving east and hoping for an economic bonanza during the postcommunist transition.

Now that the Western market is saturated, it is complicated to acquire titles, and very costly to launch new ones. So the German companies have turned their sights on Eastern Europe.

Horst Roper heads the Dortmund-based Formatt-Institut, a research institute on the media business. He told RFE/RL the competition between publishing houses in Western Europe is so fierce that there are better opportunities in Eastern Europe for expansion.

"German companies are paying relatively low prices to buy up the publishers in Eastern Europe that usually play a leading role in their market segments. And then they build up these publishers. By doing this, they hope to improve these publishers' positions within their segments. This stronger position allows them to earn more money," Roper said.

Roper added that German media concerns, who in the West were confined to the magazine and weekly press market, have found more flexibility in Eastern Europe, where they have moved into the daily press market as well as more political publications.

At a time when the Western daily market is experiencing a downturn and the advertising market is in a recession, Eastern Europe now provides a significant contribution to the German groups' turnovers.

Roman Latuske is spokesman of MAFRA, a Czech publishing house controlled by the Dusseldorf-based Rheinische Post Media. He told RFE/RL: "Today, the situation in the Western European media markets is very difficult. And that's why, you can say, our foreign 'engagement,' in principle, contributes significantly to the results for the entire company."

German media groups are also eager to solidify their expansion plans outside Germany, where the rules of competition are more loose. "You can do in Poland or the Czech Republic many economic things much more simply," Latuske said. "And you can react more flexibly because there is not as much bureaucracy here or special interests as in Germany."

Rheinische Post Media controls the two prominent Czech newspapers "Mlada fronta Dnes" and "Lidove noviny." It is also active in Poland.

German media concerns are regularly accused of monopolizing the Eastern European print market. In Hungary and the Czech Republic, for instance, German publishing houses control the majority of the local press.

In Croatia, WAZ alone reportedly holds one-third of the daily paper market and one-half of the magazine market. In Bulgaria, WAZ reportedly controls about one-third of print publications and nearly half of the print advertising market.

There is a perception in both countries that independents cannot compete against what critics call WAZ monopolies. Critics accuse WAZ of trying to squeeze rival publications out of the market. For instance, WAZ distributes its papers on a sale-or-return basis. Distributors thus tend to order less from WAZ's competitors, who do not have a sale-or-return policy.

Critics direct some of the blame at government bodies charged with safeguarding fair competition, which they say are not tackling WAZ's hold over print media.

Sanja Cosic is secretary-general of the Independent Association of Journalists of Serbia. She told RFE/RL Serbia welcomes investment in its print market, as with any sector. She added that her organization is not particularly worried by the inroads made by WAZ in Serbia.

In March 2002, WAZ bought -- for 12.5 million euros -- 50 percent of the Serbian Politika publishing house, which owns three dailies, including the prominent "Politika," and 14 magazines, as well as printing and distribution systems.

Cosic said: "We are aware of those critics saying that WAZ is monopolist. As far as Serbia is concerned, their investment in the Politika [publishing house] is the only big one. So we would like to see more, maybe not just WAZ. We would not like to see a monopoly by any group but we would very much welcome any investment in the field of media."

Cosic said Serbian journalists work in poor conditions, with low salaries and no social security. One of the ways to improve the situation, she pointed out, is with an influx of foreign cash.

"It is one solution for the transformation and improvement of the situation and the general position of journalists," Cosic said. "We've discussed what WAZ is doing right now for the transformation of 'Politika,' and I can say that people are not unsatisfied. They have a very good collective agreement, which gives them basic safety."

Cosic noted that WAZ has pushed for improvements in the publications' design and content. In this way, she said, their circulations are likely to increase.

(RFE/RL correspondents Mark Baker and Charles Carlson contributed to this report.)