Media in the Spotlight

Economic News

22 Jul 2010
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By announcing its entry into the Bulgarian newspaper market this week, Germany's largest business media group, Verlagsgruppe Handelsblatt, managed to shift the media spotlight straight onto itself. Yet while the entrance of the company is expected to set higher standards among newspapers, sceptics argue that it will have a limited impact on Bulgaria's tabloid-dominated newspaper market.

However, as the leading company for business and financial information in Germany, Verlagsgruppe Handelsblatt's presence will be strongly felt within the Bulgarian business media segment. It has acquired of 50% shares in Economedia AD - which publishes the influential business daily Dnevnik and the leading business weekly Capital.

The acquisition of Economedia, Dnevnik reported this week, is the latest step in Handelsblatt's expansion in Eastern Europe and follows on the back of its investments in the Czech Republic, Slovakia and Serbia.

In an interview with OBG on January 13, Ivo Prokopiev - chairman of Economedia AD, said "The deal with Verlagsgruppe Handelsblatt is a recognition of the quality and editorial independence of Capital weekly and Dnevnik daily. The deal is a great opportunity to develop better business newspapers and business-to-business magazines and to start new media projects."

Although quite low in circulation, compared to tabloids, experts say business print media has recently become one of the most dynamic market segments. The launch of several business-to-business (B2B) and corporate magazines, which target specific audiences, has helped business media magazines increase their share of advertising revenue.

New titles include magazines focused on construction and architecture, information technologies, medicine, tourism, restaurant management and cars. Large companies such as the leading GSM operator, M-tel, and credit card issuer Transcard have started publishing their own specialised magazines, distributed to their clients.

Having launched magazines for tourist, energy, agriculture and medical sector professionals, Economedia AD is the leader in this segment, and is expected to further strengthen its position following its new partnership with Verlagsgruppe Handelsblatt.

Yet, the wider newspaper market continues to be dominated by another German media group, Westdeutsche Allgemeine Zeitung (WAZ), which owns the two dailies with the biggest circulation in Bulgaria - Troud and 24 Chassa - and more than 50 local dailies and weeklies.

According to industry insiders, WAZ receives over 60% of all advertising revenue available to daily newspapers, which accounts for 50% of advertising investment in print media.

Bulgaria's sole people-metric research agency, TV Plan/TNS survey, showed that WAZ publications generated 1.3m euros in advertising revenue in a typical month of July 2004.

Martin Zahariev, Managing Director of Union Media holding, the leader in lifestyle magazines such as Playboy and Egoist, told OBG that "It is expected that part of advertising budgets will be reallocated from the newspapers to the leading top 10 monthly magazines to promote the brands of luxury goods and services."

Industry insiders say the readership of weekly magazines is currently around17% of the urban, 15-60 age group (about 600,000 people), while that of the monthlies is around 27% - close to 1m people from the same group.

WAZ, which continues to enjoy the lion's share of advertising revenue, has been criticised in the past by the world press freedom watchdog, Freedom House, for monopolising the newspaper market through dumping policies on prices, distribution and advertising rates.

Yet, the concentration of ownership in print media is not the only challenge facing Bulgarian print. In its annual 2004 report, Freedom House downgraded Bulgaria from "free" to "partly free" in its press freedoms rankings. The group cited increased government influence over public media outlets as well as a rise in the use of libel suits against journalists and publishers as the factors limiting media expression.

However, the most pronounced problems, according to Freedom House, are: "Political control over state broadcasters; a politicised process of allocating licences; and manipulation of advertising, which threatens the position of independent media."

Journalists in Bulgaria are also said to exercise self-censorship, with investigative reporting on corruption and organised crime a rarity.

Despite these problems, Bulgaria still ranks 36th in the Worldwide Press Freedom Index, ahead of developed countries like Italy, Spain and Australia. It is even further ahead of its Balkan neighbour Romania, which is ranked 70th.

Meanwhile, journalistic standards are expected to improve following the media's adoption of a code of ethics in November 2004,which was signed by 42 leading print and electronic media outfits. The move is seen by many as a battle to drive out the so-called "yellow press", which relies on sales of cheap, low-quality sensationalist tabloids, which do not have legal registration and do not pay taxes.

However, Zahariev also argues that these new rules for self-regulation show "a certain degree of maturity achieved by the media market in Bulgaria, which is aware of the importance of rules for good journalistic practice."

The arrival of a new foreign media player this week, many hope, will further strengthen the Bulgarian media's resilience against outside pressure and interference in what looks to be a hotly contested election period.

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