Dailies get the gloves off
The country's top media houses are set for a bruising encounter with three new national dailies about to hit the newsstands. In the red corner is Fakt-publisher Axel Springer, which wants to change its brash image with a quality paper; Agora, the reigning champ in this arena, is about to unleash its new title; and underdog Życie Warszawy wants to punch its way into the national press ring. But analysts are skeptical that the media market can sustain a three-pronged attack. Seconds out ...
Agora made headline news when it confirmed that it will publish a new national daily this autumn. However, the company, one of the biggest media organizations in Poland with a Warsaw Stock Exchange listing worth some zł.3.5 billion, was being parsimonious with the details.
"Although in the launching period the new project is going to substantially influence the company's financial results in Q4 this year, which means that Agora's net result is probably going to be lower by over 10 percent, we believe that in the long run the new publication will constitute an added value for our shareholders," said Wanda Rapaczyński, Agora SA's CEO.
Zbigniew Bąk, Agora's deputy CEO, denied speculation that the third daily in Agora's portfolio, which includes Gazeta Wyborcza and free newspaper Metro, will be a tabloid. "It is a brand new project prepared by Agora, we're not copying any foreign publications. We want to create a newspaper of the center - with quality news and entertainment for the whole family."
Tough at the top
The editorial team is already complete, with Jerzy B. Wójcik, formerly the head of Metro, in the editor-in-chief's chair and Wojciech Fusek named as publisher. Analysts estimate the cost of the launch of the new daily, which will have a circulation of one million per day, at around zł.80-100 million. However, some claim that Agora could be about to shoot itself in the foot, and rather than reducing the readership of newspapers published by other media companies, the new sheet will rob readers from Gazeta Wyborcza.
Rafał Oracz, head of the press department in CR Media, says: "I don't think there is a demand for the general paper Agora proposes. Gazeta Wyborcza was for a long time the beneficiary of a very wide market positioning. Of course, I can't rule out that the company will cease tabloidizing the paper, but it would make much more sense to compete with Fakt. People are not interested in buying good news, which was proved by the total failure of the recently launched opinion weekly Ozon."
The market reacts
After the company announced its plans, the Agora's share price dropped by around five percent, which shows that investors don't know what to expect. Andrzej Szymański, an analyst from Bank Zachodni WBK SA, says the new project is Agora's delayed response to Axel Springer's introduction of Fakt, but Agora will never admit this.
"The project should have been carried out much earlier, before Fakt entered the market with such ease. It's Agora's old concept that had been unnecessarily blocked. Now Fakt is really the only tabloid on the market. The situation of Super Express is unclear, it is eligible for sale but nobody knows who's going to buy it. So the battle is between Axel Springer and Agora," said Szymański.
Agora's move has pushed Axel Springer to rethink their project of launching a quality newspaper equivalent to Germany's Die Welt. Wiesław Podkański, CEO of Axel Springer Polska (ASP), refused to confirm the rumor, but the media is awash with whispers fueled by alleged leaks from ASP. Moreover, a quality daily would nicely complement the firm's portfolio as the media concern already publishes Newsweek, the most popular opinion weekly in Poland, and Fakt, the strongest tabloid.
New kid in town
As if this wasn't enough, another media baron is about to enter the fray. Michał Sołowow, a Warsaw Stock Exchange tycoon, intends to transform the popular local newspaper Życie Warszawy into a quality national daily, similar to Presspublica's Rzeczpospolita. Piotr Lisicki, the prospective editor-in-chief of the new publication, says the project is already pretty advanced with mock issues being prepared by a 20-strong editorial team. Lisicki expects the readership of the paper to reach 150,000 although Rafał Oracz from CR Media considers such a forecast too optimistic.
BRE Bank brokerage house analyst Michał Marczak also has his doubts about Sołowow's project, especially given Axel Springer's know-how and capital: "Last year's plans to double the sales of Życie Warszawy failed - the readership increased by only a couple of percent. So I'm very skeptical about the idea to turn it into a national daily."
Ad advantage
If all the speculations and predictions come true, the appearance of three new dailies on the press market will not only trigger a battle for readers but also for advertisers. According to Michał Marczak, the fact that Agora made the first move might be one of their greatest advantages in the fight for advertisements. "One can't count on advertisers to appear from day one. They normally come after the second or third quarter when they can be sure the newspaper has gained readers and achieved a stable position on the market."
Rafał Oracz predicts that faced with Axel Springer's and Agora's offers, advertisers are going to opt for the latter as, along with popular dailies, the company owns outdoor advertising company AMS, TOK FM radio and popular internet sites, which broadens their offer. "Axel Springer has been going through a difficult period recently. Advertisers might use the competition between the concerns to try and eliminate one of them - and Agora seems a more attractive advertising business partner," says Oracz.
Fighting their corner
Not everyone agrees that there's not enough space for three new dailies on the Polish press market. Paweł Lisicki believes that three new titles might lead to the segmentation of the press sector. "The market is more and more divided but it is not a bad thing. In the UK, there are three classes of newspapers and they all function well in their niches. We shouldn't treat the press market as a static entity. Let's wait and see how the new papers perform and the advertisers will simply follow the trend."
Each publisher will definitely hope the trend will turn in their favor, as the stakes are high. Real income from press advertising in 2004 amounted to zł.700 million and the figure is forecast to rise to zł.750 million in 2005, and further growth of zł.60 million is anticipated for 2006.
So far, media companies have been vague about how exactly they are going to win the battle for readers and advertisers, and Agora is loath to reveal details about its new title. But for those outside the triumvirate, the struggle is sure to be a highly entertaining knock-down drag-out fight.
