Publishers unite to bid for Ruch

The publishers, all members of the Polish Association of Newspaper Publishers, are forming a company called Publishers of the Press to buy shares of Ruch Ltd., which sells 70% of the nation's newspapers. An international tender for Ruch opens Sept. 29, with the privatization slated for completion by the end of 1995.
"We want to be sure that we have power in the management of the company," said Maciej Hoffman, deputy editor-in-chief of the Warsaw-based sports daily Przeglad Sportowy. He and other members of the Polish Association of Newspaper Publishers - a group of more than 100 foreign and domestic publishers - have formed Publishers of the Press for the sole purpose of participating in the Ruch privatization.
"It could be dangerous if the strategic investor in Ruch was a company which doesn't deal in (newspaper and magazine) distribution," said Hoffman, secretary of the newspaper association, founded in 1991.
Their limited liability company will have its first meeting in October and ultimately seeks to attract all association members. Hoffman said the company is seeking to raise about $20 million, which he concedes would fall far short of a majority stake in Ruch.
One interested investor is the Polish-American Enterprise Fund, which has invested over $15 million in the publishing industry out of a total of $270 million invested in Poland.
"It's important they (publishers) have a say in what happens with their business," said Heather Potters, vice president of the fund. She declined to say how much her fund would be willing to contribute to the Ruch privatization.
Later this month the state will open an international tender for strategic investors.
No single investor will receive more than 50%, according to Zbigniew Gryglas, project manager with the Privatization Ministry. Gryglas said that 20% of the shares will be sold to Ruch employees at a discount and the State will retain 5% for restitution. Ruch said the ministry would welcome bids from publishers.
"It's quite a good idea," he said. "They know the needs of their clients and they know how to achieve success in this market."
Ruch, established in 1918, and later the state-owned newspaper giant under socialism, was restructured as a state-treasury company in 1990. Ruch was originally part of RSW Prasa-Ksiazka-Ruch, a conglomerate that published books and periodicals in communist Poland. Today, Ruch sells over 70% of Polish newspapers through 20,000 news stands and 100 wholesalers. In 1994, the company had net profits of zl. 13 million ($5.26 million) on revenues of $1 billion, said Artur Sprycha, chairman of the board of directors. Sprycha declined to reveal the company's equity or assets.
He said that cooperation with the nation's publishers is "our plan, our goal, our mission," but declined to discuss Ruch's privatization. Gryglas declined to reveal the names of any investors who have expressed interest in Ruch.
Meanwhile, the nation's publishers are making no secret of their interest in Ruch.
"We want to get privileged shares," said Hoffman. He and other publishers are pressing the Privatization Ministry to sell them shares at a discount, comparable to that offered to Ruch employees.
Hoffman noted that 50% of Ruch's revenues come from the sale of newspapers. Publishers on the whole may not have much money compared to other investors, he said. "But our capital is also the product that is being sold. These are our assets."
Gryglas said that there is nothing in the press law stating the government could sell shares at a discount to parties other than employees.
Hoffman said publishers want a significant interest in Ruch to correct three basic inadequacies: a lack of detailed analysis of paper sales, lack of flexibility in ordering newspapers and slowness in delivery of papers to kiosks.
Already, newspaper publishers have taken matters into their own hands.
In the early 1990s, many publishers stationed their own employees in Ruch kiosks to monitor newspaper and magazine sales. This resulted in improved sales, sometimes by as much as 30%, Hoffman said.
Also, many publishers, finding Ruch distribution services inadequate, started their own routes.
Andreas Tilk, president of Gruner + Jahr and not a member of the publisher's group, said that not all publishers are seeking shares in Ruch.
Tilk said the best solution to ensure publishers' interests may be to find a foreign distributor not yet in the Polish market to buy shares of Ruch. In the meantime, he said, "we can improve the private distribution system and show Ruch how to work."