The sun sets on New Day
A decision by Polish media group Agora to stop publishing Nowy Dzień (New Day), its most recent project that appeared on the market in November 2005, won a warm market welcome and pushed up Agora's share price immediately after the information was released.
Expenditures related to the launch of Nowy Dzień dragged down the media group's fourth-quarter financial results from a Q4 net profit of zł.38.8 million in 2004 to zł.8.5 million in Q4 2005. Agora's management expected this, but the paper failed to reach its sales target of 250,000 copies, with average circulation in November and December below 200,000.
"Nowy Dzień's sales in January fell compared to December and continued to drop in February," says Agora's deputy chief executive, Zbigniew Bšk. "Ultimately, we got to the point where we had no doubt that reaching targets set for the project was not possible."
The paper generated an operating loss of zł.27 million during the three months it was on sale and the media group revealed that the launch of the paper cost zł.24 million.
"The shutdown is a good, aggressive decision. Now Agora will not have to spend heavily on the new project, and its earnings prospects are safer," said Michał Mierzwa, an analyst at Erste Securities.
The appearance of Nowy Dzień was interpreted by analysts as the media group's volley in the battle with Axel Springer for supremacy in Poland's newspaper market. The German media giant's Fakt tabloid overtook Agora's Gazeta Wyborcza in terms of readership soon after its introduction in late 2003.
Nowy Dzień, defined by Agora as a mid-market paper, failed to find a niche between quality dailies and tabloids. This coincided with media reports that Springer was about to launch another daily, this time targeting Gazeta Wyborcza as its direct rival.
The shutdown of Nowy Dzień triggered market talk that Agora may now seek to buy media assets from Norway's Orkla - owner of broadsheet Rzeczpospolita and leading regional titles.
Agora refused to comment on Orkla but said it was keeping an eye out for potential buyouts. "We are still looking for expansion opportunities, including acquisitions. We will always be interested in buying interesting media assets for a reasonable price," Bšk said. (Reuters)
