Wiesław Podkański
Nearly a year after its launch, Newsweek Polska has been an unquestionable success. Although the weekly's circulation has slipped to an average of 250,819 copies - a substantial drop from the 408,612 issues sold just after Sept. 11 - Newsweek sells more than rival publications Polityka and Wprost. The magazine has also proved that its bare-bones writing style and attractive graphics can lure new readers without stealing them from the competition. According to estimates by Newsweek's publisher, Axel Springer Polska, the magazine accounted for 28% of the company's overall revenue in the first half of this year, more than double what it generated in the fourth quarter of 2001. In the first six months of 2002, Newsweek logged more than zł. 36 million ($8.78 million) in ad revenue and zł. 14 million ($3.41 million) from distribution. Wiesław Podkański, Axel Springer Polska's chief executive officer, talked to the WBJ's Anna Kocińska about Newsweek's first year and the publisher's plans for the future. The following is a translated and edited version of their conversation.
Q: On the eve of the magazine's launch last year, Tomasz Wróblewski, Newsweek's editor in chief, told the WBJ that he was convinced the title would be a success. Have you been successful? A: We were pleasantly surprised that from the very beginning Newsweek had become a leader among news magazines when it comes to sales.
Q: According to an analysis made by the Warsaw-based SMG/KRC market research company, Wprost and Polityka continue to beat you among total number of readers. A: It's no surprise that Wprost and Polityka have more readers. Readership is monitored through the Polskie Badania Czytelnictwa (PBC) system performed by SMG/KRC. Publishers have discussed this methodology for some time now because PBC is really monitoring knowledge of a particular brand rather than readership. It's been practically a rule for years that new titles always need at least one to two years to reach certain readership figures. So, it's rather the number of issues that one can sell that can be described as an absolutely objective criterion (of success), and I've never heard of any kind of manipulation in ZKDP's (Związek Kontroli Dystrybucji Prasy - press distribution watchdog) figures.
Q: Have you also been successful in terms of ad revenue? A: The average number of ads in Newsweek is higher than in our business plan. I reckon that the number of ad pages per issue is 18 to 19. These are really seasonal figures, though, because in summer even popular magazines, such as Newsweek, tend to have only six to seven ad pages.
Q: What's Newsweek position on the market? A: Measured by sales, it's very stable. Obviously, after the first few months of an absolute boom resulting from extremely intensive promotion and greater interest in Newsweek after it was introduced, its sales had dropped, but it settled on the very decent average level of 250,189 issues.
Q: Did Newsweek snatch readers from Polityka and Wprost? A: The number of issues sold by Polityka or Wprost has dropped only slightly, so one can say that we managed to reach a completely new group of readers, which we estimate at some 160,000 people. It's yet another unusual thing about Newsweek: We tried to present a product that would be different from the existing weeklies because we knew that Polityka's readers are very loyal. We managed to get our writing across to young and well-off readers with good educations, which is an asset in talks with advertisers.
Q: Has Newsweek reached a break-even point yet? A: It's making money, which happened far earlier than expected. But we still plan to invest in Newsweek and create, for instance, special issues. Q: How much have you invested in Newsweek? A: All I can say is how much we have invested in its promotion. In the second half of 2001, we spent zł. 10.8 million ($2.63 million). In the first half of this year, we spent zł. 4.4 million ($1.07 million). We'll still promote Newsweek, but in a different way. At the beginning, we had the classic, new brand promotion, and now we want Newsweek to become a sponsor of big events in social, economic and cultural life. We are trying to invest in our readers. We are organizing debates at universities for students, who are also our readers. There is also the concept of 'Newsweek clubs.'
Q: Has anything surprised you about how Newsweek has been received? A: I can't say that any particular section didn't work out. We're surprised by the excellent feedback on our science section. We're now trying to put more into it, more interesting stories because that's what our readers want.
Q: I've heard about the 'unpleasant atmosphere' in Newsweek's editorial department. Are you aware of this? Has it affected the magazine's quality? A: Yes, I've been getting certain signals, but the task that (editor in chief) Tomasz Wróblewski had was extremely difficult. He had to build a completely new team of people, who came from different papers and magazines. It's no secret that every publication has a different style and pace of work, so the editor in chief had no other choice but to dictate a severe management style to integrate the team. During the first nine months, I've seen quite a few changes in Newsweek's team, but it's stabilized, and I've recently heard that some people want to come back. So, I wouldn't take too seriously the chatter about Wróblewski's supposed dictatorship qualities.
Q: With Newsweek a success, you must certainly be planning new projects. A: I've always stressed that a publishing house that is not working on new projects has no future and should be closed down. So, we are working on several projects in areas where we're already present and also in new segments of the market, but we're not making comments on these plans.
Q: But everyone on the market is talking about a top secret project of yours - a new daily that is rumored to be headed by Newsweek's former deputy editor in chief. A: We are not working on a daily. It's true that Grzegorz Jankowski, Newsweek's former deputy editor in chief, is working on new projects, but I won't reveal any details.
Q: Do you have any plans to acquire existing titles? A: We are having such talks. Some negotiations have taken years now, but I can't say that in one month's time we're going to take over some company. From the business point of view, it's a good time to buy because a lot of companies are in serious trouble. On the other hand, you can easily get burned.
Q: Are you interested in buying into a free press publication? A: We're not present in this segment of the market partly because we have no experience in it, and partly because last year Axel Springer in Germany had a fierce battle with Metro (a Sweden-based free-daily publisher). Axel Springer won that battle, and free papers withdrew from the German market. In short, I wouldn't exclude any new initiative, but I wouldn't define segments of the market that we'll invest in either.
Q: How would you describe Poland's press market right now? A: The market is consolidating. (No. 1 Polish media company) Agora purchased the Prószyński publishing house; (Germany's) H. Bauer bought Twój Styl. In the future, we will also see the consolidation of multimedia, such as the mergers of press groups with electronic media. The development of local press will continue to counterbalance this process. Local press is already developing like crazy. Papers are being created in every powiat (body within the admi-nistrative structure of the country), so it's difficult to evaluate the market. We're not ruling out the possibility of investing in local press.
Q: Are you nervous about the possible launch of a new business weekly by H. Bauer? A: In a sense we're getting ready for that by trying to improve the quality of Profit (a business monthly). We'd like to build new projects around it, such as special issues. We might also release new publications under logos similar to Profit. As for Bauer's weekly, I'm not surprised that its decision whether to launch it at all has been fraught with pains. The business segment of the press market is extremely difficult. Profit sells more than all the other business magazines put together, so I have to say we're satisfied with its results, but considering its circulation, the magazine should have more ads. So, there is a lot of room for improvement yet, especially in terms of the ad market. On the other hand, it's a question of time for media planners to get used to Profit. In Poland, you need a minimum of one year to earn the trust of advertisers and ad agencies.
Q: What's the current situation on the ad market? A: Considering the situation on the ad market, last year's launches of Newsweek and Profit didn't come at the best time. On the other hand, they've proved they're able to grab as much from the ad market as possible. But, of course, all publishers are waiting impatiently for the ad market to revive. But this can only happen if the overall economy recovers. In our case, the situation is not that dramatic. We're not going to close down, let's say, half our titles if the economy doesn't recover in six months.
Q: What impact has Axel Springer in Germany had on your Polish operations? (Deutsche Bank is preparing to float a 40% stake of Axel Springer, held by Kirch, as collateral for a E720 million loan to Kirch Gruppe, on which the media group has defaulted.) A: The situation of the mother company has no impact on its operations in Poland. Poland is still a priority country when it comes to Axel Springer's international involvement. However, whether Axel Springer will get more involved in electronic media (in Germany) or not, may in the future impact the company's investment decisions in Poland.
Q: How will the lackluster ad market impact your financial results in Poland? A: Actually, we've seen an increase in ad revenues due to the launches of (Newsweek and Profit). So far, we've seen year-to-year average growth of revenue up to 25%, and I'm pretty sure that this year it'll continue, or it might be that the revenues will grow even faster. Our profits will grow, too, unless we invest again because, obviously, our results always depend on the scale of our investments.
