Ownership changes help spark new media flurry in Czech Republic

Photo: Bin im Garten, CC BY-SA 3.0

Traditional Czech newspapers appear to be losing their allure under new ownership. Readership and advertising revenues are down. Meanwhile, though, a raft of new media titles and concepts have hit the market, all trying to find the magic formula for success.

Photo: archive of Echo Media
TV video streams, niche news services aimed at tablets and computers, and new news servers; the fast forward button appears to have been pushed on developments in the Czech media scene over the last year or so.

And while some of the developments appear to stem from the wider digital and internet revolution that have lowered the barriers for new media start-ups by cutting the heavy capital investments needed in printing technology and distribution networks for the likes of traditional papers, there also appears to be another factor at play as well.

Call it the abhorrence of oligarchs: an ownership shake-up of leading Czech newspapers with foreign, most German, media magnates stepping out and Czech business magnates stepping in, caused many Czech media professionals to quit their cosy posts and set up on their own. Many say they could not trust the new Czech media magnates, such as Mladá Fronta Dnes’Andrej Babiš; Hospodářské Noviny’s Zdeněk Bakala, and Blesk’s Daniel Křetínský to keep their business and political ambitions in the background when push comes to shove. One of the highest profile new ventures came with the creation of the Echo Media Group by journalists who quit the respected Czech daily Lidové Noviny after its takeover by billionaire businessman and ANO leader Andrej Babiš.

One of the leaders of the exiting journalists was the paper’s former editor and managing director and head of the MAFRA groups internet activities, Dalibor Balšínek. At a round table on new media in the Czech Republic, he explained some of the original motivation. “The reason why we started the project is that we wanted to keep our independence. We did not want to work for an owner who has a political party and is one of the biggest employers in the country. We simply could not imagine that we could work for someone like that. And we are really, really pleased that people, our readers, appreciate that and that we have so many readers and that this year we should be able to break even.”

Dalibor Balšínek,  photo: Czech Television
The initial flagship of the group was an online news server launched in March 2014. Although the stress has been on high quality journalism, the option of putting that content behind a pay wall and demanding readers pay for access was shunned. Instead, a more ad hoc approach has resulted in the internet online experiment resulting in a partial return to traditional print media in the form of a weekly current affairs magazine from November last year.

Dalibor Balšínek takes up the story. “We started without a pay wall. We were thinking about a pay wall but intead of a pay wall we launched that weekly which is not free and must be paid for. So our income is now considerable, both from subscriptions and sales on news stands. So we are not planning to introduce a pay wall on our daily, but on the weekly people have to pay and it is quite a significant sum.”

For the weekly, there are around 1,200 subscribers and news stand sales amount to around 5,000 copies after two months. But a big disappointment has been the advertising revenues stemming from internet activities.

Still, Balšínek says his past experience with the massive MAFRA media groups should have taught him that the battle for internet advertising revenues is very fierce and that it’s a winner takes it all world out there with only one or two sites with considerable exposure able to claim considerable revenues. “The price of internet advertising is really low. And on the market we are a content server, but we not just competing with content servers but we are competing with everybody who is on the internet. That is the big difference. We are maybe in the top 10 news servers in the country already, but on the whole Czech internet we are perhaps only number 80, perhaps number 85.”

Nevertheless, although advertising revenues have disappointed so far, there is still the hope that they will eventually contribute half of total earnings with Balšínek hopeful that this can happen by the end of this year.

Michal Klíma,  photo: archive of Michal Klíma
Dotyk, which describes itself as the first tablet weekly, has a similar story in the sense that some of its leading lights are exiles from the Economia media group centred on the business weekly Ekonom and the daily paper Hospodářské Noviny. It launch dates back to May 2013 and there are currently four publications with the original weekly supplemented by separate, business, lifestyle, and royal titles. The weekly has already won one award for the best tablet weekly in Europe.

Michal Klíma, former general manager Economia, is the owner and one of the co-founders of Dotyk. He believes that advertising revenues can help sustain new media ventures and says that advertising companies and houses are willing to back new projects because they realise the danger of mainstream media being concentrated in too few hands. “I trust in the market to some extent. This situation with the concentration of media ownership is not good for the advertising business because strong owners are powerful partners for advertisers. So I believe that advertisers and advertising agencies and the advertising business generally will support new projects as an alternative to the business that is owned by oligarchs and very strong owners. So, I think that the advertising model is an alternative to paid content because, as you said, paid content does not work that well.”

With investment continuing on the new titles, the publishing house behind Dotyk, Tablet Media, has still to break even.

But if the new media are still seeking the financial recipe for success, the old media are struggling with falls in readership and in ad revenues. The latest audited circulation figures for November last year show the readership figures for all the major Czech daily papers down, sometimes drastically. And while the overall advertising market for printed titles is reckoned to have shrunk by 3 percent in 2014 to around 17.5 bilion crowns, there have often been double digit drop in the share grabbed by daily papers compared with the previous year. At the same time, the media magnates Babiš and Křetínský are said to be in the verge of new acquisitions with the regional daily chain Denik said to be put on sale by its German owners.

Photo: archive of Tablet Media
That is some consolation for the new Czech generation of media entrepreneurs. Dalibor Balšínek again. “I have a big hope that the oligarchs do not understand the business and it is visible. You can see it in the case of Zdeněk Bakala who bought the publishing house Economia. Economia is losing money constantly for the past three or four years. The losses are significant. And the same is true of MAFRA and Andrej Babiš, they are not earning money, they are losing it. Maybe they will force sate companies to advertise in his publications. What is more significant is that they are losing readers. The decrease in circulation is 20 percent in the case of his newspaper [Mladá Fronta Dnes]. I am not afraid they will buy everything because what I am sure about is that they do not understand the business and this is to our advantage. I understand the business, but not they do not.”