A concentration of power - and everyone looks the other way?
For the first time in Switzerland, the “mega-merger” between Tamedia and Edipresse is creating a publishing behemoth whose empire stretches from Eastern Switzerland to Lake Geneva. However, other cases have shown that corporate cultures that are too different often fail to harmonize—and such giants also distort competition. Guest commentary by Stephan Russ-Mohl, director of the European Journalism Observatory at the University of Lugano.
In Switzerland, it was a mega event that even regional papers such as the Mittelland-Zeitung reported on over two pages. In neighboring Germany, on the other hand, the merger of Tamedia and Edipresse was only reported as a single column in the Frankfurter Allgemeine Zeitung. In retrospect, it is not the merger of the two publishing giants from German-speaking Switzerland and Suisse Romande that is the big surprise, but how it was handled in Switzerland. The country really does have other worries at the moment. So the players were spared an outcry of indignation. After all, such a concentration of media power is not at all in keeping with the Swiss Confederation, which prides itself on its direct democracy and has perhaps the most sophisticated system of reciprocal balance of power that Western democracies have to offer.
For the first time, a publishing colossus is being created in Switzerland, which enjoys a media diversity that hardly any other European country can match, whose newspaper empire stretches from eastern Switzerland to the western corner of Lake Geneva: in St. Gallen, Tamedia is on the market with the free newspaper 20 Minuten, while in the neighbouring canton of Thurgau it owns the Thurgauer Zeitung. In Geneva and Lausanne, Edipresse owns Le Temps, Tribune de Genève, Le Matin, 24 heures and the free title Le Matin Bleu. The latter is to be merged with 20 minutes. And at its headquarters in Zurich, Tamedia is already the top dog in the multimedia business - with 20 Minuten, Tages-Anzeiger, SonntagsZeitung, TeleZüri and Radio 24.
The Röstigraben prevents harmony
At first glance, this is a powerful boost to concentration, and is accompanied by fears that the pluralism of opinion in Switzerland could be damaged. On closer inspection, such fears are, at least for the time being, unfounded: For one thing, Tamedia has so far facilitated a great deal of pluralism internally. A political conformity of the media empire, as can be observed time and again with Berlusconi or Murdoch, is not to be expected from Pietro Supino and Martin Kall, the two top people at Tamedia.
On the other hand, the Röstigraben between Suisse Romande and German-speaking Switzerland will prevent too much harmony. The language barrier makes it unlikely that Le Temps will in future be supplied by the same correspondents as the Tages-Anzeiger. Even the translation costs for individual articles are higher for contributions that an editorial team orders directly from a freelance journalist who works in his native language.
Synergies will therefore be achieved less in the editorial offices and more "backstage", as the management jargon goes. Backstage, Tamedia CEO Martin Kall has calculated that around 30 million francs can be saved annually by purchasing paper together, better utilizing printing plants, jointly operating the advertising business and merging other areas, such as information technology. Compared to the billions of taxpayers' money that our politicians are currently so generously distributing to banks, car manufacturers and other "needy" people all over Europe, this sounds more like "peanuts". Measured against the two companies' turnover of 1.5 billion Swiss francs, this represents a savings potential of 2 percent. This, in turn, seems solid and realistically calculated.
Above all, however, a company with a presence in almost the entire country is better equipped to deal with giants such as Google or Microsoft, but also the telecoms groups and even the postal service, which are making powerful inroads into the media business.
Despite such obvious opportunities arising from the elephant wedding, the move by Tamedia and Edipresse is courageous. After all, not only Daimler and Chrysler or Dresdner Bank and Allianz have realized after a short honeymoon that their corporate cultures do not harmonize very well. The mergers of numerous large media companies were also bound to be marital disputes and cost shareholders a lot of money. Robert Picard, one of Europe's most prominent media economists, recently listed the places where dreams of synergies have vanished into thin air at a symposium in Switzerland: He recalled AOL-Time Warner, Vivendi Universal and Bertelsmann as particularly spectacular cases. The list could easily be extended. Picard pleaded for more "coopetition" - a neologism made up of "cooperation" and "competition". This involves close, selective cooperation between competitors, who nevertheless remain independent. It remains to be seen whether this would have been the better approach for Tamedia and Edipresse.
For Switzerland as a media location, however, the answer is a clear yes. "Concentrations of power," says Hugo Triner, publisher of the Boten der Urschweiz/Südostschweiz, "are not only questionable from a political point of view, but also economically." He finds it "naïve" to allow them. Advertisers and journalists in particular, but also readers, would become dependent. Large companies distort competition, for example by dumping prices in order to drive competitors out of the market. Afterwards, "when a monopoly or quasi-monopoly has been created, editorial services are significantly reduced and prices are raised". In fact, there are already numerous examples of this in Switzerland.
For the first time, a publishing colossus is being created in Switzerland, which enjoys a media diversity that hardly any other European country can match, whose newspaper empire stretches from eastern Switzerland to the western corner of Lake Geneva: in St. Gallen, Tamedia is on the market with the free newspaper 20 Minuten, while in the neighbouring canton of Thurgau it owns the Thurgauer Zeitung. In Geneva and Lausanne, Edipresse owns Le Temps, Tribune de Genève, Le Matin, 24 heures and the free title Le Matin Bleu. The latter is to be merged with 20 minutes. And at its headquarters in Zurich, Tamedia is already the top dog in the multimedia business - with 20 Minuten, Tages-Anzeiger, SonntagsZeitung, TeleZüri and Radio 24.
The Röstigraben prevents harmony
At first glance, this is a powerful boost to concentration, and is accompanied by fears that the pluralism of opinion in Switzerland could be damaged. On closer inspection, such fears are, at least for the time being, unfounded: For one thing, Tamedia has so far facilitated a great deal of pluralism internally. A political conformity of the media empire, as can be observed time and again with Berlusconi or Murdoch, is not to be expected from Pietro Supino and Martin Kall, the two top people at Tamedia.
On the other hand, the Röstigraben between Suisse Romande and German-speaking Switzerland will prevent too much harmony. The language barrier makes it unlikely that Le Temps will in future be supplied by the same correspondents as the Tages-Anzeiger. Even the translation costs for individual articles are higher for contributions that an editorial team orders directly from a freelance journalist who works in his native language.
Synergies will therefore be achieved less in the editorial offices and more "backstage", as the management jargon goes. Backstage, Tamedia CEO Martin Kall has calculated that around 30 million francs can be saved annually by purchasing paper together, better utilizing printing plants, jointly operating the advertising business and merging other areas, such as information technology. Compared to the billions of taxpayers' money that our politicians are currently so generously distributing to banks, car manufacturers and other "needy" people all over Europe, this sounds more like "peanuts". Measured against the two companies' turnover of 1.5 billion Swiss francs, this represents a savings potential of 2 percent. This, in turn, seems solid and realistically calculated.
Above all, however, a company with a presence in almost the entire country is better equipped to deal with giants such as Google or Microsoft, but also the telecoms groups and even the postal service, which are making powerful inroads into the media business.
Despite such obvious opportunities arising from the elephant wedding, the move by Tamedia and Edipresse is courageous. After all, not only Daimler and Chrysler or Dresdner Bank and Allianz have realized after a short honeymoon that their corporate cultures do not harmonize very well. The mergers of numerous large media companies were also bound to be marital disputes and cost shareholders a lot of money. Robert Picard, one of Europe's most prominent media economists, recently listed the places where dreams of synergies have vanished into thin air at a symposium in Switzerland: He recalled AOL-Time Warner, Vivendi Universal and Bertelsmann as particularly spectacular cases. The list could easily be extended. Picard pleaded for more "coopetition" - a neologism made up of "cooperation" and "competition". This involves close, selective cooperation between competitors, who nevertheless remain independent. It remains to be seen whether this would have been the better approach for Tamedia and Edipresse.
For Switzerland as a media location, however, the answer is a clear yes. "Concentrations of power," says Hugo Triner, publisher of the Boten der Urschweiz/Südostschweiz, "are not only questionable from a political point of view, but also economically." He finds it "naïve" to allow them. Advertisers and journalists in particular, but also readers, would become dependent. Large companies distort competition, for example by dumping prices in order to drive competitors out of the market. Afterwards, "when a monopoly or quasi-monopoly has been created, editorial services are significantly reduced and prices are raised". In fact, there are already numerous examples of this in Switzerland.
