Once Monopoly winner, now collector trophies

Who still buys daily newspapers under today's conditions? David Carr, probably the most prominent media journalist at the New York Times, has just drawn attention to a dramatic change in the ownership structure that is taking place in the USA. First the readers, then the advertisers ran away from the newspapers in droves. Then the owner families stole away, hedge funds and other players in the financial sector stepped in, believing that they would be able to grab them at the bottom of the market. Smart-aleck investors had come and gone. Each of them had announced that they would lead the industry back to its former greatness and to new profitability - and were "shorn bare", i.e. left with losses in the millions. Carr cites the Philadelphia Inquirer as an example. There have been four changes of ownership there in the last five years. The recent sale price of 55 million dollars is just ten percent of what the paper was worth in 2006.

But now a trend reversal is emerging: Because there is no business model that opens up future prospects, newspaper houses are becoming collector's and collector's items for the super-rich: "It's not the really wealthy," says Carr, who are the buyers, "but those who long ago said goodbye to the ordinary, boring normality of everyday economic life." Of course, there are "other expensive hobbies", but at some point, vintage cars or 19th-century landscapes will become surplus to requirements for such people to buy. "Newspapers may not make a profit," says Carr, "but they are good for a new form of bragging rights. How rich is he? He can afford a newspaper to make himself heard."

We have recently seen a similar development in Eastern and South-Eastern Europe and already in the UK. In eastern and south-eastern Europe, it is local oligarchs who are getting into the newspaper business. In the UK, it was a Russian billionaire who fled to safety from Putin and his henchmen and has been stirring up the London market ever since. In the USA, Carr calls them the new "Newspaper Barons". There, Warren Buffett of all people has put himself at the forefront of the movement and bagged the Omaha World-Herald in his home town - after telling his shareholders at the Berkshire Hathaway shareholders' meeting three years ago that newspapers promised "endless losses" and that he would not buy one "at any price". There are similar commitments in San Diego, Philadelphia and elsewhere. The motives of the newcomers are likely to be similar, and at least one of the new American moguls is being astonishingly frank about them: Douglas F. Manchester, real estate entrepreneur in San Diego and new owner of the San Diego Union Tribune, has instructed his editors to write in favor of further urban development projects and a new stadium. This is reminiscent of the behaviour of other newspaper barons such as William Randolph Hearst in California's gold rush era, before journalism became professionalized in America. Is Switzerland light years away from such threatening developments? Or is it perhaps just lagging a few years behind the trend that is emerging not only in America, but also at least here and there in Europe? A thought experiment may help: Let's imagine that the migration from print to the Internet is also increasing rapidly here, and that newspapers, including the still highly profitable free papers, are becoming increasingly unprofitable. Who would then be likely to invest in Tamedia, Ringier and the NZZ Group if the current owners wanted to part with their now burdensome holdings? Presumably, investors who want to exert power and influence through their media.

In Eastern and South-Eastern Europe, the new oligarchs are already doing this without restraint wherever Western investors such as Mecom in Poland or the WAZ Group in the Balkans have fled. The new media czars there operate largely unobserved by the Western public - even though they actually set out to build a democratic, liberal Europe together. Here, too, we could be in for a rude awakening if we close our eyes to the realities for too long.