Advertising market Publipresse General Manager Otto Meier is currently having a hard time with his newspaper unit. But for the second half of the year, he foresees a slowdown in the bleeding of print media advertising revenues.WW Daily newspapers are in a deep crisis. It looks as if they are losing a substantial part of their importance - both in the advertising and reader markets. How bad is the situation really? Otto Meier This is not the first time that daily newspapers have faced such a situation. In the early nineties, there was a lean period. And in the mid-nineties, we also experienced a slump, although not as severe. Back then, the situation wasn't particularly comfortable either. At the moment, newspapers are having to get by with much lower revenues. That's why practically no publisher can avoid making savings and looking for synergies.
However, newspapers are facing a double loss of importance. On the one hand, in the advertising market - but even more serious appear the losses in the reader market, from which the Tages-Anzeiger and Berner Zeitung, for example, are suffering particularly badly. In addition, the recently published Univox study for daily newspapers showed a continuing loss of reach. Doesn't that make you afraid?
This situation would then inspire fear if one did not know why this is the case. The loss of circulation and readership suffered by Tages-Anzeiger and Berner Zeitung is largely due to the existence of 20 Minuten. These newspapers are probably forced to take appropriate measures. The Tages-Anzeiger has already drawn up a battle plan with the "Express" project.
But the "Express" will not really be able to solve the problems of the Tages-Anzeiger.
That is correct. But Tamedia can cover this market with its own product in the future. This means that competition from the Tages-Anzeiger will then at least remain in-house.
And what if the new commuter newspaper does not generate the desired advertising revenues? As we know from 20 Minuten, this newspaper - despite great success in the audience market - is not yet in the black.
Personally, I'm not at all sure that the commuter newspaper business model will ever be successful. On the other hand, the advertising market generally reacts with a certain time lag, that's nothing new. So I can well imagine that the situation for 20 Minuten could be different for years to come - if the commuter paper lasts that long at all.
Do newspapers really only have problems in the area of young readers?
No, the problem also affects - to a lesser extent - the middle age groups. They, too, are served a medium in the form of 20 Minuten, which can certainly cover certain reading needs. Nevertheless, the young seem to me to be the most important and at the same time the most difficult area for daily newspapers. If you can no longer win over the young, then you have a big problem in the future.
Media scientist Heinz Bonfadelli and futurologist Josef Trappel recently argued in unison in Werbewoche that newspapers have no choice but to develop new business models for the future. Do you agree?
Newspapers have to adapt to changing reading needs. But if I'm interpreting the Univox study correctly, then other
mass media such as television have lost in importance. And this in favor of individual communication on the Internet. This trend is likely to increase.
Futurologist Josef Trappel even fears that by 2006 newspapers will not have found any recipes to compensate for their loss of importance.
I have a different opinion on that. In German-speaking Switzerland, we have a Sonntags Zeitung and a SonntagsBlick that function excellently. Despite a third Sunday paper, the NZZ am Sonntag, these two have lost absolutely nothing of their status in the reader market. There are similar successes in French-speaking Switzerland. For example, with Le Matin Dimanche, which is already sailing at a lonely height and is nevertheless continuing to develop positively. Or Le Matin Semaine in tabloid format - this is also a new newspaper model that is working very successfully. The whole area of local newspapers should not be forgotten. They suffer little or not at all from the current crisis in both the readership and advertising markets. This has to do with the fact that these papers provide exclusive services in the local sector and are therefore still excelling in the market.
Newspapers suffer most in urban agglomerations - is this really only due to 20 Minutes? Isn't there a fundamental malaise behind it?
The commuter newspaper contributes a lot to the problem. On the other hand, in urban areas, the variety of media and thus the mutual competition is naturally much greater. But the most important thing seems to me,
that local newspaper markets are fundamentally less cyclical. They benefited much less from job ads and dotcom companies during the boom years. Accordingly, the local press has not built up structures that eventually became too big. It has always operated more leanly, and that naturally helps it make ends meet in the current situation.
Publipresse, of which you have been general director since October, is suffering from
is suffering particularly from the newspaper crisis. In 2002, it lost 13 percent of its sales, having already lost 4 percent the year before. And for the current year as well, "P" is expecting a decline of
5 percent. When do you think the downward trend will come to a halt?
I wish I knew! But at least I expect the downward trend to slow down from the second half of the year. You have to see that those ad segments that were responsible for the minus in the past 18 to 24 months - financial advertising, dotcom companies, insurance companies - have now slowly arrived at the bottom line. On the other hand, ad segments that have been stable will continue to be stable. Nor should we overlook the fact that wholesalers, department stores and the entire automotive market have not cut back on their advertising investments. I am only cautiously optimistic, however, provided that we are not played an absolute trick by global politics. If the war against Iraq gets underway, that won't be so dramatic for our advertising business. But if this war were to possibly trigger a wave of terror in Europe, then we would have a significant worsening of the crisis.
It must be a bit frustrating for you that you took up the post of Publipresse CEO just as the long party of the print media was coming to an end. Is Publipresse facing a redefinition or redimensioning of its business plans?
We are not changing the business model because of this. But we have to adapt our structures to what the market is offering. On October 1, 2002, we launched a fitness program that will continue until the end of this year. This will enable us - at least in some areas - to compensate for falling revenues. As far as my personal situation is concerned, it is often said that it is wiser to enter when business is down. Then you can shine when things start to go up again.
Publipresse already cut 8 percent of its workforce in 2002, and this year the reduction is expected to exceed 8 percent - that hurts.
We can't completely avoid layoffs either, but the reductions can largely be absorbed through fluctuations. Publipresse has a young, professionally mobile workforce, which is why even in times of crisis like the current one, our fluctuation rate is around ten to fifteen percent. Of our total of 1,500 to 1,600 employees, that is at least 150 - about the same number as we are reducing by the end of 2003.
Print advertising accounts for a good three-quarters of PubliGroupe's sales (2002: 76.5 percent). Now this share seems to be shrinking sustainably. Do you think it's possible that the share could drop below three quarters in the next five years?
That is absolutely conceivable. But only because new PubliGroupe business areas will gain in importance, and not because Publipresse could shrink in the medium or long term. PubliGroupe is constantly looking for new business areas. But this is happening more abroad than in Switzerland.
What role does Publipresse see for itself in the renewal of newspapers? After all, "P" holds stakes in many newspapers and thus also bears a direct share of responsibility. For example, it could set up a forum for the newspaper of the future.
Part of the philosophy of our holdings is that we do not interfere in publishing or even editorial matters. No matter how big or how small the respective participation is. On the other hand, thanks to its international network, PubliGroupe has knowledge of how newspapers are developing in other markets. This know-how is certainly also valuable for Switzerland. You can and must continue to develop the newspaper medium, but in my opinion you don't have to reinvent it. Developing it further can also mean, for example, putting newspapers one-to-one on the Internet. Just like the new
e-paper - and thus generate new readers.
In these difficult times, of all times, PubliGroupe is facing additional adversity: In November 2002, the Competition Commission (ComCo) opened an investigation into the market power of "P". When do you expect a decision?
This will certainly take months. The Weko has sent out questionnaires to the independent publishers and the intermediaries. Logically, we have also received one. Our goal is to make a positive contribution to this investigation. We also have nothing to hide at all and see this investigation as an opportunity to make our role more transparent than it may have been before. And as an opportunity also to present our contribution and our important function for the Swiss press.
Otto Meier: Suffering in the print market is easing.
The PubliGroupe share also keeps testing new lows: on Monday, it fell by more than 8 percent, and it also trended negatively on Tuesday.
PubliGroupe shares have lost 90 percent of their value in three yearsNearly 2000 francs was the value of the PubliGroupe share in the first half of 2000. The quotation was considered a historic high. When the price fantasies in the media industry collapsed, the PubliGroupe shares were also
shares were dragged into the downward spiral. By the end of 2000, the shares had fallen by more than half to around 800 Swiss francs. And the downward spiral continued thereafter. The PubliGroupe share reached its lowest point to date on February 10, 2003, when it was still trading at 180 francs. After that, the share price went up again somewhat, but was still worth 10 percent less than at the beginning of the year, at 200 francs, last Tuesday morning. (dse)
Interview: Daniel Schifferle