Michael Ringier on his media activities in Eastern EuropeRingier's international business, particularly in Eastern Europe, is growing rapidly. According to publisher Michael Ringier, it could soon become at least as important for Switzerland's largest media group as the Swiss market.Ringier's international business is currently extremely dynamic. What is the background to this development?
Michael Ringier: Firstly, we were one of the first to invest there ten years ago. As a result, we have a very good starting position today. Secondly, these markets are now consolidating, as has been the case for us over the last 20 to 30 years. Now there are only two, three, maybe four large publishers in the newspaper and magazine business in each country. However, opportunities have now arisen to take over or invest in a few more publications. And we have seized this opportunity.
In recent years, Ringier has repeatedly invested in companies abroad and then waited until the partner exits. That's what happened in the Czech Republic and Slovakia, and it could also happen in Romania and Hungary. Is this Ringier's strategy?
Ringier: It is true that we entered into strategic partnerships, partly out of the necessity of not having to take all the risk as a family business. But our intention was always very clear: these countries are part of our future, that's where we're staying, that's an investment in the next 50 years. And that has paid off. Our respective partners, on the other hand, sometimes had different intentions or changed their minds, which is why we were always able to take over 100 percent of the business. However, the new partnership with Gruner + Jahr is now also a publishing partnership that we have to develop further.
So you are not speculating that Gruner + Jahr will soon exit the company?
Ringier: No, that's not the opinion, but you can't rule it out either.
Ringier is not active in Poland. Are there reasons for this?
Ringier: We were active there, but we got in too late. Poland is the largest of the Eastern European countries, so it was also the most interesting for other publishers. We therefore saw our opportunities in the smaller countries, where there was less competition at the beginning. We later gave up our commitment in Poland - and also one in Bulgaria - because we couldn't invest in all six countries at the same time.
Last year, the Eastern European business accounted for 12.9 percent of Ringier's total turnover. How is it developing?
Ringier: We will be involved in around CHF 200 million in sales next year. But you have to take a long-term view: All these countries will become members of the EU in the next few years, and that will bring more legal certainty, growth and profit prospects. That's why I'm convinced that this business will be hugely important for Ringier in ten years' time.
What proportion of total sales?
Ringier: If growth continues at this rate, an increase to 30 to 50 percent is absolutely conceivable in the next 10 to 15 years.
Ringier already has a dominant position in some markets, and the range of other interesting titles is probably limited. How much leeway do you still have?
Ringier: There are individual titles that would still be of interest to us, but prices have also risen enormously. On the one hand, that's nice because it also says something about the value of our own business, but on the other hand it imposes certain limits on us. However, there is still a lot of potential in Romania because this market is still not very consolidated. In Hungary, on the other hand, I can hardly touch anything new in the newspaper business for political reasons, but there are still opportunities in the magazine business.
This year, the Eastern European business will be in the black overall. Are there countries where this is not yet the case?
Ringier: No, in our operating business we are in the black everywhere. However, if you add the depreciation and amortization resulting from our relatively expensive acquisitions, the picture is somewhat different.
Operationally black - does this also apply to next year?
Ringier: We hope so, the economy remains uncertain. In Eastern Europe, however, it has proven to be relatively stable. But it remains to be seen whether it will stay that way.
How does Ringier pay for these investments in Eastern Europe?
Europe and Asia?
Ringier: As always in this company, we financed these investments from our self-generated cash flow. However, as I said, we also entered into some partnerships to reduce the risk. Nothing will change in this respect. Interview: Markus Knöpfli
New investments in the Czech Republic
Because Ringier's tabloid Blesk has increased its circulation in the Czech Republic by 61 percent to 330000 copies over the past five years, the Group has now purchased a second printing plant in Prague. At the same time, Ringier has acquired a 51 percent stake in the sports daily Cesko-slovensky Sport (circulation: 60,000 copies). Just a week ago, Ringier also announced a joint venture with Gruner + Jahr in Hungary, the Czech Republic and Slovakia (WW 42/01). In Romania, however, the two groups are still going their separate ways.