The media war in Croatia

AIM, Zagreb, December 5, 2000

The new Croatian daily Republika, owned by Ivo Pukanic, sold on December,4 all of its 200,000 copies almost immediately as it appeared on newsstands. Readers were attracted by three things: the fact that it was a new newspaper, announcements that it would not appear because of problems with its printing press, and -- most important of all – a hugh scandal that took up the better part of its front page. The Republika published, supporting this with evidence, what well-informed journalist circles have known for months: that the actual owners of Europapress Holding, the largest Croatian media organization, are Ivic Pasalic, former president Tudjman's advisor for internal affairs, Miroslav Kutle, the most renowned Croatian prisoner today, Vinko Grubisic, the mastermind behind the Croatian Democratic Union's plans to subjugate the Croatian media scene, and -- nominally, and together with Germany's WAZ -- Ninoslav Pavic, the only so far known owner of EPH.

The Republika didn't spare harsh words in describing the "partnership," that is, the Contract for Joint Appearance in the Market, which the four of them singed as early as Sept. 17, 1997, and thanks to which the until then modest company finally made a boom. According to the paper, Kutle, Grubisic, Pavic and Pasalic formed a "criminal organization" (which is considered an extremely serious felony by the Croatian Penal Code) with the purpose of taking over the media market and make an illegal profit. In describing them Republika even used the expression "the gang of four," which gained worldwide fame during the times of the Chinese Cultural Revolution.

According to the Republika, the four partners also planned to start a new daily newspaper, under the aegis of the Gruppo company, win a concession for a national TV station and take control of the entire media sector in Croatia. In order to make the contract impenetrable to eyes of the curious, they wrote it in code, totally incomprehensible to those not initiated: to win a concession for a national TV was thus dubbed "to win an Oscar," Globus Holding was called "Uncle," the Gruppo firm from Zagreb was referred to as "Daddy," and so on. In short, the contract (together with the code) shows that Europapress Holding, which was generally considered an independent media house, was all along a satellite of Ivic Pasalic, that is, of the Croatian Democratic Union, and that most of its initial capital came from Miroslav Kutle, that is, from the money this Croatian Democratic Union tycoon got from looting the Croatian economy. Documents published in the paper reveal that the same people are the owners of the new national TV (TV Nova, formally controlled by Miroslav Lilic and Tomislav Marcinko) and Jadran Film, and made it clear that the same clan was behind the Imperial tabloid, in which opponents of Ivic Pasalic are demonized after the formula of Marinko Bozic, making ample use of lies, half-truths and police files.

Acting swiftly, on Dec. 4 the police took in for questioning all members of this "partnership." Nino Pavic and Vinko Grubisic were detained, whereas Pasalic, probably because of his parliamentary immunity, was released. But since Justice Minister Stjepan Ivanisevic admitted at a press conference that the Republika's allegations were true to a great extent, it appears that the same fate could befall the until recently untouchable Pasalic. The police have confirmed that an investigation was under way and that until it is over they will reveal no other information. Nino Pavic's German partners from WAZ denied Republika's allegations, saying that they were Pavic's only partners, but it appears that they were also taken aback by the scandal and would like to find a way out.

The coming of the Republika to life was otherwise accompanied by a host of scandals. When several days prior to the appearance of the first issue Ivo Pukanic announced that the cost would be three kuna (twice cheaper than any other daily paper in the country), the Hrvatska Tiskara printing company made an unusual and a shocking move even for Croatia: it cancelled the printing of the paper at the last minute, saying that there was a shortage of newsprint both in the domestic and international market. The company also found and additional excuse in an alleged complaint made by the Sportske Novosti paper, printed by the same company. The Sportske Novosti protested that if the Republika was printed their copies would have to be prepared on another printing press, which would jeopardize the paper's "visual identity." In that case they would sue the printer for damages. This insolent rejection was used as the initial excuse. But Pukanic would not take no for an answer: "On Dec. 4 the Republika will be on newsstands even if I have to print it myself," he said. The motives for the rejection became quite clear after the first issue appeared. But this was not the only reason why the other papers responded with anxiety to the appearance of the new daily. The publishers of other papers were seized by panic mostly because of the price of the Republika. They immediately organized a meeting which lasted for hours and which ended with the conclusion that there was, in fact, no need for them to lower their prices. Thus, at least when price is in question, the Republika will have no competition in Croatia.

This scandal, beyond doubt, will strongly affect Pavic's EPH. This holding company publishes 14 papers, among them the influential and widely read Jutarnji List daily, the weekly magazine Globus, women's magazines Gloria and Mila, Astro Magazin, and the monthlies Playboy, Cosmopolitan, and others. WAZ, which owns the other half of the company, has already gained control of the media market in Bulgaria, and it plans to make a major move into the markets of Slovenia, Bosnia and Herzegovina, and Serbia. The success of its strategy in Croatia depends mostly on how the Jutarnji List fares. So far it has been selling some 160,000 copies per day, and the profit it made was used to cover the not so negligible losses of other EPH publications.

This is why the appearance of the Republika raised the most concern among the WAZ publishers, because its possible success could deprive them of profit from the "a pond swarming with crocodiles," as some picturesquely portray the local media market. The Jutarnji List enables for the survival of a host of EPH-WAZ publications that currently do not pay off, but could be successful in an enlarged market. Pukanic, on the other hand, plans to sell some 40,000 copies per day, and if his plans work out, this could endanger not only the Jutarnji List, but the company as a whole, as well as the other publishers: the Zagreb Vecernji List (the daily with the highest circulation), and the other daily newspapers in the country, though to a lesser degree.

Pukanic was also attacked because of his dumping strategy. His rivals claim that his price in unrealistically low, and that it cannot even cover publication costs. This argument, however, is not quite credible. The Republika employs some 60 people (in comparison, Vecernji List has about 450 employees), and measures aimed at saving as much as possible are visible everywhere. Thanks to new software, the Republika does not need design artists (at least not as many as the other publications have), and its business concept cannot stand too much bureaucracy. Given that it will also have twice as less pages that its rivals, it is clear that Pukanic's calculations that with 40,000 copies per day the paper can make two million German marks annually appear to be quite correct. The Republika's success, however, will not necessarily mean that the journalists too will profit – in this daily they are paid half as much as their counterparts at the Vecernji List and the Jutarnji List and in most weekly publications. Furthermore, the Republika's low production costs could well force the other two dailies (and maybe other publishers as well), to continue to fire people and reduce other costs, which will ultimately turn against the profession. The possible success of the new daily will also have political consequences. If its editorial policy turns out to be similar to the Nacional weekly magazine's -- by promoting civic society and liberal values, by being critical of and openly ill-disposed towards the nationalistic concept of country and society -- the entire media scene, as well as political life, would unavoidably begin to adjust to new circumstances. The Republika could thus mark the beginning of a new phase in civilizing the Croatian political scene, which still stinks of the nationalism left after the defeat of the Tudjman party.

The Republika is a special precedent in one more sense as well. This time around, attempts at stifling a liberally-oriented newspaper were mostly not politically motivated. The reason was the overcrowded market. The clash between the Republika and Europapress Holding is the first clash between, for Croatian circumstances, a large capitalist holding company and a small publisher who wants to become large. Only far in the background can something else be discerned: a clash between the Croatian president, close to the Nacional and the Republika, and the Croatian prime minister, close to Europapress Holding. It appears that with the success of the Republika, the influence of the president will increase as well.

Boris Raseta