Is WAZ Taking Over Croatia?

AIM Zagreb, December 6, 2001

On December 20, this year a distribution giant from Zagreb – enterprise "Tisak" (The Press) - will come out of bankruptcy to which the HDZ's economic terminator Miroslav Kutle pushed it several years ago with his still unproven criminal tricks. However the recovery of the "Press" from bankruptcy will be rather interesting: almost 26 percent of ownership will equally go to Ninoslav Pavic's "Europapress holding" (EPH), Rovinj Tobacco Factory and the "Vecernji list" (The Evening Paper), whereas the remaining 24 percent will be unevenly divided between the state, workers of the "Press" and those entities to which this enterprise owes money. Immediately after this scenario (according to which the "Press" will recover from bankruptcy and at the same time be reorganised) was made public, the public started speculating: according to these rumours Pavic's EPH has already agreed to buy those shares of the "Press" that were supposed to go to Rovinj Tobacco Factory so that it would thus acquire over one half of shares of this powerful distribution firm. This would practically mean that the largest newspaper publisher in Croatia would get hold of a distribution network and would be able, by means of numerous available methods, to stifle all other publishers. Also, knowing that Nino Pavic will soon get his hands on the enterprise "Distripress"(the second strongest newspaper distributor in the country) it can be concluded that "Europapress holding" (i.e. the German newspaper concern WAZ) is about to establish a nice monopoly.

"I do not want any monopoly, that is nonsense!" said Nino Pavic in his interview for the "Slobodna Dalmacija" (The Free Dalmatia) and continued: "Every responsible businessman in any profession, as well as this one, has to develop his company". However, does the development of a company also implies the establishment of a monopoly on the newspapers market? Pavic rejected every idea of having such intentions or any business contacts with the Tobacco Factory from Rovinj (TDR): "We truly have no common interests with TDR and other publishers are much closer to us. The society's statutes have ensured that no one can be dominant in respect of others while guaranteeing full equality to everyone, i.e. not only owners, but everyone else doing business with The Press", he said.

Ivo Pukanic, owner of the Zagreb weekly "Nacional" (National), however, thought that the future ownership structure of the "Press": "is shameful and dangerous". "That solution is a disaster", said Pukanic, "not only for small publishers, but also for the freedom of the press in Croatia. With this solution for the "Press", and thanks to the new authorities "Grupo", we wrote about, has achieved its goal of de facto controlling Croatia's entire media space." Indeed, the entire affair might be interpreted the way Ivo Pukanic sees it: Namely, last December, his paper published a secret partnership contract signed by Ninoslav Pavic, Vinko Grubisic, Miroslav Kutle and an anonymous partner, hiding behind a pseudonym Hrvoje Franjic (it is assumed that it was actually Ivo Pasalic). This contract described the establishment of a secret clan "Grupo" with the aim of taking full control over the country's media space. After the contract was disclosed by the newspapers, the police arrested Pavic and Grubisic (at that time Kutle was already in prison), interrogated them, kept them detained for two days and then released them. In the meantime the investigation was totally suspended and it was suspected that Croatian Prime Minister and the SDP President Ivica Racan was behind that: Namely, it is open secret that Pavic and Racan have been very close for years and that they grew even closer when the latter became the most powerful man in the state. Since then, the most powerful newspaper publisher in the country (and beyond) dedicated himself to promoting Racan's policy and protecting his moves in his highest-circulation papers (primarily the daily "The Morning Paper" and weekly "Globus").

"What can I expect from the "Press" with Ninoslav Pavic at its helm?" asked Ivo Pukanic with a good reason. What can anyway be expected from the authorities that with no resistance yield to all Pavic's demands and bow to his pressures? "Nino Pavic and EPH have blackmailed the Government and want to buy the "Vijesnik" (The Herald), i.e. the Croatian Printing House! In case this is done, "Grupo" will establish the full monopoly over the Croatian media space", claimed Pukanic. Admittedly, there is some truth in his words: Namely, Racan knows that the policy he is pursuing is totally inefficient and unproductive, but if Pavic's journalists - positioned in some fifteen EPH's publications, since no one controls TV anyway- would want to write about it, he would not have to lose any sleep over it. Ninoslav Pavic, quite experienced and capable businessman, is taking advantage of the Prime Minister's fear and, on account of that fear, could soon easily become the majority owner of the Republic of Croatia.

"This is no case of monopoly", rejected Branko Gretic, the official receiver of the "Press", Pukanic's assumptions, adding: "There are six distributors in Croatia and the fact that the "Press" is the largest only compels us to work better. My task is to make the "Press" stronger. This enterprise sells papers and there is no publisher in Croatia that can tell that the "Press" distributes his publications under less favourable terms than those granted to "The Evening Paper" or EPH". That is how things stand at the moment, but what will happen when "The Evening Paper", EPH and Tobacco Factory from Rovinj join the ownership structure?

Who can then prevent tobacco manufacturers from Roving from selling their shares to the EPH or "The Evening Papers"? In any case, who can forbid anyone to buy or sell any shares that are available on the market? No one can do that and since it is common knowledge how much money does EPH (i.e. its German owner WAZ)have, it is very likely that some owners of the "Press" shares would not be able to resist the temptation. Thus, a monopoly would be established irrespective of Branko Gretic's claims that there are six firms dealing with newspaper distribution in the country. All of them, except for "Distripress" are minor firms, whereas "Distripress" might soon become Pavic's property. Naturally, this doesn't mean that this scenario will necessarily be realised in practice (and it would be good if it were not), but it is quite probable, which is reason enough for all those who publish newspapers in Croatia and are not under the EPH's patronage, to become concerned. Additional concern is caused by the data on the mode WAZ operates in many East-European countries: in Bulgaria, for example, WAZ wiped out the entire competition by getting hold of the distribution network so that it could lower its prices to the maximum and, in the final stage, it slashed the prices of advertising space in its publications. No one could match that. Something similar could easily happen in Croatia if Ivica Racan doesn't break free from Nino Pavic's two-year-long blackmailing.

Ivica Djikic

(AIM)