German Capital in the Serbian Media Market

Ranimating Politika

The contract with the German WAZ concern is not a takeover of the Politika publishing company. Instead, it formed a new company, in which both partners have an equal share.

AIM Belgrade, February 5, 2002

Employees of the Politika newspaper, the oldest daily in the Balkans, on Jan. 29 had a chance to see a one euro coin, part of about EUR25 million the German media concern WAZ Medien Gruppe invested as initial capital in Politika Newspapers and Magazines, a joint venture with Politika. Luc Glant, WAZ executive director and shareholder, gave the coin as gift to Darko Ribnikar, Politika's general manager and editor in chief, and said: "Put it somewhere in the newsroom, as a token of what you are striving towards: joining Europe." He had officially revealed the outcome of months of negotiations -- the first foreign investment in a Serbian media company after the fall of Slobodan Milosevic's regime.

Politika managers insist that what happened on Jan. 29 was not the sale of one of the most influential and abused media organizations in Serbia, but a 50-50 percent partnership in a new company, jointly formed by Politika and WAZ. What is unusual is that of the initial EUR25 million, Politika contributed only EUR1,000, plus its publications, production infrastructure and the distribution service. Furthermore, Politika is obliged to immediately invest only one-half of what it pledged, that is EUR500, whereas the other half has to be invested in two years' time. Politika's offices -- its real estate -- will not become a part of the new company.

The contract also includes a detailed distribution of authority: Politika will be in charge of editorial policy and WAZ will deal with investment. That the arrangement should work as planned is corroborated by the fact that in other countries WAZ has a policy of not interfering in the editorial policies of newspapers. Darko Ribnikar, a descendant of the family which in 1904 founded the paper, was appointed general manager, and WAZ representative Andre Bayer will be his deputy. He will be the sole WAZ representative permanently settled in Belgrade.

Serbian Premier Zoran Djindjic, thanks to his personal ties with Stability Pact for South Eastern Europe coordinator Bodo Hombah and German Chancellor Gerhard Schroeder, brokered the deal. There were no negative public reactions. Instead, most agreed that as soon as it had freed itself from Milosevic's grip, Politika became a means with which the Serbian premier and his German friends are to pursue their political interests. Belgrade journalistic circles where the only ones who ensured that Politika's transformation would not pass unnoticed. They noted, for instance, that just before the deal was made, Nenad Stefanovic, until recently head of the information service of Djindjic's Democratic Party, was appointed to a senior position at Politika.

Journalists, primarily those employed at Politika, doubt that all 1,800 of them will be given jobs in the new company. They claim that so far they have received only a memo advising them that on March 1 they will be receiving new employment contracts, providing new salaries "in line with the costs of living," whatever that is supposed to mean. It had been rumored that the partnership would mean that one-half of the company's employees would lose their job. The latest gossip is that out of a total of 200 workers in the Politika daily, about 20 will be retired. They are all aware that even if they preserve their current positions, company rules will become stricter. In expectation of the outcome, they have begun to greet each other in German as a joke. A day after the contract was signed, all company computers were supplied with a small German dictionary.

According to the contract, the new company will continue to publish all of Politika's current publications, and none of them can be discontinued without the Yugoslav partner's consent. But word is going round that Politika's management has already agreed to shut down most of the current periodicals. According to this story the German partner wants only the Politika newspaper and Svet Kompjutera magazine to continue publication, and is planning to start another daily newspaper. That would mean the end of the Politika Ekspres, Ilustrovana Politika, Sportski Zurnal, Viva and Huper.

As they wait for new equipment to arrive, Politika employees discuss hearsay that the same day WAZ signed the contract with Politika, company representatives also negotiated with the widely-read daily Vecernje Novosti and the BIGZ Publishing House, and that they are also eyeing TV Politika. According to the claims, the Vecernje Novosti managers are still keeping the German challenge at bay, while the fate of BIGZ and TV Politika is not known.

The contract with Politika and potential deals with other Belgrade media outlets are for WAZ a continuation of a highly successive thrust onto the market of South Eastern Europe. The Essen-based media concern is considered one of the most successful newspaper publishers in Germany in the second half of the 20th century, publishing almost 500 titles annually, and having a turnover of almost DM3.6 billion last year. As owner or co-owner, it publishes 24 dailies, 43 general interest magazines, 33 specialized magazines, four TV magazines and numerous commercial reviews in Germany, the Czech Republic, Austria, Hungary, Croatia, Romania and Bulgaria. Its dailies have a circulation of over four billion printed copies per day. In neighboring Croatia, which Serbia likes to compare itself with, WAZ owns 50 percent of the Zagreb Europa Press Holding company, which publishes the Jutarnji List daily, the weekly Globus, numerous specialized magazines for women and teenagers, and the Croatian editions of Playboy and Cosmopolitan.

Vera Didanovic

(AIM)