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Czech report
by Euro Reporter
2015-02-04 12:01:32
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Ownership changes help spark new media flurry in Czech Republic

Traditional Czech newspapers appear to be losing their allure under new ownership. Readership and advertising revenues are down. Meanwhile, though, a raft of new media titles and concepts have hit the market, all trying to find the magic formula for success. TV video streams, niche news services aimed at tablets and computers, and new news servers; the fast forward button appears to have been pushed on developments in the Czech media scene over the last year or so. And while some of the developments appear to stem from the wider digital and internet revolution that have lowered the barriers for new media start-ups by cutting the heavy capital investments needed in printing technology and distribution networks for the likes of traditional papers, there also appears to be another factor at play as well. Call it the abhorrence of oligarchs: an ownership shake-up of leading Czech newspapers with foreign, most German, media magnates stepping out and Czech business magnates stepping in, caused many Czech media professionals to quit their cosy posts and set up on their own. Many say they could not trust the new Czech media magnates, such as Mladá Fronta Dnes’Andrej Babiš; Hospodářské Noviny’s Zdeněk Bakala, and Blesk’s Daniel Křetínský to keep their business and political ambitions in the background when push comes to shove. One of the highest profile new ventures came with the creation of the Echo Media Group by journalists who quit the respected Czech daily Lidové Noviny after its takeover by billionaire businessman and ANO leader Andrej Babiš.

One of the leaders of the exiting journalists was the paper’s former editor and managing director and head of the MAFRA groups internet activities, Dalibor Balšínek. At a round table on new media in the Czech Republic, he explained some of the original motivation. “The reason why we started the project is that we wanted to keep our independence. We did not want to work for an owner who has a political party and is one of the biggest employers in the country. We simply could not imagine that we could work for someone like that. And we are really, really pleased that people, our readers, appreciate that and that we have so many readers and that this year we should be able to break even.” The initial flagship of the group was an online news server launched in March 2014. Although the stress has been on high quality journalism, the option of putting that content behind a pay wall and demanding readers pay for access was shunned. Instead, a more ad hoc approach has resulted in the internet online experiment resulting in a partial return to traditional print media in the form of a weekly current affairs magazine from November last year. Dalibor Balšínek takes up the story. “We started without a pay wall. We were thinking about a pay wall but instead of a pay wall we launched that weekly which is not free and must be paid for. So our income is now considerable, both from subscriptions and sales on newsstands. So we are not planning to introduce a pay wall on our daily, but on the weekly people have to pay and it is quite a significant sum.”

For the weekly, there are around 1,200 subscribers and news stand sales amount to around 5,000 copies after two months. But a big disappointment has been the advertising revenues stemming from internet activities. Still, Balšínek says his past experience with the massive MAFRA media groups should have taught him that the battle for internet advertising revenues is very fierce and that it’s a winner takes it all world out there with only one or two sites with considerable exposure able to claim considerable revenues. “The price of internet advertising is really low. And on the market we are a content server, but we not just competing with content servers but we are competing with everybody who is on the internet. That is the big difference. We are maybe in the top 10 news servers in the country already, but on the whole Czech internet we are perhaps only number 80, perhaps number 85.”  Nevertheless, although advertising revenues have disappointed so far, there is still the hope that they will eventually contribute half of total earnings with Balšínek hopeful that this can happen by the end of this year. Dotyk, which describes itself as the first tablet weekly, has a similar story in the sense that some of its leading lights are exiles from the Economia media group centred on the business weekly Ekonom and the daily paper Hospodářské Noviny. It launch dates back to May 2013 and there are currently four publications with the original weekly supplemented by separate, business, lifestyle, and royal titles. The weekly has already won one award for the best tablet weekly in Europe.

Michal Klíma, former general manager Economia, is the owner and one of the co-founders of Dotyk. He believes that advertising revenues can help sustain new media ventures and says that advertising companies and houses are willing to back new projects because they realise the danger of mainstream media being concentrated in too few hands. “I trust in the market to some extent. This situation with the concentration of media ownership is not good for the advertising business because strong owners are powerful partners for advertisers. So I believe that advertisers and advertising agencies and the advertising business generally will support new projects as an alternative to the business that is owned by oligarchs and very strong owners. So, I think that the advertising model is an alternative to paid content because, as you said, paid content does not work that well.” With investment continuing on the new titles, the publishing house behind Dotyk, Tablet Media, has still to break even. But if the new media are still seeking the financial recipe for success, the old media are struggling with falls in readership and in ad revenues. The latest audited circulation figures for November last year show the readership figures for all the major Czech daily papers down, sometimes drastically. And while the overall advertising market for printed titles is reckoned to have shrunk by 3 percent in 2014 to around 17.5 billion crowns, there have often been double digit drop in the share grabbed by daily papers compared with the previous year. At the same time, the media magnates Babiš and Křetínský are said to be in the verge of new acquisitions with the regional daily chain Denik said to be put on sale by its German owners.

That is some consolation for the new Czech generation of media entrepreneurs. Dalibor Balšínek again. “I have a big hope that the oligarchs do not understand the business and it is visible. You can see it in the case of Zdeněk Bakala who bought the publishing house Economia. Economia is losing money constantly for the past three or four years. The losses are significant. And the same is true of MAFRA and Andrej Babiš, they are not earning money, they are losing it. Maybe they will force sate companies to advertise in his publications. What is more significant is that they are losing readers. The decrease in circulation is 20 percent in the case of his newspaper [Mladá Fronta Dnes]. I am not afraid they will buy everything because what I am sure about is that they do not understand the business and this is to our advantage. I understand the business, but not they do not.”


Mining plan prompts secession debate

A Czech mayor has suggested his town should secede from the country if plans to expand mining in the area go ahead, it's reported.

The small town of Hora Svate Kateriny sits on the border with Germany, and Mayor Lukas Pakosta says joining their northern neighbour would be "an option", the Mlada fronta Dnes website reports. Residents fear the town could be cut off under a planned expansion of the opencast mine, and the mayor says a critical road link would be destroyed under the proposals. "We would only be able to get into Bohemia through mountain areas," he says. "In winter, we would be totally cut off, but this wouldn't be a problem in the case of Germany." People in the area often do their shopping across the border and the nearest hospital is in the German town of Olbernhau, the report says. "If the Czech Republic lets us down, from a practical point of view being ceded to Germany is an option," Mr Pakosta tells the website.

Not everyone supports the mayor's idea, though. "This is rubbish," a local miner tells the paper. "We want to stay in the Czech Republic and keep mining coal because this brings money." The suggestion has been labelled "dangerous" by former Czech Foreign Minister Karel Schwarzenberg. "As Donetsk and Luhansk cannot leave Ukraine, Hora Svate Kateriny cannot leave the Czech Republic," he says.


Could Czech Republic finally get smoking ban?

The Czech Republic has some of the most liberal laws in Europe when it comes to smoking. Now, however, the country’s health minister is working on legislation that would ban cigarettes from all bars and restaurants. Previous efforts to introduce a ban have come to very little – but the minister says the time is now right for such a change. For many visitors, a night out in the Czech Republic’s smoky bars and restaurants is like going back in time. Indeed, 17 EU countries have comprehensive smoke-free laws in place, some for a decade or more. The current Czech legislation, greatly eviscerated before it was approved five years ago, leaves it entirely up to restaurant owners whether they allow patrons to puff on their premises. Efforts since then to follow most of the EU on smoking have come to nothing.

Now, however, there may now be clean air at the end of the tunnel. The minister of health, Svatopluk Němeček, told a newspaper on Wednesday that legislation he has drafted envisages a blanket prohibition on smoking in hostelries. An earlier version of the bill had included one option under which the ban would apply only where food is prepared, thereby excluding bars. So how likely is this attempt to succeed? I asked Dr. Eva Králíková – a leading anti-smoking campaigner – for her reaction to the minister’s comments. “This is the first minister of health, unfortunately, who supports a total ban on smoking in public places. So I’m very happy that we have such a minister, currently.”

The minister says that the public are calling for this change. If that is the case, why has it taken us so long to get to this point even? “You have to ask members of parliament and decision makers. I don’t know [laughs]. I just can say that either they do not or did not have basic information about the health and economic impact of passive smoking, or they are stupid. I have no other explanation.” People say that the tobacco lobby is quite strong in the Czech Republic. “Unfortunately that’s true. This is what I tried to say politely before [laughs].” We have seen various attempts in the past to bring in legislation against smoking, to regulate smoking, in the Czech Republic. They have generally come to nothing. How optimistic are you that this attempt may be successful? “I hope so. What else can I say? We have ratified the framework convention on tobacco controls of the WHO, which requests smoke free spaces, so we have to do it. It’s only a question of when and the tobacco industry is trying to postpone this date, as much as possible.”


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