European Commission Enterprise Directorate General Publishing Market Watch Sector Report 1: The European Newspaper Market Submitted to: DG Enterprise, European Commission Delivered to: Cesar Santos Version: Final Date submitted: 16 March 2004 Turku School of Economics and Business Rightscom Ltd Administration Rehtorinpellonkatu 3 FIN- 10 Leake Street 20500 TURKU, London SE1 7NN FINLAND UNITED KINGDOM Tel: + 358 2 338 311 Tel: +44 20 7620 4433 www.tukkk.fi www.rightscom.com Copyright © 2004 European Commission Publishing Market Watch Sector Report 1: The European Newspaper Market Contents 1 INTRODUCTION TO PUBLISHING MARKET WATCH ........................... 5 2 EXECUTIVE SUMMARY ...................................................................... 7 2.1 STATISTICAL REPORT ............................................................................ 7 2.2 DIVERSITY AND SUSTAINABILITY............................................................. 8 2.3 KEY BUSINESS ISSUES ........................................................................... 8 3 INTRODUCTION.............................................................................. 10 3.1 STATISTICS AND SOURCES .................................................................... 10 3.2 DATA FROM NEW ACCESSION STATES ..................................................... 11 4 DEFINITION OF THE SECTOR.......................................................... 12 5 STATISTICAL ANALYSIS ................................................................. 14 5.1 CIRCULATION-RELATED MEASURES ........................................................ 14 5.1.1 CIRCULATION NUMBERS ......................................................................14 5.1.2 DAILY NEWSPAPER CIRCULATION ............................................................14 5.1.3 NON-DAILY NEWSPAPER CIRCULATION .....................................................16 5.1.4 FREESHEET NEWSPAPER CIRCULATION......................................................17 5.1.5 SUNDAY NEWSPAPER CIRCULATION .........................................................18 5.1.6 EUROPEAN DAILIES IN WORLD NEWSPAPER MARKETS....................................19 5.1.7 CIRCULATION PER 1000 POPULATION ......................................................21 5.2 NUMBER OF TITLES PUBLISHED.............................................................. 23 5.2.1 DAILY PAPERS..................................................................................23 5.2.2 NON-DAILY PAPERS ...........................................................................27 5.2.3 FREESHEETS ...................................................................................28 5.2.4 TITLES PER MILLION POPULATION ...........................................................30 5.2.5 NUMBER OF TITLES COMPARED WITH GEOGRAPHIC AREA ................................31 5.2.6 AVERAGE CIRCULATION PER TITLE...........................................................31 5.3 REVENUE-RELATED MEASURES .............................................................. 34 5.3.1 ADVERTISING ..................................................................................35 5.3.2 REVENUE SPLIT BETWEEN ADVERTISING AND CIRCULATION .............................39 5.3.3 ADVERTISING AND GDP......................................................................41 5.4 EMPLOYMENT-RELATED MEASURES......................................................... 42 5.4.1 EMPLOYEE NUMBERS ..........................................................................42 5.4.2 EMPLOYMENT COSTS ..........................................................................43 5.5 FINANCIAL MEASURES ......................................................................... 45 5.5.1 BASIS ...........................................................................................45 5.5.2 TURNOVER......................................................................................45 5.5.3 VALUE-ADDED .................................................................................48 5.5.4 OPERATING MARGIN...........................................................................50 5.6 PER EMPLOYEE MEASURES .................................................................... 51 5.6.1 LABOUR PRODUCTIVITY .......................................................................51 -2- Publishing Market Watch Sector Report 1: The European Newspaper Market 5.6.2 VALUE-ADDED TO PERSONNEL COSTS ......................................................54 5.6.3 TURNOVER PER EMPLOYEE ....................................................................56 5.6.4 NEWSPAPERS AND NATIONAL ECONOMIES .................................................57 5.7 COMPARATIVE INFORMATION FOR THE US ............................................... 58 5.7.1 TRENDS .........................................................................................59 6 COMPETITIVENESS AND CULTURAL DIVERSITY ............................. 61 6.1 INTRODUCTION AND OVERVIEW............................................................. 61 6.2 DIVERSITY IN THE READERSHIP............................................................. 63 6.2.1 READING NEWSPAPERS AND MAGAZINES ...................................................63 6.3 REGULATIONS TO FOSTER DIVERSITY VERSUS EU COMPETITION POLICY ........ 64 6.4 GERMANY: FEDERAL STRUCTURES AND CONSOLIDATION ............................. 66 6.5 CONSOLIDATION IN AUSTRIA................................................................ 68 6.6 THE CASE OF CENTRAL AND EASTERN EUROPE: CONSOLIDATION AND FOREIGN OWNERSHIP AFTER 1989 ............................................................................. 68 6.6.1 THE CZECH REPUBLIC ........................................................................70 6.6.2 HUNGARY .......................................................................................70 6.6.3 POLAND .........................................................................................70 6.7 NEWSPAPERS IN MINORITY LANGUAGES .................................................. 71 7 THE SUSTAINABILITY OF THE EUROPEAN NEWSPAPER INDUSTRY 73 7.1 ENVIRONMENTAL SUSTAINABILITY ......................................................... 73 7.1.1 EDITORIAL......................................................................................73 7.1.2 PRODUCTION...................................................................................73 7.1.3 OTHER ENVIRONMENTAL IMPACTS...........................................................75 7.1.4 COSTS OF COMPLIANCE.......................................................................75 7.2 SOCIAL SUSTAINABILITY...................................................................... 76 7.2.1 DEMOGRAPHIC CHANGES .....................................................................76 7.2.2 LITERACY AND EDUCATION ...................................................................76 7.2.3 IMPLICATIONS FOR NEWSPAPERS............................................................77 7.3 ECONOMIC SUSTAINABILITY ................................................................. 78 7.3.1 SUSTAINABLE CIRCULATION..................................................................78 7.3.2 SUSTAINABLE ADVERTISING .................................................................79 7.3.3 CONSOLIDATION...............................................................................80 7.3.4 ONLINE BUSINESS MODELS FOR NEWSPAPERS.............................................80 7.3.5 IMPACT OF ONLINE MODELS ..................................................................81 8 SWOT ANALYSIS OF SECTOR .......................................................... 83 8.1 STRENGTHS ....................................................................................... 83 8.2 WEAKNESSES..................................................................................... 83 8.3 OPPORTUNITIES................................................................................. 85 8.4 THREATS........................................................................................... 86 9 KEY BUSINESS ISSUES AND TRENDS.............................................. 88 9.1 A CRITICAL PERIOD............................................................................. 88 -3- Publishing Market Watch Sector Report 1: The European Newspaper Market 9.1.1 DRIVERS OF STRUCTURAL CHANGE..........................................................89 9.1.2 RESPONSE TO STRUCTURAL CHANGES ......................................................89 9.2 GENERAL ECONOMIC OUTLOOK .............................................................. 90 9.3 FALLING CIRCULATION ........................................................................ 90 9.3.1 NEWSPAPERS AND OTHER MEDIA ............................................................91 9.3.2 AGEING READERSHIP..........................................................................92 9.4 FALLING ADVERTISING REVENUES .......................................................... 93 9.4.1 IS THE LOSS OF SHARE PERMANENT? .......................................................94 9.4.2 RECRUITMENT ADVERTISING .................................................................95 9.5 CONSOLIDATION ................................................................................ 95 9.6 REGULATION ..................................................................................... 96 9.6.1 COMPETITION ..................................................................................97 9.6.2 DISTRIBUTION ISSUES........................................................................98