Last Western Media Owner Sells Up In Czech Republic

September 10, 2015 • Business Models, Short stories • by

Over the last two years the Czech Republic has seen the most dramatic change in newspaper ownership since the beginning of 1990s. Western (mostly German) companies that bought Czech newspapers 20 years ago, have now completely left the market. The last to leave, German group, Verlagsgruppe Passau, announced the sale of its network of local titles Deník (Daily) last month.

Although the sale has yet to be approved by the antitrust authority, it has already raised questions about the quality, independence and future of the country’s print media.

The new owner of Deník is a Czech-Slovak company Penta. Penta’s key business areas involve property, financial services and health care. Until last year it had had no previous experience in media business.

This lack of media experience has led to speculation that, as with other recent Czech media ownership changes since 2013, Penta’s main objective for acquiring the newspaper group might be to promote its own business goals. There are fears that the local titles might be used for political purposes, or to intimidate Penta’s business rivals.

Problematic owner?

There are a number of reasons why these fears might be justified. One of the co-owners of Penta, Marek Duspiva, openly stated in an interview for Hospodářské noviny this April that: “Owning the media is an assurance for us that it would be worse for anyone to irrationally attack our company. And I would emphasise the word irrationally.”

In 2011 Penta was involved in a huge political scandal in Slovakia (known as the Gorilla cause) which seriously damaged company’s reputation. The investigation in Slovakia revealed that in the years 2005 and 2006 one of Penta’s senior managers secretly negotiated with leading Slovak politicians. There was a strong suspicion of corrupt behaviour, although the police have not yet concluded their investigation.

The Gorilla cause is also important for another reason. Last year Penta bought the leading Slovakian serious newspaper SME, which had been one of the company’s loudest critics and regularly published prominent stories about the scandal. As a protest against this takeover, which was considered to be an attempt by Penta to silence a noisy critic, most of SME’s staff left the newsroom and established a new, independent, daily Denník N (Daily N).

The CEE trend

Recent media ownership changes in the Czech Republic fit a broader pattern of media development in Central and Eastern Europe (CEE). This was analysed by researchers involved in the University of Oxford’s recent project Media and Democracy in Central and Eastern Europe.

According to their findings, the 2008 economic crisis influenced the young, small and still not firmly established media markets of CEE countries much more intensively than in Western Europe or North America. This situation, accompanied by the need to save money, forced many Western companies to leave CEE markets, and sell the media outlets they had purchased in the 1990s.

The local owners who replaced the departing companies were generally businessmen, originally successful in areas other than the media. They differed from the western owners who were mostly looking to profit from media ownership, and generally guaranteed political and economic independence for their news outlets. The motivations of the new owners are less clear.

However, as media profits are now far less attractive than before the economic crisis, it seems likely that powerful local business players are hoping to use news outlets to further their own economic and political interests.

Will the law change?

This is also the reason why, at least in the Czech Republic, media ownership has become an important public issue.

Debates filled the public space when Andrej Babiš, one of the Czech Republic’s richest businessmen – and currently the finance minister and leader of the most popular political party ANO – bought the media house, Mafra, in June 2013. Mafra publishes two serious newspapers, Mladá fronta Dnes and Lidové noviny. Later, Babiš also purchased one of the most influential Czech radio stations, Impuls.

There was also public criticism at the end of 2013 when two other influential businessmen, Daniel Křetínský and Patrik Tkáč bought the company, Czech News Centre. It publishes the country’s most popular tabloid newspaper, Blesk. In this context, the latest acquisition of Deník by Penta represents the final stage ownership transformation of the Czech newspaper market.

Various initiatives to map the Czech media market and protect media freedom have been established as a consequence of these ownership changes. One of them, Svobodu médiím! (Freedom for Media!), an association of NGOs and civic initiatives, lobbies for a change in media law.  At the same time, the Ministry of Culture is preparing amendments to several important media laws including the law on community media, the regulation of media ownership and changes to the law on public service broadcasters.

Whether this will improve the Czech media system, is an open question. It depends on the final versions of the laws and the willingness of politicians to support them.

The media situation in the Czech Republic is better than in Romania, Bulgaria or Hungary, but the last few years have signalled potential dangers.

Local press has an uncertain future

To come back to the latest ownership change, there is still one important point to mention. The purchase of Deník by Penta might also significantly change the character of Czech local journalism. This is because Deník is the leading local newspaper in the country – or to be precise, it is a hybrid of national and local papers. It has a central part, common to all the versions of the edition, but also several pages devoted to local affairs which are produced by more than 70 small local newsrooms, based in larger cities all around the country.

In recent years, Deník has been through significant costs and staff reductions that have affected the character and standard of journalism. The local journalists are under more intensive time pressure and are suffering from lack of financial resources, compared to their national newspaper counterparts. Also the salary level is significantly lower in local newsrooms compared to national newspapers.

Nevertheless, there is still enormous potential for local news. The newspaper’s previous German owners did not successfully maximise Deník‘s local news network. Penta, the title’s new owner, has officially stated it wants to improve the quality of local journalism and has promised to invest in the title. Whether that comes true or not, it is quite clear that it is the start of a new era for journalism in the Czech Republic.

pic credit: Flickr Jaroslav A. Polak

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