The World: Daily Mail buys former Communist mouthpiece

DMGT and Slovakia's Pravda might seem unlikely partners, but local buyers say the deal makes sense, Mark Johnson writes.

Anyone would be forgiven a double-take when they read a headline that said the Daily Mail had bought Pravda. It's not every day that a bastion of middle England, with its obsessive coverage of house prices and immigration issues, ties up with a publication so closely associated with the former Soviet Union and its oppressive Communist past.

But note, this is the Slovakian former Communist organ, rather than the Russian one of the same name. It is the Central European state's oldest national newspaper and is now one of its leading quality broadsheets, with a circulation of 78,000 copies a day.

It was the international division of Daily Mail & General Trust, Northcliffe International, that snapped up the Slovakian daily when it acquired its owner, Perex, in August for an undisclosed sum. This deal brings the newspaper owner's total investment in Slovakia to £23 million. After all, with the UK newspaper market struggling, the growth potential in new overseas markets is attractive.

DMGT's Eastern European businesses now have annual revenues of £35 million and annual profits of £6 million with a portfolio of titles concentrated mainly in Slovakia and Hungary. Its leading titles include the weeklies Kisafold and Delmagyarorszag and Budapest Sun in Hungary, and the two Slovakian classified advertising newspapers Avizo and Profesia.

Avizo, the country's biggest-selling classified ads daily, was DMGT's first investment in the Slovak market, in 2004. Pravda, with its combination of sports, business and news coverage, is a powerful addition to an already strong foothold in the country.

But the whole deal still seems rather odd to British eyes.

Istvan Szammer, Northcliffe International's Central and Eastern Europe managing director, dismisses any suggestion the two brands should be regarded as an odd pairing. He claims that perceptions overseas of the country and its oldest newspaper are outdated. "Northcliffe has been operating in Central Europe, in Hungary, since 1989. So we're not a new player in these markets," he points out.

Slovakia itself has come a long way since becoming independent in 1993 and emerging with a fully fledged parliamentary democracy. Reporters Without Borders, the public interest organisation that promotes press freedom around the globe, ranked Slovakia first in the world for press freedom alongside seven other countries. Pravda is itself widely considered in Slovakia to be the country's most trusted newspaper, according to research.

Its editorial slant, although centre-left in general, has recently, according to Szammer, been "trying to keep a distance from both sides of politics as this is a good tactic for increasing circulation".

Indeed, the circulation battle with its closest rival, SME-Praca, is now the most pressing concern, with the Daily Mail's new Slovakian counterpart edging ahead steadily over recent years.

With more than 460,000 regular readers, Pravda is currently slightly ahead of the centre-right SME-Praca, which has 428,000 readers. Pravda is out-sold only by the market-leading tabloid, Novy Cas.

In terms of ad revenue too, Pravda leads SME, with more than £4.5 million in income in the first seven months of this year alone, compared to SME's £4.2 million.

Market observers say the tie-up can only bolster Pravda's position, with media buyers in the region arguing the deal will prove fruitful for both Northcliffe and Pravda.

Universal McCann Bratislava's managing director, Branislav Kudri, has high expectations for Pravda. His optimism is based on the title's success in repositioning and distancing itself from its Communist past, together with the high growth rates among print media in Slovakia in general and the levels of trust that the brand enjoys among its readers.

"Northcliffe has definitely made a good deal in buying Pravda," Kudri says. "The print market is currently growing and Pravda is strong. If it maintains its current positioning, it can't really lose."

However, a media planner in Slovakia, who asked to remain anonymous, says things may not be quite as rosy for Pravda as Kudri makes out. He argues that, given the close ranking of Pravda and SME in recent years, the circulation battle will mean competition will always remain intense.

This, he says, could prove costly in a print news market that has been growing at a strong rate for several years.

But Pravda's readership profile is one of its strengths, Kudri argues. He says that with its readership being predominantly university-educated, under 30 years old, and including a strong student contingent, brand loyalty may prove an important factor in reaching an older age group over time.

Its online version is read by the Slovakian diaspora in neighbouring countries, though figures for the size of the online readership are not available. Kudri believes that, with its current positioning and growing strength, online readership could eventually see a strong surge too.

With the ink still fresh on the deal, Northcliffe has not rushed to implement radical changes at Pravda and these don't look likely to happen in the immediate future.

Szammer says that few structural changes are anticipated at this stage, but new ideas will be imported from the UK on editorial style and policy in an effort to stave off fierce competition for advertising and sales.

In fact, the broadsheet, which had a turnover of £8 million last year, is about to start learning how best to run a market-dominating newspaper from the Daily Mail and Evening Standard.

"It's too early to talk about changes as the deal is only a few weeks old," Szammer says. "But Pravda has strong management and great ideas about improving the paper. We will be learning from the Daily Mail and the Evening Standard about how they work."

So, despite their historical divisions, the Daily Mail and Pravda actually make suitable stablemates. Whatever next?

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