World Media in 2005: Eastern Europe

Fifteen years after the fall of the Berlin Wall, and Eastern Europe is just as determined to make its Communist past a distant memory, as it embraces western political and economic ideals.

Romania is the world's fastest-growing ad market, according to ZenithOptimedia.

The market there grew by 43.2 per cent year on year in 2004. The Economist Intelligence Unit says 2005 will be a "watershed" year for the country when it decides whether to join the European Union in 2007.

Many of Romania's fellow Eastern European countries, for instance Hungary, Poland and the Czech Republic, became member states in May 2004, 15 years after the fall of the Berlin Wall. By doing so, these countries slammed the door shut on their Communist past.

Yet other countries in the region still face political turmoil. The Ukraine's farcical elections, for instance, hit world headlines at the end of 2004.

It will be a while before the Ukraine is in a fit state to join the EU.

The view is that drastic reform is required before this will be possible.

But considering the tumultuous background of many Eastern European markets, progress across the region has been astonishingly swift.

A clutch of new and established no-frills airlines has opened this part of the world up for both business and pleasure. Europeans seeking a long weekend away are now as likely to consider Budapest, Prague or Bucharest as they are Vienna, Berlin or Florence. For good or ill, Estonia's capital, Tallin, is now a magnet for stag nights, largely due to incredibly cheap flights.

The potential of this region is shown in ZenithOptimedia's top 20 countries by ad expenditure growth. Romania, Lithuania, Russia, Hungary, Poland and Estonia all appear.

Eastern Europe is a particularly appealing prospect for media owners, particularly ones that have built a formidable reputation in their mother countries. The Swedish media group MTG has 3.5 million subscribers for its pay-TV channels in the region, while the Dutch publishing company Sanoma and the German behemoth Axel Springer have successfully launched titles in Hungary.

Axel Springer has also teamed up with Newsweek in Poland on a local edition, as well as with Forbes in Russia. Steve Forbes, the president of Forbes and the editor-in-chief of Forbes magazine, has praised Axel Springer's "knack for sizing up markets" in the region.

Mathias Dopfner, Axel Springer's chief executive, has even pledged that Eastern Europe - and specifically Hungary, the Czech Republic and Poland - will be the publishing company's primary focus for 2005.

If Axel Springer's record is anything to go by, it stands to be hugely successful in staking out a claim for itself. It already publishes what has become Poland's most popular newspaper, Fakt, and Reggel is its latest daily addition to Hungarian newstands. Reggel, which claims to be politically independent, is set to hit sales of 55,000 by the end of 2005, giving it a strong chance of edging its way into Hungary's top ten newspapers.

Axel Springer wants one-third of its revenues to come from international business and, after an unsuccessful bid for The Daily Telegraph in the UK, it is ambitious in its desire to conquer Eastern Europe. Magazine-wise, this will be straightforward because it can adapt various German magazines - particularly its specialist computer and car titles - for the region.

Axel Springer is just one of a band of publishers that have moved fast to capitalise on Eastern Europe's potential. Burda, for instance, formed Burda Eastern Europe in 1995 and now has a presence in five markets. Burda Pol-ska publishes Poland's most popular women's monthly Dobre Rady (Good Advice). Launched in 2002, it rapidly built up a fan base and its circulation now stands at a mighty 825,000.

Across the region, TV still dominates, because it remains relatively cheap, costing approximately half the price of equivalent airtime in western markets. This has led to cluttered and chaotic commercial breaks and has left channels with little or no money to invest in decent programming.

Price hikes are planned in the near future on most channels.

Hungary's terrestrial station RTL Klub implemented a method of controlling demand through the introduction of a station-average pricing system in 2004. Meanwhile, all Hungarian eyes are firmly fixed on the box for the launch of a new locally produced soap opera on Hungary's second-biggest commercial channel. Soap operas and their stars command massive audiences and generate acres of press coverage in the country.

High-profile, ground-breaking media ideas from the region remain thin on the ground at international award shows. However, this may be down to the fact agencies in Eastern Europe tend not to enter awards as enthusiastically as western shops.

ADVERTISING EXPENDITURE

USdollars million at current prices. *Estimated

News- Mag-

Total papers azines TV Radio Cinema Others Internet

1993 268 84 60 118 - - 6 -

1994 700 156 124 356 53 - 9 -

1995 935 203 168 444 77 1 42 -

1996 1,351 261 220 673 112 1 82 -

1997 2,023 383 345 1,039 132 3 119 -

1998 2,815 511 447 1,469 178 4 207 -

1999 3,579 566 599 1,942 230 7 232 2

2000 4,207 662 686 2,290 248 12 304 5

2001 5,061 701 763 2,964 273 21 325 15

2002 5,433 753 790 3,176 339 19 337 20

2003 6,060 912 884 3,457 405 36 339 27

2004 6,662 1,019 994 3,698 478 44 390 39

2005* 7,298 1,101 1,082 4,067 530 53 414 50

2006* 7,972 1,206 1,172 4,455 570 60 445 63

2007* 8,637 1,276 1,243 4,857 632 68 485 75

TOP 20 COUNTRIES BY ADVERTISING EXPENDITURE GROWTH

Rank Country Year-on-year Total spend Total spend

% change (est) 2004 (est) 2003 (current

USdollars m prices) USdollars m

1 Romania 43.2 192 153

2 Indonesia 29.8 2,364 1,821

3 Turkey 26.6 901 821

4 Venezuela 23.9 1,078 1,175

5 Lithuania 20.5 89 74

6 Russia 20.3 3,300 2,744

7 Panama 19.3 182 153

8 Hungary 17.0 1,741 1,488

9 Thailand 15.6 2,068 1,789

10 Philippines 15.0 638 554

11 China 14.0 8,538 7,489

12 Vietnam 13.1 208 184

13 Greece 12.5 2,324 2,065

14 Poland 11.2 3,027 2,721

15 Pakistan 11.0 156 140

16= Argentina 10.0 516 506

16= Chile 10.0 607 551

18 South Africa 8.7 1,324 1,218

19 Estonia 8.5 60 55

20 Malaysia 8.3 1,032 953

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