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Communist press monster reborn

How about this party cocktail: Throw in a huge printing company which dominates the newspaper market. Add management that is close to the governing party that it owns and publishes the party's daily. Top it off with the largest print distribution corporation and shake well. Then serve, and you can be sure the potion will make the drinker wonder whether this is 1998 or 1988.
The printing behemoth in question is called Danubiaprint, and it is no stranger to the eyes of political storms. Until November 1989, it was directly controlled by the Communist Party (CP). Having print and distribution facilities together with most periodicals in one office complex made the task of political supervision much easier. The Velvet Revolution ripped the government media monopoly to shreds, but both Danubiaprint and its distribution counterpart, Prvá novinová spoločnosť (PNS), remained in state hands.

How about this party cocktail: Throw in a huge printing company which dominates the newspaper market. Add management that is close to the governing party that it owns and publishes the party's daily. Top it off with the largest print distribution corporation and shake well. Then serve, and you can be sure the potion will make the drinker wonder whether this is 1998 or 1988.

The printing behemoth in question is called Danubiaprint, and it is no stranger to the eyes of political storms. Until November 1989, it was directly controlled by the Communist Party (CP). Having print and distribution facilities together with most periodicals in one office complex made the task of political supervision much easier. The Velvet Revolution ripped the government media monopoly to shreds, but both Danubiaprint and its distribution counterpart, Prvá novinová spoločnosť (PNS), remained in state hands.

When the National Property Fund (FNM) sold PNS to Danubiaprint on February 24 (see related story, page 1), a fully integrated media empire consisting of printing, distribution and periodicals was reborn.

After the 1994 elections, when Mečiar's government started its massive privatization drive of direct sales, Srník and his associates formed a company which, according to an FNM press release, acquired Danubiaprint from the state on August 1, 1996, for 220 million Sk ($ 6.2 million), with only 50 million paid up front and the rest spread over a period of several years. This sale occured on the same day the FNM made its most controversial deal in the history of Slovak privatization - the Nafta Gbely sale - allowing Danubiaprint to escape the attention of the furious opposition.

Although a senior executive in Danubiaprint's legal predecessor during the Communist era, Srník's rise to the pinnacle of power came with the Velvet Revolution. "He is one of the few CEOs installed in the aftermath of the 1989 changes who has survived in his position to this day," said Peter Brhlovič, former publisher and chief editor of Slobodný piatok weekly.

Srník's success was largely due to his consummate skills in using the power he was given with the printing press. "He always played it safe with both sides and was very careful," Brhlovič said. "All the papers that failed, did and still do owe Danubiaprint a lot of money."

Brhlovič explained that due to high printing costs, many papers gradually became indebted to Danubiaprint. Whenever Srník wanted to shut down a paper, he just demanded payment of the debt. "[These papers] were from all parts of the political spectrum," Brhlovič said.

If a paper couldn't pay, Danubiaprint asked for ownership stakes. As a result, Danubiaprint not only owns several papers now, but still has financial leverage over the former owners of many failed papers. "Consequently, many people are afraid of [Srník]," Brhlovič said.

After the privatization deal, Danubiaprint at first paid Mečiar's administration back only in small favors such as the overnight printing of invalid referendum ballots on May 21, 1997, after Interior Minister Gustáv Krajči decided to strike the question on direct Presidential election from the ballot, a move later called illegal by the Constitutional Court.

However, in November 1997 the Sme daily published information on two joint-stock companies, R-Press and H-Press. R-Press had taken over the publishing of the Mečiar-led Movement for a Democratic Slovakia's (HZDS) daily newspaper, Slovenská Republika. H-Press is in the business of collecting regional dailies and turning them into tabloids with a pro-government stance. So far it has gathered six of them.

Srník is the Supervisory Board Chairman of both companies, and the business weekly Trend claimed that Danubiaprint directly owns both H-Press and R-Press. "Even though it is difficult to prove the political allegiance of a printing company, you can deduce it from their publishing activities," said Miloš Nemeček, chairman of the Slovak Association of Periodicals Publishers. "Nonetheless, different publishers have had different experiences with Danubiaprint. For example, Pravda has never had any problem."

But Alexej Fulmek, president of VMV, the company that publishes the anti-Mečiar daily Sme, had a different story to tell. Sme is the only major nation-wide daily not printed by Danubiaprint. "In October 1995, when our original printer Concordia refused to print us, Danubiaprint helped us out for one day," Fulmek said. "But this was done without the knowledge of top management. The next day, Srník forbade printing Sme at Danubiaprint."

According to Trend, Danubiaprint has a 50 percent share of the periodical printing market. The share of its principal competitor, Concordia, reaches barely 20 percent according to its CEO, František Mana. However, these figures do not paint the full picture, as on the nationwide dailies market, Danubiaprint has a monopoly with the single exception of Sme.

Most of the company's power comes from its wealth of modern printing presses. "If a printing press breaks down, which happens quite often, the dailies cannot afford to wait hours till everything is back in order," Brhlovič explained. "And only Danubiaprint has enough presses to guarantee that delays will not occur no matter what happens to a particular machine."

However, with national elections approaching, it is unclear what may happen to the Danubiaprint machine. Although Mečiar's privatization greased it gears, the opposition's reprivatization scheme may pour some sand into the gas tank.

According to a media analyst who wished to remain anonymous, if the opposition wins September's national elections, then in the framework of the announced reprivatization scheme, at least PNS and possibly even Danubiaprint itself are going to be taken away from their current owners and managers. This time, it seems, Srník has not hedged his political bets.

On the other front, the continued growth of Srník's power has alarmed some publishers, who have begun considering serious steps to secure their independence from the whims of Danubiaprint. "A group of publishers is undertaking a serious analysis of how to create an alternative distribution network to PNS," Nemeček said. "The situation is more difficult with printing. Danubiaprint's competitors could not absorb all the major dailies, although they could surely accomodate at least two with an average circulation [of 50,000-70,000 copies]."

In the medium-term, however, some competitors could present a significant challenge. For example, Concordia estimated it had doubled its 1996 revenue to 574 million Sk ($16.4 million) last year. If it manages to preserve this kind of momentum, Danubiaprint's managers may have a serious competitor to deal with, something they are not used to.

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