Eastern Exposure

Magazine publishers warn that getting into this region isn't as easy as it used to be

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For most major magazine publishers, Eastern Europe isn't exactly uncharted terrain. Nearly every top publisher boasts a presence-say, a licensed edition of a top women's brand in Russia.

With the region thriving economically, a second wave of arrivals is expected in the next 24 months. But those there caution that while opportunities abound, bolstering one's Eastern European presence isn't as simple as it was just three or four years ago.

Take the example of Hearst Magazines, by any measure the U.S.-based publisher that has made the deepest inroads in the region. Hearst launched Cosmopolitan in Russia way back in May 1994, and its current circulation there hits 1.1 million a month. Good Housekeeping followed in 1995 and Harper's Bazaar in 1996. Since then, Cosmo has also found its way into Poland, Hungary, Croatia, Romania, Ukraine, Latvia, Bulgaria, Serbia and Georgia.

Even with Hearst titles in the black in most of these markets, George Green, president-CEO of Hearst Magazines International, notes the increasing cost of entry. "Lots of publishers waited too long to get in," he says. "Ten years ago, there weren't any magazines ... Now, you're in a dogfight just about anywhere you go."

Amid this dogfight, magazine executives and media buyers lack their usual specificity when asked about ad pages and circulation numbers. Publishing executives offer few details about Eastern Europe's ad climate, other than to stress there are dollars to be had across a range of categories-electronics and fashion receive multiple mentions-and that publishers' local partners know how to bring them in.

The opportunities are real.

Mr. Green cautions that Eastern Europe "is not a singular event. What works in one country doesn't necessarily work in the one next to it ... Wherever you are, you gotta do things their way."

Magazine executives strongly warn against regional editions, which tend to be considered the easy way into Eastern Europe. "They serve the publisher more than they do the reader or the advertiser," says Jim Jacovides, VP-international licensing at Time Inc. A Polish edition of In Style, for example, not only would be published in a different language than a Hungarian edition but would include different products depending on their availability in the market.

Publishers stress the importance of finding the right local partner. While heading in on one's own isn't entirely outside the realm of possibility, the challenges are daunting. When Conde Nast Publications arrived in Russia in 1998 to launch Vogue, the company ran into difficulties staffing its operation.

The ideal Eastern European partner, whether in Belarus or Moldova, boasts a more or less consistent set of skills. Both marketing and editorial staffers should have considerable experience in the country, solid reputations in local publishing and access to market research. U.S. companies, after all, are placing venerable brands in the hands of their partners.

There exists less consensus on the types of magazines that translate best, in terms of reader and advertiser interest, to Eastern European countries. Not surprisingly, Stephen Colvin, president-CEO at Dennis Publishing, touts the potential of men's magazines. Maxim has editions in Russia, Ukraine, the Czech Republic and Serbia, with Hungary and Poland likely to be added within a year. "I'm not saying that men are the same in every one of these places," Mr. Colvin says, "but there's a certain commonality of interest."

Mr. Colvin is most bullish on the international potential of music title Blender.

MEREDITH EYES REGION

Meredith Corp. is one of the few exceptions among major publishers, with no titles yet in Eastern Europe. But John Zieser, VP-corporate development, general counsel and secretary, believes parenting titles are poised for growth. "Let's face it: Raising children is one of the few things that cut across all cultures," he says while noting the relative paucity of such magazines in most Eastern European markets. "You might have one or two local titles to go up against," he says, "but they tend not to have first-class photography and design."

Meredith has inked 11 international licensing deals in the last year, and expects to be up and running in Eastern Europe within the next 12 months. Among its stable of U.S. titles are Family Circle, Child and Parents.

Women's lifestyle titles are thought to have the most potential, given the success of Cosmopolitan, Vogue and Glamour. "Women are the primary buyers of magazines [in the U.S.]. Why should it be any different over there?" asks Hearst's Mr. Green. Adds Mr. Zieser: "As you see these economies developing, the concept of the female having the purchasing power in the household will eventually take hold."

Everybody seems quite bullish on Russia, despite the crowded competitive landscape. Beyond that, the prospects appear less clear-cut. Jonathan Newhouse, chairman of Conde Nast International, says his company will shun some of the smaller markets. "It's a question of scale," he says, "so they're not really of interest to us. You're not going to see an Albanian Glamour anytime soon."

Mr. Colvin, on the other hand, sees opportunities for Dennis titles in markets big and small: "The smaller [countries], they add up."

Then there's Mr. Green, who barely pauses for breath during a market-by-market assessment: "Romania is pretty close to being energy-independent; the economy there is tough but improving. Bulgaria's pretty far behind. The Baltic countries have potential, but they're small. Poland and the Czech Republic are positive from an economy standpoint, but there's so much competition that there are limited possibilities for good margins.

"Don't forget that it's one thing to publish in these countries and have a perceived presence there, but you're in business to make money."
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