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. Last Updated: 07/27/2016

Russian Newsmags Battle in Nascent Market

Over seventy years ago, the revolutionary poet Mayakovsky told Russians to "rush out and buy Ogonyok." Readers responded en masse, buying up the Soviet Union's only color-cover magazine. The circulation went beyond 3 million in the perestroika years, when Ogonyok was a standard bearer of reform. But by 1992 circulation had halved. Early last year, to adapt to a new age, the magazine was relaunched akin to a conventional Western news magazine to compete with the foreign-inspired competitors which are entering the Russian market.

On May 14 came the most serious foreign competition to date. Itogi -- a venture of the Most group, 7 Dnyei publishers and the U.S. weekly Newsweek -- hit the newsstands. Selling for about 4,000 rubles, it is closely modelled on the Newsweek formula.

Both partners have substantial resources. Most group already controls the newspaper Segodnya and 7 Dnyei, NTV television and Ekho Moskvy radio. The Newsweek family has seven other international versions, including Japanese and a Korean edition -- which sell 140,000 and 150,000 copies a week respectively -- the Australian The Bulletin, and a new Spanish and Latin American edition.

"Newsweek was quick to agree on cooperation, but made it immediately clear they were approaching the affair in utmost seriousness," said Sergei Parkhomenko, Itogi's chief editor. "Newsweek is not making a direct investment in Itogi, only [providing] technical and professional assistance," he said.

Journalists and publishers see the appearance of news magazines as a natural process, associated with the emergence of a highly educated, consumer-oriented Western-style middle class which spends a significant amount of time -- and hence reading time -- in transit between cities and nations, and wants to be kept up to date on national and global events.

Said Parkhomenko, "Here, instead of Time we have Ogonyok; for Business Week, Commersant; for People, Litsa; for Vanity Fair, perhaps Medved. Until now, there hadn't been [an equivalent] for Newsweek."

Itogi's publishers conducted two market research campaigns which showed a significant demand for news magazines akin to those in Western countries.

The initial print run of Itogi is a modest 50,000 copies, a far cry from the U.S. edition's 3.1 million. Advertising to date is limited. The latest edition of the international Newsweek, which sells over three quarters of a million copies, carried 27 pages of ads out of 66 pages. The most recent Itogi only had 8 1/4 pages of advertising.

"We are planning to have 10 pages of advertising weekly," said Nana Tsobekhiya, advertising director for 7 Dnyei, which handles the advertising for Itogi.

Elmira Mikhailova, managing director of Primaya Rech, DMB&B's below the line advertising agency, said that Itogi was likely to be read mainly by men, and therefore she envisaged it might attract advertising from banks, service companies, and telecommunications companies, among others. Ogonyok, she said, had more of a family profile, and was used by clients of her agency for advertising to women, who tend to be decision makers in household purchases.

Alexander Magatayev, director of distribution for Itogi, said that in his opinion circulation would reach 100,000 to 120,000 copies per week by the end of the year. He said that he expected a sharp rise in the second half of the summer or in the fall.

If so, Itogi will draw level with Ogonyok, which says it currently has a circulation of 100,000. The relaunched magazine, owned by a group of investors which include Boris Berezovsky and Stolichny Bank, says that it is currently loss-making.

Commersant's weekly edition became Russia's first full-color news magazine in December 1993. In spring, shortly after the relaunch of Ogonyok, several staff members of Commersant broke away to start the financial weekly Expert. Last December, the ill-fated news magazine Ponedelnik made its debut. In addition to Itogi, this year has seen the launch of Profil, a financial weekly which has drawn heavily from the journalistic ranks of a similar publication called Dengi.

"The market for similar publications is extensive, but far from saturated in Russia," said Yury Khnychkin, commercial director at the financial Profil. "Of course, in comparison with the Soviet era it seems like there are far too many of these magazines -- but one look at the Western market and it becomes clear this is not the case."

The majority of these new publications are financed by commercial banks. Profil's Khnychkin said the publication's original investor -- a Russian bank -- has put in $2 million. Expert amassed $2 million to $3 million from the sale of a 24.5 percent share to Uneximbank.

Bankers may be drawn to backing publishing ventures for influence and prestige, not just a return on their money. Mikhail Shaikov, deputy director of the Press Committee's information analysis department, said "It makes you think of the pre-revolutionary homeowners who would brag to each other, saying: 'My butler has two medals, yours only one ... I publish two magazines, and you only one.'"

Managers involved in the ventures confirm that the present stage of development in the publishing business such magazines require very carefully drawn-up business plans.

It has taken Expert a year to reach the point where it covers costs.

Other ventures have not got that far. Ponyedelnik, set up as an independent venture separate from any large publishing group, only managed two issues before it went under. Its publishers had envisioned something of a cross between Newsweek and The Economist. Inadequate financing turned out to be its downfall.

"Expenditures on the two published issues were several times that which the investors had anticipated," said a former Ponyedelnik employee who requested that his name not be used. However, Ponyedelnik's former editor in chief Alexander Gagua has not given up hope. "The magazine is not shut down, we've only suspended its publication," he said. "Since there are already significant sums invested, the investors are not prepared to abandon their idea, and talks are going on right now to resume financing."

A significant difficulty in setting up news magazines, as some see it, is a shortage of truly professional journalists who are capable of putting together a high quality magazine of this type.

"The pool [of qualified journalists] is very shallow," confirmed Itogi's Parkhomenko. "However, over the past five years, a strong journalistic school has taken shape and several good projects have gotten off the ground," he said, citing the newspapers Nezavisimaya Gazeta, Commersant and Segodnya.

"It's a real challenge to put together a strong journalistic team which will enable you to find your niche right away," says Nikita Kirichenko, editor in chief of Expert. "Magazine journalism just had not existed before now in Russia. That is, the skill to report events has been there, but the skill to provide the background has been missing. And magazines are all about background reading."

Added Shaikov from the State Press Committee, "The market is obviously not saturated, but there is a lot of garbage out there."