Mexico: State turns off the tap

For decades the Mexican government has supported the countries' newspapers through advertising purchases. The annual advertising budget of the government up until the year 2000 was approximately US $500 million. Usually 10% of that was spent in print media advertising, meaning that Mexico's newspapers earned 30% of their revenues from the government (see “Size of the Market,” Portadatm No. 1 January/February 2003, page 6). This money financed the existence of more than 30 different newspapers in Mexico City alone.

President Vicente Fox has a “modern” view of the role of the Fourth Estate in Mexican society and has worked to cut the “umbilical cord” between the state and the media through substantial reductions in advertising.

Analysts predict that only five or six newspapers published in Mexico City will survive in this new, more competitive environment. As a prerequisite to buying ad space, both government and private

advertisers are now asking for circulation figures that are verified and certified by the Instituto Verificador de Medios. Readers have become more critical, demanding a new level of quality from their newspapers.

...Novedades and The News, the first two casualties...

Novedades and the English daily The News, both published by Novedades Editores, closed down December 31, 2002.

Novedades, a leading Mexican newspaper in the ‘60s and ‘70s, was still one of the top five papers in Mexico City, with a circulation of 46,000 and editions in Acapulco and Cancun. The News had been a vital part of the U.S. expatriate community in Mexico, but during the last few years both Novedades and The News have been unprofitable even though they charged the lowest advertising rates on the market (on an absolute basis).

A quarter page (color ad) cost between US$ 400 and US$600, approximately 25% of the price of the same space in rival newspapers Reforma or El Universal. The Acapulco editions of Novedades and The News will continue to be published.

...The Miami Herald steps in...
The demise of the The News prompted The Miami Herald to team up with El Universal to launch a The Miami Herald International Edition in Mexico City. The new edition is written in English and was launched on Monday February 10. It has 24 pages on weekdays and 48 on Sundays. It is printed and distributed by El Universal. The Miami Herald produces the international content and El Universal the local Mexican content.

...Unomásuno fights for survival amid strike...
More than 600 employees of Unomásuno went on strike in December of last year causing the “worst crisis in the paper's 25-year history.” Entrepreneur Naim Libien kept the paper alive, paying the Alonso family 5 million pesos (almost US $500,000) for its purchase.

Unomásuno has a net debt of 90 million pesos (US $8.2 million), which Libien is expected to pay down through negotiations with creditors. Libien is also the publisher of Diario Amanecer and El Demócrata in Toluca, as well as Diario Atardecer in Mexico City. Libien's small team plans to produce a daily newspaper focusing on investigative journalism. Libien told Portadatm that the new editorial direction will be that of a critical, left of center newspaper. Another Unomásuno strategy will be to publish supplements (on marketing, cars, sports etc…) targeting a younger demographic.

The rate for a full page color ad is 11,500 Mexican pesos (US $1,000 or CPM of US $55). However, advertisers get discounts of approximately 50% (CPM of US $27.50). Ironically, the strike has boosted sales due to curiosity among readers. In the past, the Mexican government purchased up to 90% of Unomásuno's advertising.

...Excelsior gets an owner, who targets the Hispanic market...

Miguel Aldana, Mexican entrepreneur and former director of Interpol-Mexico, purchased Excélsior after years of financial troubles for the paper. The purchase price of US $150 million surprised many in the Mexican newspaper industry. Aldana bought the paper from the 810 members of the employees cooperative, who have owned the paper for 70 of its 85 years.

The brands bought by Aldana include Excélsior, Últimas Noticias, Revista de Revistas, Plural, Jueves de Excélsior and El Buho. Aldana's partners are Mexican entrepreneur Arnulfo Ortiz Villanueva, and US businessmen John J. Doherty and Richard Lane.

The investors expect to raise profits, which in 2002 were 3 million Mexican pesos (less than US $300,000) to 195 million Mexican pesos (US $17.7 million) by 2005. In order to achieve this Aldana intends to publish Excélsior in every Mexican State and in the US Hispanic market.

...and changes at El Universal
Ramón Alberto Garza, editorial vice president of El Universal since July 2002, was let go last December. Juán Francisco Ealy Ortiz, sole owner and chairman of the board of El Universal, took over the editorial department. Although the reasons for Garzá's dismissal were not revealed, insiders claim Garza and Ealy disagreed on editorial matters. According to these sources, personnel costs rose by more than 50% during Garza's short tenure – headcount increased by 10%. Mexican newspaper analysts estimate that Reforma, founded in 1993, and El Universal, account for 50-80% of advertising sales in Mexican newspapers.


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