Wednesday, July 4, 2012

With crisis in Spain, El Pais expands globally

Spain is suffering through a newspaper crisis as severe as that in the U.S., and the response of one of its leading newspapers has been to expand into new markets.

El Pais, part of Grupo Prisa, is cutting editorial staff at its headquarters in Madrid, but it just announced an expansion of its coverage of Mexico and Latin America.  The Mexico section will have its own digital front page and six new staff people based in Mexico City. This follows on El Pais's launching of a digital front page for the U.S. as well. For journalists in Spain -- who have seen 7,000 of their peers laid off in the past three years -- the expansion in the Americas has to be a slap in the face. But it has a a cruel commercial logic. 

Going where readers are, globally and digitally

La portada de la nueva sección
El Pais is making a small bet on a global market for digital journalism, which it sees as much more promising than the print market within Spain.

The media market is not expanding in Spain, which has a population of 47 million and is suffering through a deep economic crisis. Meanwhile, El Pais is a trusted and authoritative brand in the Spanish-speaking world, which includes Mexico, with population of 115 million, and the U.S., which has 35 million Spanish speakers.

Beyond those two countries are tens of millions more potential web users all over Latin America.

The web is where the media industry will prosper in the future, says Juan Luis Cebrian, chairman of Grupo Prisa, El Pais's parent, and a founder of the newspaper. Cebrian has been criticized by his own journalists for predicting the end of print journalism. So it is no surprise that El Pais is looking to put more resources into its digital editions, and to do so outside of Spain.

Audacity or desperation

Prisa has seen its revenues plummet because of a migration of its readers and advertisers to the internet, as well as because of Spain's economic crisis. It lost 451 million euros in 2011 and has been selling off assets but is till is carrying 3.8 billion euros in debt.

The board of Grupo Prisa announced June 29 that there would be more staff reductions. That same day the employees of its radio flagship, Cadena Ser, staged a 24-hour strike in protests. Prisa is considering cuts of 200 staff at the radio operation.

Given the size of its financial challenges, the launching of two new digital editions is not going to have a significant impact on its financial results in the short term.

So this digital bet might not be as bold as it first appears. There is not much risk. In fact, it might be a tactic of Prisa to distract its investors from the rest of the bad news, which continues to get worse.

This initiative represents a small step on the road toward a digital future and the transformation of a Spanish brand into a global one. The question is if they have acted with sufficient speed to prevent a collapse of the business. Or if really anything could prevent it.


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