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German newspapers wary of Swedish rival

Will Germans soon be picking up a free newspaper at the train station on the way to work?

The Swedish company Metro appears to be quietly preparing a bid to launch the first free daily paper in the eurozone's biggest economy but faces a fierce battle with the country's established press groups.

When Metro boss Pelle Toernberg let slip in an interview in mid-February that "we want to enter the German market at some point," it uncorked a wave of rumors about the company's intentions, which have been fueled by the group's refusal to discuss their plans.

According to one rumor, the Swedish company has signed a letter of intent with the German group Axel Springer with a view to cooperating on the venture.

Others say Metro it is about to link up with the giant Westallgemeine Zeitung (WAZ) publishing house in the Ruhr area, Germany's industrial heartland.

Metro's thinking is not hard to fathom.

"If you don't have a presence in Germany, then you don't have a presence in Europe," said Anja Pasquay, the spokeswoman for the German federation of newspaper producers (BDZV).

"With more than 22 daily newspapers, it is the fifth-biggest press market in the world and the biggest in Europe in terms of circulation. It is obvious in that context that a group like Metro looks at what is happening and asks what it can do here."

Germany's numerous regional papers are seeing young readers desert in droves, although some are defecting to national papers that are beginning to follow the example of Britain and produce daily editions in a condensed tabloid format, such as Die Welt Kompakt, the little sister of the Die Welt broadsheet.

Even if its plans are little more than rumors, Metro has got the German press world scared.

Already struggling with faltering readership, the sector saw advertising revenue fall by a third between 2000 and last year.

And the arrival of a brash young rival in a market that has seen a modest recovery in advertising would not be welcomed with open arms.

"The competition between newspapers for a share of advertising revenue has become tougher and you have to wonder if there is enough money to go round if a new competitor enters the market," Pasquay said.
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