Two pieces of news this week interested news organizations and, indirectly, readers who consume information, services and entertainment. Folha did badly on both fronts.
In Istanbul, Turkey, the World Association of Newspapers (WAN) released results for the printed press in 2003, and the performance was not good. In Braslia, the president of BNDES, the national development bank, sent the bank’s proposal to bail out indebted media companies to the Senate Education Committee. It was less than they wanted.
Falling circulation
The WAN report indicated that worldwide circulation of newspapers fell 0.12 0n 2003. The decline was not bigger because sales increased in various Asian countries, such as China and India (see graphic). In the rest of the world, things are falling, or stable, which is considered good results.
In Brazil, newspaper sales declined by 500,000 copies per day last year. In 2000, they sold 7.88 million copies; in 2002, it was 6.97 million; and last year it was 6.47 million.
Over the course of recent years, Brazilian newspapers still have positive performance. In 1990, for example, they sold about 4.27 million copies per day. The continuous fall began in 2001. The loss in the past five years is 10.7% and has affected mainly the big newspapers. The 15 biggest Brazilian newspapers declined 18.1% between 2001 and 2003.
And what explains such a huge drop? Changes in habits, prices and competition. In various countries around the world, the advent of free newspapers, distributed on mass transit, has caused more damage than the arrival of new ways to disseminate the news. In recent years, newspapers discussed how to deal with the Internet and ended up being partners. They are now facing a new challenge, which is from the “mobile” wave of cellular phones and wireless computers.
In Brazil, discussion about the decline in newspaper circulation tends to be restricted to quality. But it is evident that other factors also have weighed in, such as the population’s declining incomes and the financial weakening of companies, practically impeded from making new investments.
Traditional media companies will have to do something more than wait for growth to resume. Like newspapers in other countries, they must think about new content, new quality standards, and new strategies to keep readers and attract younger ones.
Bailout
Since I have already touched on the crisis, let’s move on to the most delicate topic. The president of BNDES, Carlos Lessa, sent to the Senate the bank’s proposal to bail out indebted media companies. The program, which does not depend on Senate approval to be enacted by the government, has already provoked a lot of controversy.
The proposal submitted for evaluation by senators is much different from the one presented by media companies when they approached the bank months ago. They wanted a special line of credit for 5 billion reals (US $1.6 billion) to refinance debts in the sector (calculated at 10 billion reals), 1.5 0nterest and a 10-year payment schedule.
BNDES is offering 2.5 billion reals, 5 0nterest (plus fees for the financial community) and a five-year term to liquidate the debt. BNDES still believes that it will be possible to obtain from the companies, traditionally closed and predominantly family run, changes in management practices to make them more transparent and accountable.
It is certain that pressures in the Senate and on BNDES will be strong and diverse. Among the companies themselves, there are those who believe that the government should not lend money for the sector to pay its debts. And there are those who believe that the government is offering too little. The news is that, this time, everything seems to be clear. That is a good sign.
INTERVIEW
“Dissemination of news sometimes overpowers me”
Carlos Lessa, president of BNDES, is involved directly in the formulation of the financing program for media companies. He is a 67-year-old economist, was the rector at Rio de Janeiro Federal University, calls himself an advocate for development, and says he is a “compulsive reader of books and newspapers.”
Ombudsman – Why does BNDES have to lend money for media companies to finance their debts? Doesn’t that signify favoritism for a sector that has strong power to pressure?
Carlos Lessa – BNDES has no tradition of involvement in the sector. What made us sensitive was the fact that the sector consists of more than 2,000 companies, if you add up newspapers, magazines, radio and television. The amount of employment is a variable not perfectly estimated, but there are those who speak about 500,000 direct and indirect jobs. What is interesting is that the employment ranges from unskilled laborers to the highest-skilled people, considering the technological and creative side. This sector has another, more important characteristic, to disseminate content that affirms our national identity. Therefore, we can’t let this sector atrophy, fall apart and eventually lose its identity.
The practice of democracy demands that this sector exist even with its incongruencies, differences and variations.
The important point is that we, at BNDES, do not want to be the cash register for this. If this program is approved, it will be operated by the financial sector, by the banks. Those who analyze the risk of loans and decide whether or not to make them will be the banks.
Ombudsman – Doesn’t this type of bailout reinforce the model that leads to concentration and oligopoly?
Lessa – I don’t believe so. A line such as this is a line that should connect from a microscopic company to the biggest one in the sector. There is no preferential orientation for any type of company. An important point is the following: we finance companies, not people. And the culture of the sector historically is very much associated with people. So much that, to meet banking rules such as BNDES, companies will have to accept a series of rules, such as regular auditing and corporate governance.
Ombudsman – What does it mean that these companies are not transparent now?
Lessa – What it means is that, to get BNDES support, it must be transparent, which is normal in the operation of banks. The program can be educational for the management of the companies.
Ombudsman – Do you read newspapers?
Lessa – Yes I do. My problem is that lately I have not had time to even breathe.
Ombudsman – Do you like what you read?
Lessa – I am a compulsive reader of books and newspapers.
Ombudsman – Do you like to read newspapers?
Lessa – I enjoy reading many columnists and editorials. The dissemination of news, I must confess, sometimes overpowers me for being so abundant and treated so lightly that in certain moments it seems a little excessive to me.
Translation by John Wright
