A Town Called Krasnodar

The Russian economy can be described in quite simple terms.  First comes Moscow.  Then comes nothing.  Next comes St. Petersburg.  Then comes nothing.  Finally, there are just over a dozen cities with populations around or above one million.  These were the cities—along with their surrounding regions—that Bonnier decided to start researching in 2006.

"We visited a number of places throughout Russia and surveyed the situation of media markets, which was not a simple task because the markets are quite insular, making it difficult to get relevant data," says Andrus Vaher, CEO of Delovoy Peterburg and Delovaja gazeta Yug.  "Many of the larger cities had also had well established business newspapers for many years.  In the end, we had a shortlist of five cities.  From this list, we chose Krasnodar."

Krasnodar, which was founded toward the end of the 18th century by Catherine the Great, is well known as the center of the Kuban Cossacks' struggle against the Bolsheviks.  And the spirit of the "grasshoppers of the steppes," or the "blue-eyed wolves," as the Cossacks were called by their enemies, survives to this day in the form of widespread suspicion towards authority.

Here, 1,500 kilometers [900 miles] south of Moscow and 100 kilometers [60 miles] from the Black Sea coast, in a city that doesn't even rank among Russia's fifteen largest cities, Bonnier has published the weekly business newspaper Delovaya gazeta Yug since 2007.

"We already had a newspaper in St. Petersburg, Delovoy Peterburg, which has worked very well there," explains Andrus.  "So it felt logical to test the concept in other Russian cities."

Although the city of Krasnodar has a population of less than 800,000, it is the center of Krasnodar kraj, a region with a population of over five million.  Krasnodar kraj is also home to Novorossiysk, the largest Russian port on the Black Sea, and Sochi, the country's most popular seaside resort and the host city of the 2014 Winter Olympics.  The Olympics alone should spur a spike in investments within the region.  Krasnodar ranks third among cities where most new vehicles are purchased per capita, after Moscow and St. Petersburg.  That the May 2009 Russian edition of Forbes magazine recognized Krasnodar as "the best city for business in the country" hardly weakens the case of this fast-growing city.  Despite all of this, Krasnodar lacked its own business newspaper.

Bonnier began cautiously with the launch of a Web site in Krasnodar.  At the same time, three journalists from Delovoy Peterburg moved down to the city, rented a small apartment and went to work.  In the search for a Managing Director, it was decided to go with a local name—but finding someone from the media industry without ties to the city government proved impossible.  The new Managing Director, Dmitry Volkov, was instead recruited from the wine industry.

"Most Russian newspapers are fairly uncritical toward the local city government and potential advertisers, to say the least," says Andrus.  "But that's not how we work.  Our concept, besides writing about the people behind the companies, rather than just the companies themselves, is to remain independent and to avoid all ties with local industries.  So it was extremely difficult to explain to our advertisers that we didn't plan to write positively about them simply because they advertised with us."

Bonnier's business newspapers in Russia also differ from their local competitors in terms of their relationship with subscribers.  Unless the newspapers are financed entirely by advertising or sold individually, Russian readers traditionally choose their subscriptions from a hefty catalog sent to their homes by a large agency every six months.  Unlike these newspapers, which have no real idea who their readers are, Delovoy Peterburg and Delovaya gazeta Yug know their subscribers well.

But the process of establishing a newspaper in Krasnodar hasn't been easy.  One day, when the newspaper was still a fresh upstart, two men stepped into the editors' offices.  They explained that they had come on behalf of the tax authorities and were there to check that the newspaper had paid licensing fees on its computer software.  They threatened to seize all of the computers, which would have been completely devastating for the newspaper.  At the same time, they hinted that an appropriate sum of money might just solve the problem.

"Dmitry Volkov called me and said: 'What should we do, Andrus?  They want to take our computers,'" says Andrus.  "I said: 'We can't allow this.'  After discussing for a while, Dmitry came out and said that if you take our computers we'll write about it—not only in our paper and in Delovoy Peterburg, but in all of the European business newspapers within our group.  This would spread some pretty bad publicity to the region's potential investors.  After a bit of deliberation the men disappeared.  And we haven't heard from them since."

It wouldn't be the last time the newspaper's independence policy would come into conflict with local chiefs.

"In the spring of 2009, we conducted an interview with the Mayor of Novorossiysk," says Andrus.  "It took a few weeks for us to publish the article since his Press Officer was required to approve of every word.  It just goes with the territory that the Mayor's office is one of the places we deliver a number of free copies of the newspaper.  The day the article was published, our Managing Director received a call from a member of the Mayor's staff.  He was told that all of the copies we'd sent to the Mayor's office had been clipped into bits, and that we no longer had permission to deliver the newspaper there.  This was because we'd used a photo of the Mayor that he hadn't approved—he thought it made him look like a mafia boss.  In the good old days, newspapers only published official photos of those in power, so this was evidently something new for him."

Currently, Delovaja gazeta Yug is published only once a week, but the staff plans to increase its frequency.  A newspaper that dares to speak out against the powers that be should have no trouble succeeding in the hometown of the Cossacks.

FACTS

• Bonnier has been present in Russia since 1993, when the business newspaper Delovoy Peterburg was launched. Today, Delovoy Peterburg is the leading business daily in St. Petersburg as well as the country's third largest in terms of paid circulation.
• Apart from Delovoy Peterburg and the online business news site www.dp.ru, the company has a Delivery Service and Handbooks publishing operation and a weekly business newspaper in Krasnodar - Delovaya gazeta Yug.
• The strategic objective for Bonnier Business Press is to take the business model of the already successful Delovoy Peterburg to other major cities in Russia.