European Print Media makes a move on the US

by Mark Scott a reporter in BusinessWeek's London bureau.

As print readership declines at home, Europe's news outlets are using their Web portals to expand into the U.S. market. Can they survive?

For many Brits, reading a daily newspaper remains a ritual of life as indelible as sipping a morning cup of tea or complaining about the weather. From down-market tabloids such as News Corp.'s (NWS) The Sun and Trinity Mirror's (TNI.L) The Daily Mirror, to the traditionally high-brow broadsheets such as The Times of London (also News Corp.) and Telegraph Media Group's The Daily Telegraph, Britain boasts a remarkable 13 daily national newspapers with a combined daily circulation of almost 3 million.

The industry has been hit hard, though, by declining advertising revenue over the last decade, as more and more readers turn to the Internet for breaking news. In response, British media outlets are increasingly looking abroad for expansion—especially to the U.S.—to shore up their bottom lines and exploit a growing thirst for credible international news coverage around the world.

Global Readers Flock to Web Sites

Stark numbers help explain why. According to the London-based Audit Bureau of Circulations, domestic British newspaper circulation during the six-month period from February, 2007, to July, 2007, fell 2.04% vs. a year earlier. But Web site traffic is on the upswing. Guardian Unlimited, for instance, the online portal for Britain's The Guardian newspaper, pulled in 16 million unique users globally in May, 2007, up 10.3% from a year earlier and a solid 122% higher than four years ago.

Even more impressive, nearly 6 million of the Guardian's visitors came from the U.S., compared with 4.4 million from Britain. "The strategy is to use the Web site to become a global brand," says Carolyn McCall, chief executive of the Guardian Media Group, the parent company of The Guardian newspaper. "By gaining as much exposure as possible, we can diversify our revenue, expand our reach, and increase our journalistic opportunities."

The Guardian has been ahead of the curve in reaching out to a non-British audience. That opportunity came to the fore during the aftermath of the second Iraq war, when the newspaper's left-of-center editorial stance against the conflict helped boost its global audience, particularly in the U.S.

The Guardian's U.S. Moves

Now, The Guardian is looking to cash in on its growing North American presence, adding additional reporters to its U.S. editorial team and targeting U.S. advertisers. In a project expected to take 18 months, the newspaper hopes to turn its Web site into the "leading liberal voice," by providing content directly tailored to a part of the U.S. audience not served by more conservative domestic publishers.

For McCall, this strategy remains "low-risk," despite the prospect of increased competition with the likes of The New York Times (NYT) and The Washington Post (WPO). Yet some media analysts caution that European publishers can fall on their faces if they get too ambitious in the huge and saturated U.S. market.

"The problem is when European media outlets go after the mainstream U.S. audience," says Paul Zwillenberg, head of the media practice at London-based OC&C Strategy Consultants, who argues that targeting niches is a wiser bet. "Operations like The Guardian, which already has a presence in the U.S., can be successful by expanding their existing products."

News-Hungry U.S. Audience

That's the approach taken by The Times, owned by Rupert Murdoch's News Corp., which took the unusual step in 2006 of launching a U.S. print edition distributed solely in New York and Washington. According to editor Robert Thomson, the newspaper's North America edition taps into growing interest for coverage of global current affairs. "U.S. readers want and need sophisticated global political and economic coverage," he says. The Times also has revamped its Web site to entice more international readers.

This increased focus on a U.S. audience isn't just limited to newspapers either. The enduring BBC—affectionately known at home as "Auntie"—has thrown down the gauntlet to its American rivals by expanding its 24-hour news channel, BBC World News, to compete in the U.S. against CNN (TWX) and Fox News (NWS).

The strategy comes on the back of the runaway success of the BBC news Web site, which pulls in 6.4 million unique U.S. visitors each month, according to London-based Internet researcher Nielsen//NetRatings. So far, pickups of the BBC's 24-hour news channel have been confined mainly to cable operators in the Northeast. But the company remains hopeful about extended distribution. "We have seen a real interest in international news in the U.S.," says Jeremy Hillman, editor of BBC World. "There's a large appetite for the sort of news we produce."

Research statistics suggest as much. According to a study by Virginia-based Luntz Maslansky Strategic Research, 47% of those polled in the U.S. rated international TV news coverage as either fair or poor. Among sources of global news coverage, respondents ranked BBC highest for credibility and No. 2 for reputation, after CNN. Rivals such as Fox, MSNBC (GE), and local news shows were far behind.

"If BBC World News targets a specific market, rather than catering for a mass audience, it could be quite successful," says OC&C's Zwillenberg.

Translating Success into English

The appeal of the U.S. market hasn't gone unnoticed by other European media companies, some of whom are trying to push into English-language media to grab new audiences in the U.S. and other English-speaking countries. The most successful to date has been German weekly news magazine Der Spiegel (a content partner for BusinessWeek.com), owned by Axel Springer (SPRGN.DE), whose English-language Web site, launched in 2004, has seen rapid growth.

According to Matias von Blumencron, Der Spiegel's online editor, the expansion has been key not only to increasing the magazine's brand presence overseas, but also to boosting online advertising revenue by targeting English-language consumers. "By expanding our activities, it has given us a chance to show our international audience that we are a voice from Central Europe with a specific point of view," he says, adding that approximately a quarter of Der Spiegel's 4.58 million unique monthly online visitors are now generated from the magazine's English-language Web site.

Despite such bullish talk, success in the brutally competitive U.S. media industry is by no means assured. Last year's $4.6 billion sale of the Knight-Ridder newspaper chain to the McClatchy Co. (MNI), as well as the recently agreed-to $16 billion buyout of Tribune Co. (TRB), demonstrates the perilous state even of well-entrenched media firms as they adjust to declining circulations and the growing impact of the Web.

It's a tough time in the media business, and everybody is looking for growth outside their shrinking home markets. For European media giants, America is too tempting a target to overlook. But some are bound to get burned trying.