Entering a Crowded Market p.

By: Larry Luxner Investor launches a new daily newspaper in Puerto Rico
A FOURTH DAILY paper is about to enter Puerto Rico's already crammed newspaper market, and nobody in the industry ? including its new publisher ? expects an easy battle.
El Diario, a tabloid like its one English-language and two Spanish-language rivals, has already printed two prototype issues and is scheduled to begin appearing as a five-days-a-week newspaper in early May with a circulation goal of 60,000.
""I think this is the best moment to begin a new Spanish-language paper. There's a need for alternative points of view in Puerto Rico,"" said Rafael Santos Del Valle, a 51-year-old corporate attorney heading the new venture.
""We did a feasibility study and found that there are four areas abandoned by the other papers: youth, women, senior citizens and those living outside the San Juan metro area. We promise that this paper will cover the whole island, not just San Juan.""
Puerto Rico's 3.6 million people already have three dailies to choose from. The largest is El Nuevo D?a, a 230,000-circulation paper thick with ads and sophisticated graphics. Next-largest is El Vocero, whose 200,000 copies splash crime stories on the front page with big, blood-red headlines that appeal mainly to blue-collar workers.
By comparison, the English-language San Juan Star, a Scripps Howard affiliate, sells only 36,000 copies, but its readership consists of tourists, affluent ""gringos"" and Puerto Ricans who have lived on the U.S. mainland and use English as a second language.
There was a fourth newspaper, El Mundo, but labor problems forced that prestigious paper shut in December 1990 after 68 years of continuous publication. A fifth daily, El Reportero, lasted only eight years until its demise in 1988.
In both cases, the papers found it impossible to compete with El Nuevo D?a, which was founded in 1971 by Antonio Ferr?, the son of former Gov. Lu?s A. Ferr?, and has enjoyed steady growth ever since. Many people view El Nuevo D?a as a booster for the pro-statehood New Progressive Party (NPP).
""It's not going to be easy [for El Diario] to enter the market,"" says Francisco Priegues, media director for West Indies & Grey Advertising, one of the island's largest ad agencies. ""It would have to compete head-on with El Nuevo D?a and El Vocero.
Adds consultant Alex W. Maldonado, who now writes a political column for the Star: ""Anybody who wants to take on El Nuevo D?a better be prepared for a fight.""
Maldonado should know. A former editor of El Mundo, he launched El Reportero in 1980; at one point, El Reportero's circulation hit 40,000. ""We did well but we couldn't sell enough advertising,"" he recalls.
Del Valle says that El Reportero failed also because it was too closely aligned in the public mind with the island's Popular Democratic Party (PDP), which advocates continued U.S. commonwealth status for Puerto Rico. Del Valle is a PDP stalwart who headed the Cooperative Development Administration under former Gov. Rafael Hern?ndez Col?n.
However, he insists he will not let his personal politics interfere with El Diario's editorial content.
""I will take positions that benefit the Puerto Rican people, regardless of the political parties' positions,"" vows Del Valle in an interview at his 21st-floor office in San Juan's banking district.
He concedes that the bulk of his readership will probably come from among the 800,000 or so Puerto Ricans who voted for the PDP's gubernatorial candidate last November and are now disenfranchised and ""without a forum."" Their candidate, Sen. Victoria Mu?oz Mendoza, lost to the NPP's Dr. Pedro Rossell?.
Total investment in El Diario is $3.5 million, split equally among Del Valle and 19 other investors, most of whom are in their 30s and 40s, he says. The new paper is to be printed on a 5-year-old, 12-unit Goss Community press in the town of Canovanas. Printing will be handled by a separate firm, Grupo Inversol, which is headed by Fabio Garcia Matienzo, a former president of the government-owned phone company. Like its rivals, El Diario's newsstand price is 30?.
Del Valle says he is seeking permission under Puerto Rican law to set up the new paper as a cooperative, which would mean certain financial advantages such as low-interest loans. The application is pending before the Cooperative Development Administration.
The attorney, who has extensive background in property law but no journalism experience, was part-owner of El Region?, a weekly local paper which circulated in Humacao and southeastern Puerto Rico, until he sold it two years ago. Until recently, he also owned a small paper specializing in condominium property law.
Del Valle says the idea of starting another newspaper in Puerto Rico stems from his belief that the island needs more competition.
""The market is not competitive, it's monopolistic,"" he says. ""El Nuevo D?a has 95% of the market. Those who read El Vocero have interests completely different from those who read El Nuevo D?a. The public wants a Spanish-language alternative to El Nuevo D?a.""
Del Valle originally wanted to call his new paper El Diario Puertorrique?o, but the government said it could not protect exclusive use of that name; it was also too long to fit on the masthead, he says.
El Diario's first free prototype, published Feb. 1, had 25,000 copies; the second, published March 4, had 40,000. The third, which came out in April, had a press run of 50,000. By the time El Diario begins appearing daily, it should have a circulation of 60,000, about the same that El Mundo had at the time of its demise.
Del Valle says he plans to use many colorful photos and graphics to attract younger readers, many of whom do not read newspapers at all. Print size is also bigger than that of the other papers. In addition, he plans to lure advertisers of youth-oriented products such as liquor, clothing, sporting goods, autos and stereos by charging half of what El Nuevo D?a or the Star charge.
""Our target is to have no less than 56 pages, [though] I don't want to have a big newspaper full of ads,"" he said, referring to El Nuevo D?a, which sometimes carries 250 pages, mostly ads.
Editorially speaking, Del Valle says he wants a strong business section focusing on manufacturing, agriculture, tourism and the cooperative movement, as well as current issues such as Puerto Rico's political status and the future of Section 936 tax incentives, which provide most of the muscle behind Puerto Rico's industrialized economy.
He will also publish a bigger-than-usual paper on Fridays to circulate over the weekend, as well as a monthly, full-color magazine devoted to women. Del Valle says that El Diario will subscribe to the Associated Press and the Spanish news agency EFE, though ""We'll limit international news to two or three pages and use only stories that are relevant to Puerto Rico.""
The paper will employ 75 to 100 people full time, up from the 30 full- and part-time employees currently on staff. Already, Del Valle estimates, he has received over 1,000 r?sum?s from reporters, photographers, salespeople, graphic artists and others both in and out of Puerto Rico. Initially, salaries will not be nearly as high as those paid by El Nuevo D?a, but that could change too as the paper grows.
""According to our plans, we'll break even within eight months to a year,"" says Del Valle, adding that he will head the operation a year or so before turning it over to the other investors.
To all those people who say El Diario does not stand a chance ? and there are plenty of them ? Del Valle has one last thing to say: ""We're not going to fail."nE&P
?El Diario prototype
?He concedes that the bulk of his readership will probably come from among the 800,000 or so Puerto Ricans who voted for the PDP's
gubernatorial candidate last November and are now disenfranchised and ""without a forum.""
?(Luxner is a free-lance journalist based in San Juan, Puerto Rico.)