Hearst-Izvestia Venture Closes p. 22

By: Jim Rosenberg Both companies hope for sufficient stabilization in
Russia to allow publishing of their newspaper to resume sp.

THE FORTNIGHTLY NEWSPAPER We/Mbl, printed in Russian and English and distributed in the United States, Russia and other former Soviet republics, ceased publication last month.
The colorful 32-page paper debuted in January 1992 as a collaboration of Hearst Corp. and the Russian company that publishes Izvestia (E&P, Feb. 29, 1992).
The original prototype led to an earlier attempted launch that fell victim to instability in what was then the Soviet Union (E&P, May 26, 1990).
Hearst Newspapers executives were not available for comment, but a statement from the company attributed the suspension of publication to Izvestia's "conclusion that the escalation of inflation produced skyrocketing . . . costs and caused the lack of economic pro-gress needed to sustain a free-market newspaper."
The statement said both companies hope for sufficient stabilization in Russia to allow their partnership to resume.
Hearst's New York office supplied a translation of a message to readers that appeared in the last Russian-language edition. It said publication was suspended temporarily in accord with a decision by the editorial board and by Hearst and Izvestia and blamed the economic situation for the closing.
The message cited the "gigantic leap in prices" in January in Russia, where "costs of newsprint, printing and distribution have jumped 500%."
The notice further said new "prohibitive taxes, protectionist custom duties and tariffs, and finally the new policy of ending 'market romanticism' " have caused private companies that depend on a market-oriented economy and advertising to "curtail their activities."
The message essentially said that by interfering with companies' abilities to conduct business, the Russian government was hurting sales of the advertising that supports a press independent of government or sponsoring organizations.
Terms of the Hearst-Izvestia joint venture agreement quoted in the published message identify direct and indirect government infringement on a free press as a basis for ending publication of We/Mbl.
The agreement also may be suspended because of actions by any government that "materially and adversely affect" the joint enterprise's ability to publish.
"We are not saying goodbye," the message concluded. "We are working hard to find a solution to meet with you again."
In the meantime, however, the paper's operation in Hearst's Washington offices was closed, and one person familiar with that operation said that although the Moscow-based edition may restart, the U.S. edition probably will not.
The separate Washington- and Moscow-based We/Mbl editorial staffs were linked by satellite. Separate but very similar editions were paginated electronically on desktop systems and printed by Izvestia's production arm and by Hearst's Midland (Texas) Reporter-Telegram (E&P, June 6, 1992, p. 18; Oct. 2, 1993, p. 24.)
The 20,000 copies circulated in the United States featured fine color reproduction on brighter, slightly heavier newsprint. Most were sent free to selected readers. Those who paid $26 for 26 editions received refunds for the undelivered balance of their subscriptions, We/Mbl marketing manager John Joly said.
The Russian-language edition circulated approximately 150,000 copies, most through newsstand sales. (Circulations in the United States and Commonwealth of Independent States, which is composed of former Soviet republics, settled during the past year from much higher numbers at launch.) Single copies typically sold for 60 to 120 rubles, often depending on whe-ther sellers bought on consignment or at the wholesale rate, business manager and technical director Walter Hempton said.
With Russia's economic situation and the ruble's continually plunging exchange rate, Hempton said, figuring equivalent per-copy costs in U.S. currency is not very meaningful. We/Mbl and most other newspapers remained affordable purchases, he said.
Where the paper was sold, it sold out within hours. In spring 1992, Hearst Newspapers vice president and general manager Robert Danzig said, "We've really been struck with the celerity with which [We/Mbl] has just been vacuumed off the newsstands in Russia."
At least two-thirds of Russian-language sales were in Moscow and St. Petersburg. The remainder were spread east into Siberia and southwest to cities in Belarus and Ukraine.
Though the paper received initial advertising commitments from several large corporations, its fortunes fell as the newspaper industry's advertising slump persisted. More recently, however, as the downturn began to abate, advertising returned to the pages of We/Mbl.
The fate of the Washington-based staffers could not be determined. Editors expected to return to the office in early March did not return calls for comment; messages left at the homes of co-editor Maxwell McCrohon and managing editor Frank Cook were not answered.