IRS Q1 2012: Five talking points

1. Jacob Mathew, who is president of WAN-IFRA and executive editor and publisher, Malayala Manorama Group, India was speaking at Publish Asia in Bali in April.

He said: “Three-quarters of the world’s top 100 largest newspapers are published in Asia. A majority of those in India and China. Print circulations are growing, a fact that is not easily explained away by those who insist on predicting the death of newspapers.”

The recent numbers from IRS Q1 2012 fly against this comment. The top nine language (regional) dailies (which includes Mathew’s Malayala Manorama) have lost 5.22 lakh readers, totally. The popular Gujarat Samachar is the solitary regional newspaper to buck the trend. The ranking among the top 10 dailies remains unchanged; Top 10 Hindi dailies have added 3.95 lakh readers, while the English dailies have added 1.23 lakh readers. Numbers may be sluggish, but they reflect Jacob Mathew’s sentiment that “Millions of Asians - and indeed Indians - turn to their daily paper as their primary trusted source of news and information.”

2. The consolidation phase has begun. The numbers may not reflect it but there’s a clear buzz that no matter how much one invests into the chasm of print loss, you can’t recreate the goode olde days and compete with rival media and technologies.

In 2012, we saw alliances being set and newer strategies — with more realistic expectations — being unveiled. Change is being ushered. In the first quarter of this month, Jagran Prakashan acquired Suvi Info Management (Indore) at the close of business hours on March 31, 2012. Naidunia Media, which publishes the NaiDunia daily, is a subsidiary of Suvi. The Punjab Kesari Group is planning to raise up to Rs 150-crore from a private equity (PE) firm to help enter new markets. Plus the news of the Aditya Birla Group picking up 27.5% stake in Living Media.

The main thing is, as Kumar Mangalam Birla, chairman, Aditya Birla Group, says, “The media sector is a sunrise sector from an investment point of view. I believe that Living Media offers one of the best opportunities for growth and value creation.” But the other side of the coin is, awareness among publishing insiders that the old business simply is never coming back has almost sunk in.

3. The Indian newspaper industry is “guesstimated” at Rs 19,700-crore; and the print magazine vertical at Rs 13,000-crore, according to the Federation of Indian Chambers of Commerce and Industry (FICCI) and a KPMG joint-report. Hindi continues to dominate, what with five out of the top 10 dailies being published in Hindi. 

Although Dainik Jagran shows a marginal increment of 2,000 readers, the group's yearly numbers are a good indication of what is happening in this segment. The Hindi major has reported standalone operating revenues of Rs 1,244.41-crore for the financial year 2012, an increase of 11.57 % over the previous year. However, the net profit for the year slid to Rs 179.64-crore from Rs 205.83 crore in FY11. The net profit was impacted by steep increase in newsprint prices (Rs 57-crore), initial loss from the new brand Punjabi Jagran (Rs 12-crore), higher depreciation (Rs 9-crore) and interest cost (Rs 7-crore) during FY12.

Having said that Jagran Prakashan’s standalone ad revenues beat overall industry growth, growing by 10.90% in FY12 at Rs 850.01-crore from Rs 766.48-crore in the previous fiscal. Circulation revenues were up by 9.63% at Rs 244.47-crore from Rs 222.93-crore, while digital revenues (excluding ad revenues) stood at Rs 8.24-crore, up by 23.17% from Rs 6.69-crore.  Mahendra Mohan Gupta, chairman and managing director of the Jagran group stated in a press statement that with the Suvi acquisition, the group is achieving sizeable scale at a lower investment and shorter gestation period than is typical of the print industry.

4. According to KPMG, “Hindi plus key regional languages have a combined readership of eight times that of English newspapers. These two segments contribute approximately 60% to the industry’s revenue and cater to 89% of the readership. Together, they are expected to grow at a compounded annual growth rate (CAGR) of 10.9% over the period 2011-16, outpacing the English language market’s growth of 6.3%.”

Unlike the West which eyes two big revenue streams — advertising and circulation — in India readership does not translate into revenue. As one top publisher said to us: It’s time to search for smaller golden eggs. Given how news is gathered, organised and presented in India, that also suggests a rethinking of production role and workflow?

Are there new approaches that let organisations leverage their brand equity? Might we benefit from systems that allow smaller print centers and better outreach? We are seeing this trend with Hindustan (one of the gainers in the IRS Q1 2012). The Hindustan Times group has invested in five new presses at four centres in Gaya, Aligarh, Lucknow and Varanasi. This ensures 20 pages full colour broadsheet, daily. In real terms this has translated into: Hindustan, the Hindi daily of Hindustan Media Ventures Ltd, a subsidiary of HT Media Ltd that publishes Mint and Hindustan Times, saw a jump of 1,12,000 in readership over the last quarter. The total readership figure for the newspaper now stands at 3.84 crore.
 

The gains are a result of an aggressive expansion spree resulting in a pan-UP and Uttarakhand footprint with 12 editions covering the two states. With the launch of Aligarh edition in November 2011 and Moradabad edition in February 2012, the growth momentum in readership continues, according to a company release. We are seeing this trend with Sandesh in Ahmedabad (which is consolidating); plus the Marathi daily Lokmat at its Sholapur and Akola centres in Maharashtra. And the English daily, Assam Tribune in Guwahat and Sadin in Guwahati and Dibrugarh.

5. The English dailies saw a rise of 1.23 lakh readers. The big movers are: The New Indian Express (up by 41,000), The Tribune (by 39,000) and The Times of India (by 36,000). In fact with the exception of Mumbai Mirror(drop of 26,000), Deccan Chronicle (by 7,000) and The Hindu (by 7,000); all the other dailies  registered a rise in their readership numbers over the previous quarter. This was exemplified by the Bennett & Coleman group which signed a “two-digit million dollar sale” in May for its flagship daily, Times Of India. Today, Hindi plus key regional languages have a combined readership of eight times that of English newspapers. These two segments contribute approximately 60% to the industry’s revenue and cater to 89% of the readership. Together, they are expected to grow at a compounded annual growth rate (CAGR) of 10.9% over the period 2011-16, outpacing the English language market’s growth of 6.3%. Overall, the print industry is expected to grow 9% year-on-year, said Jehil Thakkar, partner and head of media and entertainment sector at KPMG in India, when he interacted with our team during the budget season in 2012. The key factor remains: advertising yield of print media players in the English and Hindi Sector. And more importantly, advertising growth for the sector.

 
Conclusion

Our view: Print editions is not vanishing anytime soon. Having said that most newspaper publishers in India are opting for two strategies.

- Outsourcing their day-time spare print capacity, or deploying extra capacity of their print facility to bring in commercial broadsheet or tab newsprint work as you can. 

- Many more publishers are looking at innovations to lure customers. It’s no longer through freemium techniques, but through customer engagement (specials, custom publishing, syndication) and making use of the newspaper’s brand positioning (events, awards, marketing services).

These may not be double-digit contributors to a newspaper company's revenues but these methods are ensuring that newspaper publisher does not let his power erode. Will the strategy work? Only IRS Q2 will disclose that.