Newspapers: Trends and strategies

The print industry has recently been in the spotlight. The Q3 FY12 results didn’t look too pleasing and had some of the media giants hitting the panic button and signing deals to survive the rainy days.

Mukesh Ambani’s RIL will sell a portion of its stake in Eenadu TV (ETV) to Raghav Bahl-promoted Network18 for Rs 2100 cr in cash. This will see them catapult in the same bracket as Bennett Coleman & Co and Zee Network, who has a JV with Dainik Bhaskar Group for DNA newspaper. Meanwhile Jagran Group’s buyout talks with Hindi newspaper Nai Dunia seemed to be one way for the regional newspaper to break into new territories.

Desperate times saw ad rivalry, earlier seen in the food and beverages industry like the one between Coca-Cola and Pepsi, spill into the newsprint industry with The Times of India and The Hindu facing off against each other. The quarter also witnessed newspapers like the Telugu newspaper Saakshi increase their prices in order to survive the globally increasing paper prices.

The Media Research Users Council and Hansa Research announced The Indian Readership Survey (IRS) for this financial year’s Q3, which saw Dainik Jagran rule the roost with 1 crore  64 lakh readers. Dainik Bhaskar, Hindustan, Malayala Manorama and Amar Ujala maintained their top five positions.

Dainik Bhaskar Corp
The publication reported a sales turnover of Rs 1095.49-cr as compared to last year’s Rs 913.54-cr but the net profit went down from 203.42-cr. The total revenues grew by 14% y-o-y to Rs 395.6-cr in Q3 against Rs 348.2-cr of Q3 of last fiscal but net profits declined by 28% to Rs 55.4-cr in Q3.

When asked about the group’s performance over the last quarter, Prasoon Pandey, head- investor relations, DB Corp, commented, “The recent launches of Jharkhand and Maharashtra are better than expected lines, in terms of readership and revenue scale. Over all, we added around 8 lakh new readers, as per Q3 2011 IRS numbers. This has further widened our lead as a newspaper group with 1.92 cr readership per day, over our nearest competitor. We witnessed impressive growth in all our major markets.”

Pandey claims, “In digital apps, the company’s Hindi website has become the largest website in terms of number of page views.”

He adds, “Currently, we are not in a position to give 2012 guidance on advertising growth, due to fast changing dynamics of the market on daily basis. However, we strongly feel, with the government and RBI intervention in terms of policy and rate corrections, and with improvement in the sentiments and resultant consumption back in the high territory zone, we, being the largest player in each of our major markets, are positioning ourselves to maximise the benefit of the same.”

In real terms, the publication reported net sales of Rs 391 cr, 13% higher y-o-y and 11.4% up on quarter-on-quarter. The growth was driven by healthy advertising revenue which grew y-o-y by about 15% to Rs 865.1-cr from Rs 754-cr along with a strong growth from circulation revenue.

Accoring to Pandey, advertising revenues have increased by approximately 9% y-o-y to Rs 305.9-cr in the current period from Rs 281.5-cr in Q3 last fiscal.

In September, the group acquired MP Printers and in December, a 2.7% stake in Edserv Softsystem (an IT training services providing firm) for Rs 15 cr. Also it bought the e-learning online content of Prosel Ventures for Rs 35-cr.

Deccan Chronicle Holdings Limited\The Reddy-owned company is the publisher of the English daily Deccan Chronicle, with a presence across Andhra Pradesh, Tamil Nadu and Karnataka. The company which publishes other English newspapers like The Asian Age and Financial Chronicle and Andhra Bhoomi, reported a sales turnover of Rs 231.59-cr in Q3 FY12 as compared to Rs 199.61-cr in Q3 FY11 despite the increase in inflation, showing a healthy y-o-y growth. It also showed a quartert-on-quarter increase compared to Q2’s 225.8-cr sales.

The net profit recorded for the quarter was Rs 21.33-cr, a marginal increase over the previous quarter and a loss compared to previous year’s Q3 result of 35.18-cr.

The publisher though ranked as the fifth-most read English newspaper according to the latest IRS report. Its current AIR stood at 10.94 lakh in IRS Q3 2011 compared to 10.88 lakh in the last round. The marginal increase of 6,000 readers in the quarter, reflected the topsy turvy trend in the industry, which previously had seen it lose 38,000 readers in Q1 2011 and then an addition of 53,000 readers in IRS Q2 2011.

HT Media Limited
The HT Media Limited publishes three dailies, which include its flagship brand Hindustan Times, the business newspaper Mint and the Hindi publication Hindustan. The group boasts of other media such as online portals like ‘HTCampus.com’, ‘Shine.com’ and ‘DesiMartini.com’ and radio, with its brand Fever 104 FM, having its presence in four major cities. In December, the group launched an exclusive iPad app for its publication Mint.

Saudamini Bagai, manager – communications, HT Media, comments, “The company performed exceptionally well, both operationally and financially, even more so considering the tough global economic environment. Year-on-year, our readership has grown across the board in Q3 2011.”

She adds, “Readership for Hindustan Times grew by 6%, Hindustan grew by 11% and Mint grew by a whopping 41%. Furthermore, all of our publications have been the fastest growing in their respective categories. On the financial front, our revenues grew by 14% primarily driven by a strong 11% growth in advertising revenues.”

The company reported a 7% increase in circulation revenue of print segment, from Rs 47.1-cr to Rs 50.3-cr driven by higher circulation and realisation.

As per the latest round of the IRS 2011 Q3, Hindustan Times continued to grow its readership, to strengthen its position as the No.2 English daily, behind The Times of India, despite losing 4,000 readers. The total readership figure for the newspaper stood at 3.75 cr, which is an addition of 44 lakh readers in the past year compared to IRS Q3 2010 results. Its AIR grew from 35.17 lakh in Q3 of  2010, to 37.33 lakh in Q3, 2011 - an addition of 2.16 lakh average readers per issue – the highest by any English newspaper. Hindustan Times had previously added one lakh readers in the first quarter of IRS 2011 and 45,000 in Q2 2011 to get to the second spot.

The group’s chairperson, Shobhana Bhartia, states, “The latest Q3 IRS results are a reflection of HT Media’s continued strength in the print media segment. We are confident that our strong and resilient business model, established brands and sustained cost optimisation will continue to create value and show good leverage as the macro economic environment improves.”

Bagai adds, “We have registered strong growth in readership across all our print brands.  This has been on account of strengthening our existing editions as well as gaining traction in new editions.  On the digital front, we have continued our investments on building capabilities and coming out with new products and initiatives. During this quarter, we launched iPad apps for Hindustan Times and Mint, which have received an extremely positive feedback from users. Our focus lies squarely on reader satisfaction and fulfilling the needs of our consumers, and we have had an excellent quarter in that respect – as evidenced by readership growth and appreciation for our new products.”

Talking about the ad ex growth for the current year, she said, “It is very difficult to give any specifics about advertisement growth in 2012. Advertising is strongly linked to the overall GDP numbers. This year advertising was slightly muted as the economy was going through a slowdown.  If the economy experiences an upswing in the coming year, we will also see a corresponding further pickup in advertising as well.”

HT Media’s business newspaper, Mint consolidated its No. 2 position as the business newspaper in Q3. The business daily grew by 41% over the last year, to 2.53 lakh daily readers.

Jagran Prakashan Limited
Dainik Jagran which has “preferred partner status” with leading media agencies as the most read and circulated daily in India, is India’s most read newspaper as per the IRS results. The other popular brands run by the group include, Jagran City Plus, Mid-Day and The Inquilab among others.

Jagran Prakashan, whose top management did not respond to our emails and phone calls, reported net sales of Rs 326-cr, a growth of 6% quarter-on-quarter and 13% y-o-y with a healthy 14% ad revenue  growth to Rs 233-cr in Q3FY12. 

The group’s net profit was Rs 41.3-cr, declining by a sharp 21% over Q3FY11.

The company provided the following pointers for the quarter’s results which are indicators of how the newspaper industry is growing:

i)          Newsprint forms the bulk of production cost and its standardisation is crucial for efficient production. Increase in newsprint prices by 15.44% (nearly Rs 14 cr).

ii)         Increase in circulation of Dainik Jagran 6.64%.

iii)        Launch of Punjabi Jagran, which resulted in losses of Rs. 2.96 cr

iv)        Depreciation of Rs 1.90  cr,

v)         Continued planned expansion of digital business and investment therein

vi)        Inflationary trends

The firm witnessed 9% circulation revenue growth for Q3 FY12.

Our view
In our interaction with The Hindu and Malayala Manorama, what emerged is papers are keen to create new things every day to attract new customers. This includes new variables in the equation – tablet and mobile (refer to the below box).

Today, CEOs are articulating their position on the importance of advertising at forums. This includes K Balaji, the managing director of Kasturi & Sons, publisher of The Hindu, who will examine successful print advertising strategies and campaigns at the 22nd World Newspaper Advertising Conference.

Likewise there is Shailesh Gupta, the marketing director for Jagran Prakashan, who will describe the company’s approach to newspaper marketing, including how it works in an advisory capacity to advertisers throughout the country who will spaek at the same conference.

The complexities of newspaper production have increased globally in the publishing industry. Especially in India, the increase in circulation, more number of editions means that the need of the day is efficient, consistent, high quality production and the choice of strategy.

Digital - The way ahead for Indian newspapers
Raw material hikes along with the digital revolution have changed the way newspapers are communicating. From an era of purely mass communication, we are now in a generation of personal engagement.

Digital apps seem to be the way forward, as Supreeth Sudhakaran reported in an interview with Mariam Mathew, chief operating officer, Manorama Online (Malayala Manorama).

Mathew said, “I am a firm believer of content not being given away for free. Paywalls are imperative. Although, in India we may take longer to implement it. In 2012 a lot of media outlets around the world are going paid as most of their customers have moved online. The Times, NY Times etc. have shown that you don’t have to be a niche product like the Wall Street Journal and Financial Times to charge.”

She says, “There are different kind of business models to make content pay and each product will have to customise the paywall according to the kind of content they produce, the user base and the usage habits.”

When asked about the country’s lack of digital devices across all sectors, she replied, “Volume is an issue due to penetration and hence the pay models will have to evolve over time. A purely pay model will not work until there are volumes so there will have to be a mix of advertising plus subscription. For newspapers to survive they will have to look at the product in its entirety i.e. print plus digital combined and then come up with a comprehensive revenue strategy.”

Mathew finished off explaining the opportunity to tap the regional market, saying, “Malayala Manorama has been at the forefront of the digital revolution and has always looked at it as a strategic part of our business and not as something that we had to do. This is the reason why we have one of the largest digital presence in the country despite being a vernacular product. We are today the only company that has started charging for our digital content.  We are platform agnostic and are there- in all the products be it iOS products or Android.”

The Indian newspapers with mobile apps include:  Aaj Tak, Amar Ujala, Andhra Jyothy, Andhra Prabha, Assam Times, Business Standard, Business Today, Dainik Bhaskar, Dainik Jagran, Dainik Navajyoti, Deccan Herald, Dinamalar, Dinamani, Divya Bhaskar, Economic Times, Eenadu, Hindustan Times, India Today, Indian Express, Jagran, Jagran Post, Kannada Prabha, Loksatta, Malayala Manorama, Mangalam, Manorama, Mathrubhumi, Mid Day, New Indian Express, Prajavani, Punjab Kesari, Sakal, Sandesh, The Hindu, The Telegraph, Times of India

The tale of two newspapers
The Hindu was well-entrenched in Chennai when The Times of India, in November, initiated an aggressive campaign for its Chennai edition, titled ‘Wake up to The Times of India’.

The TVC, created by Taproot, highlighted scenes from a Tamil lullaby in a satirical way to project that the readers of Chennai have been reading tedious-pedantic-boring newspapers –  and it’s time they switched to TOI’s Chennai edition.

On the idea behind the campaign, Priya Gupta, vice-president, Times of India (brand), said, “This campaign was particularly relevant to the Chennai market because our competitors in Chennai are essentially about ‘handouts and handshakes’. We, on the other hand, are devoted to bringing out interesting news. So, the idea was to underline to the consumer that if he’s stuck with boring news, he should switch to TOI Chennai.”

Cut to January 2012. After a longish silence, The Hindu decided to fight back, by embarking on a 360 degree campaign spread across TV, radio, print, outdoor, digital and on-ground activities. It launched its campaign ‘Stay ahead with The Hindu’, which featured responses from readers of competitor newspapers. The campaign used the brand’s “heritage and credibility” to highlight the present state of Indian journalism.

The TVCs, created by Ogilvy, featured responses from a sample survey. The questions ranged from politics to sports and music, and while they got all the answers wrong, all of them gave the right answers for questions related to Bollywood. The last question posed to all the respondents was about the newspaper they read, with the responses beeped out. The film ended with the catch-line ‘Stay ahead of the times’.

Simi Sabhaney, president, Ogilvy Bangalore and Chennai, explained, “It was important for us to get people to re-evaluate their current choice of media and switch to The Hindu. The new trend in Indian journalism, is genuinely dumbing down the society at large. And The Hindu is the only media institution that has the heritage and credibility to raise this issue. These are actual answers that these people have given us when we posed the questions. This is a disturbing fact. It represents a cross-section of our society”

The Times of India played a smart hand again by releasing another ad in their newspaper saying, “We congratulate the competition to finally waking up to The Times of India”.