Can The Hindu continue to lead the market for English newspapers in Chennai?
Within three years of launch, The Times of India (TOI) claims to sell 245,000 copies in Chennai, just 30 per cent short of The Hindu’s 356,000. That makes TOI a close number two. Says Rahul Kansal, chief marketing officer at the Rs 5,000-crore Times Group, India’s largest media company; “We are giving The Hindu a close run for its money.” “The Hindu’s circulation and readership have increased in recent years. There hasn’t been the kind of negative impact predicted,” rebuts Siddharth Varadarajan, editor, The Hindu.
The glee in media circles is palpable. Advertisers, publishers and investors are readying for another slugfest a la Kolkata (The Telegraph versus TOI) or Hyderabad (Deccan Chronicle versus TOI). The competitive Rs 18,000-crore Indian print media market usually sees one erupting every few years.(Click here for PAPER WARS)
The battle for Chennai, however, is more than a skirmish. For the Rs 935-crore Kasturi & Sons (KSL), which owns The Hindu, it is its bread, butter and identity. An estimated 90 per cent of its revenues and arguably all its profits come from The Hindu and its 17 editions.
The TOI plays to script
The TOI entered Chennai in 2008 with its usual tactics. It slashed prices, overpaid hawkers and then ran an ad campaign last year, saying that if you are a TOI reader, you are young and with it. And, if you read The Hindu, you are probably falling asleep over the newspaper.
Last month, The Hindu, released an ad campaign attacking TOI. The ads show a series of interviews, with people asking questions like, ‘What does the UPA stand for? Who is Ratan Tata’s successor?’. Most people are unable to answer these, even as they quickly respond to, “Who has a size zero? What is the gender of Aishwarya Rai’s child?” In the end, they are asked to name their newspaper. The bleeped out answer: The Times of India. ‘Stay ahead of the times,’ exhorts the ad.
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“The campaign aims to stand up for the responsible, well informed journalism The Hindu represents,” says Varadarajan.
Industry observers across the board reckon that The Hindu, which has made significant design, content and distribution changes since TOI came in, need not have done this. No one, not even TOI managers, question the quality of The Hindu’s editorial and its connect with local issues and advertisers. “If The Hindu can prevail in The Hindu home, then there is no threat from competition. For an advertiser, TOI makes more sense if it is combined with the rest of its editions,” says the head of a large media buying firm .
Most newspaper battles are predictable. They burn large amounts of capital to buy circulation, subsidise price cuts and get a few additional readers.
In the past six years, while the circulation of English newspapers has gone up 70 per cent, readership has crawled by just two per cent. The gains in higher advertising revenues go only to the top two brands. In Chennai, too, just like in the other markets, TOI will end up becoming the second paper. So, why react?
The Hindu’s Achilles Heel
Says N Murali, director, Kasturi & Sons and former senior managing director; “When revenue is stagnating, you are spending on mocking competition. This is high-risk advertising.” He has raised the two big issues that will bog The Hindu in its battle with TOI.
One is profitability. From about 13 per cent in 2006-07, KSL’s profit after tax has fallen to three per cent in March 2011. It is fighting a company five times its size, with very little money in the bank. You could argue that investors will be happy to give it money. About five years ago, KSL decided to raise $100-million, in a bid to build a war chest ahead of the TOI’s entry. But things did not work out.
Two, whether it is to raise money, be aggressive or hire an outside editor, KSL seems at war with itself. A recent conflict between the shareholders, for instance, took the Company Law Board two long years to resolve.
This new aggression, then, comes from a company dealing with its own internal conflicts. If KSL can resolve those, the Chennai market should be a cakewalk.