For newspapers in India, is it boom or gloom?

News about layoffs and recruitments being frozen abound even as circulation is growing

A new Audit Bureau of Circulations analysis shows that the sale of newspapers and magazines in India grew at a compounded annual growth rate of 4.87 per cent from 2006 to 2016. The latest Ficci-KPMG numbers too show that print media more than doubled to Rs30,300 crore in the same period. Why then are newspapers cutting staff and shutting down editions?

In January, HT Media’s Hindustan Times shut down seven of its editions and let go of dozens of people. In February, ABP laid off over 120 staffers including journalists from The Telegraph and flagship Ananda Bazar Patrika. There are stories of recruitments being frozen and growth plans on hold in several newspapers.

The reality is that print in India is a growing and profitable industry that is unable to deal with its internal fissures. “Print is growing in India compared to any other country. It has more than doubled in 10 years. That is what we wanted to display,” points our ABC Chairman I Venkat.

“Print wouldn’t have survived if there was no readership,” says Lokmat Media Managing Director Devendra Darda. Adds IPG Mediabrands CEO ABC Board Member Shashi Sinha: “The perception that print is beaten is strong, especially among foreign advertisers".

Many of these are headquartered in markets where print is in decline. And their spends are handled by agencies where young planners believe more in digital. This then is the first reason why print is generally dismissed.

“The impression is that large amounts of advertising goes to digital but the fact is TV and print together get over 74 per cent of all advertising,” points out Darda. After TV, print dominates India’s Rs126,200-crore media and entertainment industry. However, at Rs7,690 crore, digital ad spend is the fastest growing segment of the business.

Newspapers continue to grow for several reasons, the biggest being rising literacy (74 per cent currently), the primacy of the written word and home delivery. The developed world’s slide against the internet was rapid because there is volition involved in going out to buy a newspaper in the US or UK. Because of inexpensive labour, delivery costs are low in India.

In India, “the number of copies sold has increased from about 40 million to over 63 million in spite of cover prices going up by 10 per cent and more than 40-50 lakh copies being out of the ABC, given its stringent norms,” points out DB Corporation Director Girish Agarwal.

The second reason for the general aura of failure around print is the lack of metrics. Unlike the West, circulation has never been the chosen metric for advertisers. One copy of a newspaper is read by anywhere between 2 and 11 people in India. Readership, therefore, is a better measure of reach. For four years now, there has been no readership data because of publishers squabbling.

“The lack of data is making marketers believe that print is declining since there is no new data to disprove it,” says Nandini Dias, CEO, Lodestar Media. Without a metric in sight many advertisers have started reducing spends.

The third reason is just bad business calls, something that happens in any industry. However, when a newspaper shuts down editions, it is treated as a nail in the medium’s coffin. For instance, HT Media had been talking of cost rationalisation for two quarters before the axe actually fell. “Of the 800 publications (which are members of the Indian Newspaper Society), only two or three have laid off people. It is not a general trend,” points out Darda.

The ABC data shows that Hindi, Telugu and Kannada were languages with the highest growth. “Ten years ago, JPL had a circulation of 2.5 million copies, it is now more than 5 million,” says Jagran Prakashan CFO RK Aggarwal. He points to Mid-Day, one of the papers Jagran owns: “In two years, Mid Day has grown its circulation and ad revenues 8-9 per cent in Mumbai, a market where everyone believes newspapers are dead.”

 While English is far from dead, a look at the same ABC data over the last three years shows a slowdown.  “The rationalisation is largely by English media,” points out Darda. Hindi and other languages continue to grow. “In the next six months, we are expanding in Surat, Bihar and Rajasthan,” says Agarwal of DB. The headroom for growth is huge. There are 301 million newspaper readers against over 895 million literate people.

 The other challenge is digital, which has dampened advertiser mood and readership numbers both.  At over 391 million internet users, India is one of the fastest growing digital markets. Most publishers have a digital play that brings in 3-10 per cent of top line. However, because a bulk of the revenue comes from print, the time and resources invested in digital remain small.

You could argue that newspaper content drives traffic on Google or Facebook, which walk away with almost all the revenues. And that in spite of trying, the American newspaper industry hasn’t found a way out. So why bother?

Because with growth, healthy cash flows and a huge untapped market the Indian print industry has a better chance of cracking digital. If only it can learn to work together.