Battleground Tamil Nadu: the coming newspaper wars

Tamil Nadu's English newspaper market is set to sizzle with the impending launch of "The Times of India" and the "Deccan Chronicle" this year, giving "The Hindu," and "The New Indian Express" a run for their money.

The Tamil Nadu newspaper reader should prepare for a new tsunami "� but this time of a more pleasant kind. After decades of placid existence, the English newspaper market is set to sizzle with the impending launch of "The Times of India" and the "Deccan Chronicle" this year, giving "The Hindu," the current market leader by far, and "The New Indian Express," a distant also-ran, a run for their money.

Both existing newspapers have reason to lose some sleep: given the deep pockets of Bennett, Coleman & Co Ltd, publishers of "The Times of India," and the "Chronicle's" recently-raised IPO war chest, price wars are a near certainty.

Nobody's sharing any secrets as yet "� not the incumbents, not the challengers "� but few people expect the battle to be anything but bloody. Firing the first salvo will be the Andhra Pradesh-based Deccan Chronicle Holdings, which expects to launch editions of the "Chronicle" in Chennai and Trichy in 2005, with Coimbatore following later. 
 

Readership in Chennai and Tamil Nadu
As per NRS 2003, there are primarily two newspapers in the non-financial English broadsheet category in Tamil Nadu "� "The Hindu," with an all Tamil Nadu adult readership of 1,510,000, and The New Indian Express, with an all Tamil Nadu adult readership of 222,000 The readership of "The Hindu" and "The New Indian Express" in the same category for Chennai was 898,000 and 98,000, respectively, for 2002 Average net paid sales, as per ABC, of English newspapers in Chennai and Tamil Nadu
CHENNAI
The Hindu	197,947
The New Indian Express	18,648
TAMIL NADU
The Hindu	435,734
The New Indian Express	46,810
Source: ABC certificates, July-December 2003

While the Chennai edition may hit the stands some time between February and April 2005, with a possible initial print run of 1,00,000 copies, "The Times of India" could follow a month or two later, perhaps with an inaugural run of 1,50,000 copies.

With investments of Rs 40 crore planned for setting up two printing presses, the "Chronicle's" initial Tamil Nadu launch and marketing blast will cost it an additional Rs 10 crore "� Rs 3 crore in year one and the rest in year two, according to the draft red herring prospectus issued by the company before its recent public issue.

As for The Times of India," the bruising 10-year battle for market leadership fought against "Hindustan Times" in Delhi serves as an ominous pointer to what's in store in Chennai.

Says Delhi-based Bennett, Coleman director R Sundar: "We will be in the market (Tamil Nadu) within this year." He doesn't talk about Bennett, Coleman's actual war strategy, but points out that "10 years ago we were insignificant in Delhi compared with "Hindustan Times." We not only grew 'The Times of India' in Delhi but also pushed the English newspaper market in the city up from four lakh to 20 lakh copies a day," he adds.

T Venkattram Reddy, chairman of Deccan Chronicle Holdings, is playing his cards close to the chest. But that's his style, confirms a source in the Deccan Chronicle group. "The strategy for Tamil Nadu may be known (at best) to four people in the company," he points out.

Though the "Chronicle" is Andhra Pradesh's largest circulated English daily (circulation: 380,093, ABC, January-June, 2004), media observers are not betting on an easy entry for it in Tamil Nadu. Reason: it is already under pressure from "The Times of India" on its home turf.

"If it (the "Chronicle") does not move fast, it may end up being like "Hindustan Times" in Delhi and "Deccan Herald" in Bangalore, both of which have lost substantial market share in their home turf," says one media observer.

No one can, however, blame Reddy for targeting Tamil Nadu, currently monopolised by "The Hindu." N. Murali, joint managing director of Kasturi & Sons, "The Hindu's" publishers, claims that the newspaper enjoys a 90 per cent share in Tamil Nadu's English newspaper market. This automatically makes it a juicy target for challengers.

Says a "Deccan Chonicle" insider: "'The Hindu' may be the leader but it has a circulation of 2.5-3 lakh in the Chennai market. The untapped potential is huge."

Bennett, Coleman's Sundar would second that. According to him, Bennett, Coleman has always had its eyes on Chennai, but "it's only now that the time seems ripe."

Two reason why. One is cost, and the other is the growing revenue potential.

Thanks to digital communication, launching a new edition is no longer expensive as pages can be zapped across cities through satellite and land-based lines. A newspaper that has one edition in one city can print elsewhere without incurring major overheads once again.

This is how newspapers like "The Asian Age" and "The Hindu" have launched several editions with one mother edition taking on the overheads. Given the availability of cheap printing capacities in many cities, the only major costs involved in launching new editions relate to marketing and distribution.

"The Deccan Chronicle" IPO prospectus says as much: "Our Tamil Nadu entry is motivated by the current state of the market, geographic proximity to Andhra Pradesh and the possibility of achieving economies of scale."

The other reason Chennai is attractive is the growing size of the advertising pie. According to media estimates, the English newspaper market in Tamil Nadu is worth nearly Rs 300 crore a year in terms of advertising.

The biggest chunk of advertising comes from the retail industry. Apart from the big boys of retailing, regional retail brands such as Vivek, Vasanth and Jainsons are major print media advertisers. Mobile service companies, two-wheeler brands, consumer durables and financial services are also significant spenders.

Unlike "Deccan Chronicle," though, Bennett, Coleman believes in making larger investments. It is said to be investing between Rs 100 crore and Rs 150 crore for setting up the infrastructure, mainly the building and the printing press. "For a new market, the promotion and marketing costs are also big," says Sundar, without confirming the budgets.

A newspaper industry veteran, speaking on condition of anonymity, feels that the "Chronicle" group is likely to face rough weather despite its first-mover advantage over "The Times of India."

For one, the time gap between its launch and "The Times of India's entry is not likely to be more than a month or two."

'The Times of India's' strategy is to obtain a foothold in the major cities and then to spread to smaller towns. 'Deccan Chronicle' plans to set up two printing centres in Tamil Nadu without having a strong footing in Chennai. This may put a strain on its strong financials on its home turf (Andhra)," he adds.

Murali also sees "The Times of India" as the bigger threat. "'The Times of India's' entry in Chennai is only natural and it's not a surprise. (Competing with) 'The Times' will be a completely different ballgame from doing so with 'Deccan Chronicle.'"

He contends that 'The Times of India's' brand awareness is significantly greater than the 'Chronicle's,' which, he feels, will have to start from scratch. Tamil readers are already familiar with" The Times of India's" brand through its financial newspaper, "The Economic Times."

Murali concedes that it will be a tough fight as "The Times of India" is known for its aggressive marketing strategies, "which we have witnessed in markets like Bangalore and Hyderabad." Not surprisingly, he declines to share "The Hindu's" own battle plans.

Executives at "The New Indian Express" were also not available for comment on "The Times of India" and "Chronicle" threats. The newspaper, in a defensive move, slashed its cover price by half to Re 1.50 four months ago.

Will "The Hindu" lower prices if the "Chronicle" does so? Murali's reply: "Pricing alone does not influence readership; it also depends on the brand equity of the newspaper."

Pointing out that "The New Indian Express's" price cut has not affected "The Hindu's" market share, he goes on to say: "If people bought one newspaper at Rs 3 earlier, price cuts may allow them to buy two for the same cost."

In the long term, though, price cuts will work only if advertising revenues kick in to cover losses on printing and paper. While the Chennai advertising market is certainly looking up, Krishna Mohan, president (Chennai & Hyderabad) at advertising agency Ogilvy & Mather, feels there isn't room for so many players.

"The size of the print media advertising market in Tamil Nadu cannot afford four players." Besides, it may not be easy for outsiders to crack the market. "Tamil Nadu is very different from any other market that 'The Times of India' may have entered."

It's a far more conservative market. New brands will really have to work hard to make a dent on "'The Hindu's' stronghold. "The migratory population may prefer to read "The Times of India" compared to "The Hindu," but that would be a small per centage," he adds.

The key is classified ads, feels Mohan, where readers are often advertisers. Currently, "The Hindu" is the market leader in this segment by far. Murali adds that large advertisers prefer to advertise only in the leading newspaper.

"The Hindu" is known as a serious newspaper and for catering to readers in age groups above 35. "The Times of India," meanwhile, is targeting the 15-40 age-group, where experts feel there may be an unexplored market waiting to be captured. This is why "The Hindu" has launched various supplements to cater to younger readers.

"We have been constantly evolving and innovating to cater to our readers," says Murali. "To be successful in the long run, the credibility of the newspaper is important. If we were not credible, we would not have survived for 126 years," he adds.

With a marketing juggernaut ready to push its way through at one end and an entrenched market leader, at the other end, limbering up to defend its turf at all costs, the Tamil Nadu market may soon find that three is a crowd. Four definitely is.