)
Dainik Bhaskar is one the largest newspaper groups in India, with 67 editions in three languages across 12 states. Last month, the group entered Bihar, launching a Patna edition. Girish Agarwal, the company’s director, talks about his growth philosophy with Krishna Kant. Edited excerpts:
How is the environment in the newspaper sector?In contrast to English language dailies, the local language media continues to do well. Be it Hindi, Bangla, Tamil, Telegu or Marathi, newspapers in regional languages continue to grow and attract more advertisers. We have been able to increase readership and ad revenue is growing despite the tough economic environment. Now, local language dailies are driving the sector.
According to figures by the Audit Bureau of Circulation, 90 per cent of the incremental growth in subscription and readership in the last years was accounted for by local languages dailies. This is because economically, tier-II and -III cities are doing much better than metros. About 10 year ago, the top six cities accounted for 70 per cent of the national consumption basket; now, it’s the opposite. Media planners and advertisers have noticed this and they are increasingly using local language dailies to reach consumers in tier-II and -III cities.
The shift is clearly visible in the ad pie. In 2003, English newspapers accounted for 60 per cent of the ad pie. Now, the ratio has reversed and this has enabled us to nearly triple our ad revenues in the last 10 years.
After entering the English language space through DNA, DB Corp seems to have lost in that genre.
We have not lost in English but have deliberately cut our exposure in that segment. After the 2008 financial crisis, we realised the English language market had begun to stagnate and growth shifted to local languages. So, we decided to sell our stake in DNA to our partner, the Essel group.
But English dailies continue to get a premium in ad rates.
Yes but the gap between English and Hindi has halved in the last decade; in a few years, it might vanish. In 2005, ad rates for English newspapers were 7.2x; this has declined to 4x. In the last seven years, our ad revenues have grown at a compound annual rate of 22 per cent, though this was partly due to the launch of new editions.
What about the threat from news TV, largely in regional languages, including Hindi, your bread and butter business?
We don’t compete with TV, an entertainment medium. Newspapers provide news and views and the two media are consumed differently. Newspaper reading happens in the morning, along with a cup of tea. Unlike a metro resident, a typical reader in a smaller town such as Patna or Bhopal has more time to spare in the morning. This is an advantage for us. Second, most people in smaller cities are from that region, and so, are more connected to regional developments. Their involvement in the paper is much higher unlike, say, in Delhi or Mumbai, where most people are immigrants. Also, TV mostly presents national news, while our editions are focused on local news.
There is a perception that ad revenues for television is growing at the expense of print?
This is completely wrong. The ad pie for both newspapers and television has shrunk in the last decade but latter share has fallen faster and the lead of newspapers over television has widened. In 2005, print accounted for 48 per cent of the ad revenues and 42 used to go to television. Print share has falln to 46 per cent now but TV is down to 38 per cent and radio now gets 4-5 per cent while online medium now accounts for 7 per cent.
I remain optimistic about print despite challenges such as rise of online medium but we are not a prisoner of a medium. We could make a switch to internet once it acquires a critical mass.
How do you assess the threat from internet given that every second reader now carries a smartphone or a tablet?
There is too much hype about internet but let’s look at the numbers first. As of now, the total internet or broadband penetration in India is to the tune of 7 per cent. And if you segregate metro and rest of India, this number goes down to 3 per cent. It will take years for this number go to 30-35 per cent which is the critical mass.
Secondly we need to understand what people consume online. I firmly believe that we are not in the business of newspapers but in the business of communicating news. Paper just happens to be a vehicle. We tomorrow we will be selling news on tablet or computer or the smart phone. We are preparing ourselves to make a transition to that environment.
But can you make money online the way you are used to make by printing and selling newspapers?
We don’t make money by selling newspapers but by selling ads in our newspapers. Advertisers give ads because millions of people chose to read our papers. The day we start getting a similar mileage online, advertisers will move online. But that is at least 10 to 15 years away. In the meanwhile, we are trying to improve our online presence and dainik bhasker is already one of the most visited news portal in India.
The biggest Achilles Heel for newspapers is to attract new readers in their network, isn't it?
The problem in India is historically newspaper penetration in India has been very low. There were at best one or just two newspapers in most markets and incumbents hadn’t invested in product or market development. Our growth strategy has been to grow the market and expand readership by customising the content and making it more relevant to the reader in that city or region. For example in the recent case of our Patna edition, the total market expanded by nearly 40 per cent on the day of our launch. We did the same in Rajasthan, Gujarat and Maharashtra.
You now have over five dozens editions. How much do you leverage content from one edition to the other so as to minimise the edit cost.
Our edit philosophy has always been to local as much as possible. We have a national basket but then it is left to the state editor to pick and tweak the story to suit the requirement of their editions. There is no fixed policy as to the ratio of national vs local content.
Secondly, all state bureau have their own reporters in key news centres such as Mumbai and Delhi. All of them cover national events independently and the same story may appear differently in different state edition depending on the preferences of the respective state and unit editors. We produce nearly 3000 pages of contents every day and most of these pages are unique. It is a wrong perception so say that by going national you can leverage national content and scale-up your investment in editorial resources.
