Hindu slashes prices as ToI hits Chennai

After moving back and forth for nearly five years, the Grand Old Lady of Bori Bunder has finally arrived in Chennai and is set to change the media scene in this otherwise sombre port city.

The inaugural edition of The Times of India (ToI) hit the news-stands in Chennai on Monday with a front page lead story on Chief Minister M Karunanidhi launching the paper and an adjacent story criticising the state government's inaction in correcting the problem of polluted packaged drinking water in the city.

The battle lines have been clearly drawn for the Rs 1,000-crore Chennai advertising market, with established heavyweight The Hindu showing signs of putting up a fight to retain its share.

To start with, The Hindu slashed its cover price to Rs 2.50 on its weekday editions from Rs 3.25. Describing ToI as "a force to reckon with", the Rs 720-crore Kasturi & Son's (publisher for The Hindu) managing director, N Murali, said that this is hardly a defence mechanism but a mere factor of competitive dynamics. 
 

PRINTED COMPETITION
Publication	Circulation  in Chennai	All India
The Hindu	385,700	13,30,518
Deccan Chronicle	302,333	10,03,171
The New Indian Express	79,672	301,601
Source: Audit Bureau of Circulation for 1st July to 31st December 2007

Citing past instances like ToI's entry in Hyderabad and Kolkata, he said, "Market leaders have dropped cover prices. One has to be smart."

The Telegraph in Kolkata and Deccan Chronicle in Hyderabad have managed to retain leadership despite ToI's entry in the respective cities.

While this argument has some merit in it, it has also been proven wrong in Bangalore, where ToI managed to overtake local leader Deccan Herald though it took a little over 15 years to achieve that.

ToI for its part is not completely banking on toppling the market leader to take the pole position in Chennai. Bennett, Coleman & Co's director in charge of the ToI brand, Rahul Kansal said that there is sufficient scope to increase the reader base itself and he is willing to bet on a 2 to 5 fold increase in the base.

While the top three English mainline dailies suggest a reader base of close to 8 lakh in Chennai, the number could be closer to a million if one were to account for smaller publications.

However, the city's population as per 2000 census is close to 4.2 million or 8.5 lakh households (average of 5 persons per household).

Apart from the cover price cut forced on The Hindu, the entry of ToI has also cost quite a pinch on its wage bill. Salaries of staffers, in the advertising, circulation and editorial sections have been increased substantially to retain talent.

While Murali was unwilling to quantify this, sources in the group indicated a wage increase in range of 40-100 per cent have been made since March this year applicable to all group publications.

The Hindu has made good this cost pressure by hiking its ad rates by 15 per cent since April 1. "This has nothing to do with ToI's entry (in Chennai). This was done due to increase in newsprint cost and has been done by most newspapers," Murali defends.

Large Chennai-based advertisers like MRF toed a very careful line when asked about the ToI entry in the city. "I don't see that advertising in one publication needs to be at the cost of another. In fact one can complement the other," said a senior executive in the tyre company.

He added that MRF already has a long-term relationship with ToI in other cities and the Chennai edition will be added to it. Incidentally MRF is one of the largest advertisers in The Hindu with regular half page ads appearing in the publication.

Media analysts believe that ToI's is more likely to find its readers among the younger generation while The Hindu's readers would continue to be the conservative and older population. It is possibly with an eye of The Hindu's readers that the Times of India nameplate on the inaugural issue in Chennai had a steel tumbler with filter coffee.