The truth "" that all is really hunky dory and there is no reason to be defensive "" came from Sam Balsara, the head of Madison, one of the largest media buying agencies in the country. He wondered why everyone was so full of despair. He pointed out that print has roughly 50 per cent of the ad pie, it is growing in double digits (on a growing base) and that all the indices (circulation, readership, ad rates) have been going up. So why is everyone so down? |
My guess is that two factors are at work. One, the industry in India is getting unduly influenced by the doom and despair hitting the newspaper business across the developed world. There is news every week about dropping circulation, revenues, and staff cuts at some newspaper or the other in the UK, Europe or the US. The news from the US is exceptionally bad. The industry has shrunk from $60 billion to about $50 billion in size. None of the hallowed brands, including The New York Times and The Washington Post, have been spared. It is possible that Indian newspaper owners, who have looked up to these brands for decades, feel depressed by the extent of the bad news.
Then, there is age. At over 225 years, newspapers are one of the oldest media businesses in India. It was only in 2005 that the industry was truly liberalised, when foreign institutional investment was allowed in print. This happened at a time when all media was (and is) booming simultaneously "" TV, radio, outdoor, Internet, mobile, cinema and print. Print barons are used to commanding revenues and readers by the sheer fact of existence. Competing for attention "" from investors, readers and media buyers "" is a new and difficult paradigm.
Well, they need to get on with it because facts don't support these gloomy sentiments. India and China are among the five largest print markets in the world. Both are seeing a positive growth in newspaper circulation. On the back of this growth and rising revenues, some of the top newspaper groups in India have operating margins upwards of 25 per cent "" a figure the American newspapers routinely got at their peak (down now to 18 odd per cent). At 20 and upwards, the price to earnings ratio of most listed print companies in India matches those of some IT and pharma majors.
On aggression, innovation (especially in marketing) and appetite for growth and risk, Indian print companies such as Jagran Prakashan and DB Corporation or Deccan Chronicle have outperformed most global majors. How many national newspapers in the US have spread across the country, grown across media and yet held steady on growth and returns? A Jagran, for instance, does 230 sub-editions, is planning to launch a business paper, is into outdoor, mobile, and Internet, and will probably get into any opportunity the market offers.
The fundamentals on the demand side also continue to be healthy. Literacy is rising, so is purchasing power. Newspapers reach over 38 per cent of Indians according to Hansa Research and the Indian Readership Survey (IRS). According to IRS data, while Indians are not necessarily reading less, they are spending more time on other media.
There is a contextual plus here that gets missed out while comparing India to the west. As a nation, we are just discovering what it means to be media-rich. Unlike the west, we are not an audience that is sated, cynical or bored. We are avid watchers, readers and listeners. We also happen to be one of the most vocal and involved democracies. (It explains why, unlike other countries, news is a robust genre in India). Since literacy is still prized, advertisers are willing to pay to reach people who read "" note the growth of small-town editions and the resulting growth of regional media companies.
The worry for newspaper publishers should be how best to capture this positive investor and reader sentiment to make more money, not the long-term life of the medium itself. To quote Keynes : In the long run, we are all dead anyway.
The author is a media consultant and author of The Indian Media Business. She can be reached at vanitakohli@hotmail.com
