11/5/2014

Indias newspapers shrug off industry woes - FT.com

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August 13, 2013 9:00 am

Indias newspapers shrug off industry woes

By Victor Mallet in Kolkata, India

Newspaper executives in the US or Europe can only fantasise about the problems confronting their Indian peers: how to source the extra
newsprint for rising circulations and catch the eye of the millions of new readers each year.
Chennai and Kolkata are a long way from Boston and Washington, where two of the best-known US titles were sold this month the
Boston Globe for only $70m, less than a tenth of the price the paper fetched a decade ago.
In India, first-year students still peruse the monsoon-damp pages of The (Calcutta) Telegraph and proprietors wage newspaper wars from
Hyderabad to Lucknow to snatch their share of a growing cohort of readers. Last year was seen in the industry as exceptionally tough
because newspaper and magazine revenues rose only 7 per cent as the countrys economy slowed.
Yes, but we are used to 15 per cent growth, says DD Purkayastha, chief executive of ABP, one of Indias largest media groups.
Advertising growth has also been fairly handsome in the past decade.
This is a country with hundreds of profitable daily newspapers in a plethora of languages. Dainik Jagran
(Daily Awakening), a Hindi newspaper that is the top-selling daily, boasts a readership of more than 16m.
Profits even in slower times like these seem to be holding up, says Jehil Thakkar, head of media and entertainment at KPMG in India.
They are down from the boom years, but they are still within 8-14 per cent [for after-tax profit margins].
In the US, newspaper advertisement revenues have fallen every year since 2005 and at $22.3bn last year are now less than half what they
were then, according to the Newspaper Association of America.
Indias population of 1.3bn is not only growing but also becoming more literate. Print continues to take the lions share of media
advertising 46 per cent or Rs150bn ($2.4bn) of the total advertising pie of Rs327bn, according to a report published by the Federation
of Indian Chambers of Commerce and Industry and KPMG. Over the next five years, Indian print advertising revenues are forecast to
grow at more than 10 per cent annually.
The latest driver of newspaper circulation is a push by media groups into vernacular languages and hitherto neglected towns and villages.
Average newspaper penetration in India is low at 14-15 per cent, says Mr Purkayastha, but while in cities, penetration exceeds 70 per cent,
in the countryside it is as low as 5 per cent. Those people are getting literate and they have started reading newspapers.
Manas Ghosh, editor of the 10-year-old Bengali-language edition of The Statesman, a Kolkata daily dating back to 1875, says Indian
papers have begun championing local causes and reporting local affairs to attract new readers. His paper backed the vociferous (and
successful) campaign against the building of a Tata Motors car factory on Bengali farmland to make the Nano, a small car now assembled
in Gujarat on the other side of the country.
The strength of vernacular dailies in India is the strength of the coverage given to districts, which is not done by the English dailies, he
says.
All good things, however, must come to an end. Although forthcoming elections will make the next 12 months another boom time for
the Indian print media, says PN Vasanti, director of research group CMS, Indias economic slowdown has forced proprietors to recognise
the vulnerability of their business model.
People who go and
watch television more
go back to check facts
in print. Thats a very
unusual
phenomenon
- PN Vasanti, director of research
group CMS

Its not as hunky-dory as it looks from the outside, she says. The business is not so rosy. The cost of printing
has gone up.
The cover prices of Indian newspapers are among the lowest in the world. Even premium English-language
titles such as The Times of India sell for the equivalent of less than 10 US cents a copy. That makes profits
excessively dependent on volatile advertising income.
One surprise, including for newspaper groups that invested in them, is that the countrys 100 or more
television news channels many of them sensational and argumentative have not done more damage to
readership or advertising revenues.

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11/5/2014

Indias newspapers shrug off industry woes - FT.com

The more television channels we have, the more people are going back to reading, says Ms Vasanti, who calls
it the appetiser effect of TV. People who go and watch television more go back to check facts in print. Thats a very unusual
phenomenon that doesnt happen anywhere else in the world.
As in Washington, Boston or London, it will be the internet and mobile devices that finally kill the old-fashioned newspaper, although
Indias dailies should continue to thrive until accessible broadband internet reaches the parts of the country where newspaper circulation
is currently rising.
The web is more of a threat to the English-language newspapers, says Mr Thakkar, noting that internet penetration in vernacular
languages is still very low. The English-language reader tends to behave much more like the western counterpart.
Mr Purkayastha of ABP says: The order will be first the big metros, followed by the smaller towns, then the rural areas. That process may
take 15 years.
We keep on innovating. We know the tsunami is coming.
Additional reporting by Jyotsna Singh
RELATED TOPICS Indian Society

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