Chennai: As a journalist who has covered conflicts out of Afghanistan and the erstwhile Yugoslavia, Siddharth Varadarajan is unruffled by his latest warzone.
Mount Road in Chennai isn’t a battlefield but the 46-year-old Varadarajan does have a scrap on his hands in his latest role. As The Hindu’s first editorial head in almost 50 years who isn’t a member of the family that owns the newspaper group, Varadarajan is leading the fight to regain territory that has been yielded to The Times of India in its own backyard.
The editor has tried to put his stamp on the paper by tweaking the editorial and op-ed pages, apart from seeking to make cover stories more compelling. The efforts are just the beginning of a makeover exercise for the Mahavishnu of Mount Road—a sobriquet the newspaper earned for its preachy editorials.
“The presence of a big player like The Times of India with very deep pockets has made us all alert,” Varadarajan said in an interview in his spartan new office off a dark, first-floor corridor at Kasturi and Sons Ltd’s (KSL) headquarters on Mount Road.
Agent of change: The Hindu editor Siddharth Varadarajan. Photo: Saisen/Mint
Apart from the editor, the family-controlled KSL has also hired Arun Anant as its first chief executive to stoke the restoration campaign on the business side. The CEO’s entry coincided with the January launch of The Hindu’s aggressive advertising campaign poking fun at what it implied was The Times of India’s lowbrow appeal. Those ads were a belated reaction to The Times of India’s commercial taking a dig at what it depicted as a mind-numbingly boring paper.
Siddharth Varadarajan talks about his new role at The Hindu and taking on the competition.
Varadarajan has a six-eight month plan that includes better news packaging, local-language podcasts and a soon-to-be-launched edition for schools.
Meanwhile, Anant aims to extract Rs 100 crore from existing costs and boost circulation growth.
“The process of effecting change when you are long distance and not top of the food chain is difficult,” Varadarajan said, referring to his shift to Chennai from Delhi six months ago. “I interpret my move here as a mandate to make a lot of changes in the style and functioning of the paper.”
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The 134-year-old publication is seeking to rebuild after a bruising struggle within the family over allowing top posts to slip from family control and going to non-family professionals. N. Ram, who was the main proponent of the changes and stepped down as editor-in-chief in January, prevailed in the tussle.
The move was partly sparked by competition from The Times of India, the country’s biggest English-language newspaper that’s published by Bennett, Coleman and Co. Ltd (BCCL).
The Times of India, for instance, was launched at a Rs 300 annual subscription—a cover price of less than Rs 1, compared with Rs 3.25 for The Hindu’s weekday Chennai edition at the time. Currently, The Times of India is available for between Rs 1-2.50, while The Hindu sells for Rs 3 apiece.
In the four years since its 2008 launch in Chennai, The Times of India has notched up a 2.5 lakh daily circulation, just a little over half of The Hindu’s 4.2 lakh, according to company data and media buyers.
Agent of change: Arun Anant, CEO, Kasturi and Sons Ltd. Photo: Saisen/Mint
The profit after tax for the year ending March will halve from the year-earlier figure of Rs 78 crore, according to company documents obtained by Mint.
At Rs 35.32 crore, the fiscal year’s estimated profit will be closer to what it used to be in 2003, based on Centre for Monitoring Indian Economy (CMIE) data. Moreover, overall newspaper profits in the country have also come under pressure, owing to sluggish advertising growth, pegged at 12-14% in the second half of 2011, or half the peak 2007 level, according to accounting firm Ernst and Young. The jump in newsprint and labour costs hasn’t helped.
The Times of India meanwhile has widened its assault on The Hindu’s southern bastion with editions launched in Madurai, Trichy and Coimbatore in Tamil Nadu last year. In February, it opened another front by launching an edition in Kochi, Kerala.
“While The Hindu is a good brand name, ToI (The Times of India) continues to hog its market,” said Timmy Kandhari, who heads the Indian media practice of accounting firm PricewaterhouseCoopers. “In addition, newspaper circulation is expected to slip in another 5-10 years. Nobody wants to invest in a market that’s losing steam and most investors are looking at online media.”
In 2011, consulting firm McKinsey and Co. had recommended that KSL turn to professionals as part of a revamp strategy and sell shares to the public or seek private equity (PE) investment to fuel growth. But with tensions still simmering on the board, fund-raising plans may be on the backburner.
Varadarajan, formerly The Hindu’s Delhi-based national bureau chief and alumnus of the London School of Economics and Columbia University, was aware about McKinsey’s recommendations. Still, the former New York University Economics professor was surprised at his elevation in April 2011, seven years after joining The Hindu from The Times of India, and subsequently disconcerted by the three-month-long litigation that it triggered between factions on the board.
Varadarajan moved to take over the reins only in July last year, after the Supreme Court refused to intervene in the family dispute. He moved to Chennai in October after opposing family members and directors withdrew their petition against Ram’s plans to bring in a non-family editor.
The incumbent has tried to improve interaction between reporters and editors to tweak presentation by expanding the use of photos, graphics and interviews. He has sought to smarten up and sharpen the front and views pages before getting to grips with the rest of the paper.
Since January, there’s also been a push to reach out to Tamil and Telugu speaking audiences through podcasts of translated content from The Hindu.
The school edition of the paper will be launched in April, in line with McKinsey’s advice to build a stronger education platform. The consultancy’s recommendations were expected to help take The Hindu’s total circulation to 23 lakh in 2016 from 16 lakh in 2011, while reducing KSL’s dependency on the print media business to 84% from 100%. McKinsey forecast a 2.5 times jump in revenue in five years to Rs 2,500 crore, leading to a ninefold increase in profit after tax.
KSL’s publisher K. Balaji, Ram’s cousin, believes the group is on track to achieve that target with the recent changes.
“We are professionalizing our management structure and we hope to fast-track our growth plans,” said Balaji, son of G. Kasturi, a third-generation editor of the paper. “The south is our stronghold and we hope to firm (up) our position here.”
Apart from The Hindu, non-family editors have also taken over at the group’s other publications—The Hindu Business Line, Frontline and Sportstar.
Soon after the confirmation of Varadarajan’s appointment last year, a committee comprising KSL directors Balaji, R. Ramesh and Nalini Krishnan began the hunt that ended with Anant. Until he took over, the managing director—most recently Balaji, who became publisher after Ram’s resignation—oversaw the business.
Before joining KSL, Anant was business head of The Economic Times, the Bennett, Coleman-owned No. 1 business daily, and CEO of business channel Bloomberg UTV. More recently, he was promoter of a private equity consultancy. The publications of HT Media Ltd, which publishes Mint and Hindustan Times, compete with those of Bennett, Coleman and KSL in various markets.
For Anant, the move from Mumbai has meant a chance to work in his birthplace, where his parents still live, besides getting a chance to lead the revival of a brand with great potential, he said.
The CEO wants to strengthen the brand in Tamil Nadu, Kerala and elsewhere besides adding readers to The Hindu’s online offering, reputedly the first website set up by an Indian newspaper. He expects any fund-raising plans to commence only after the needful housekeeping is done and conflicts are resolved.
“The moment a private equity investor comes in, there is friction with the board as the PE guys are looking for a multiple to exit and promoters don’t share that thought,” said Anant, a graduate of the Indian Institute of Management, Ahmedabad. “Since this is imminent, obviously, the PE group would expect that in the promoter group there isn’t a divergence.”
Meanwhile, the aggression of The Hindu’s ad campaign has been noted in the rival camp.
“By and large most newspapers are not nimble footed and are usually content being a rigid monopoly but we’ve seen competitor after competitor get smarter,” said Rahul Kansal, chief marketing officer, BCCL.
There are divisions within the Kasturi Rangan family over the tactics, however. Ram’s estranged brother Murali, who resigned as KSL’s joint managing director in August, is dismissive about the effort.
“What is the use of talking of leadership and taking on ToI when the need is to look inwards,” Murali asked. “ToI has made inroads into our advertising revenue.”
That loss is worrisome at a time of weak predictions for growth in advertising—a key newspaper revenue source. India’s newspaper industry posted advertising and subscription revenue of Rs 16,000 crore in 2010 and is expected to grow at an annual 9% pace, better than the expansion in developed countries but lower than the 17% jump in 2007, according to a 2011 PricewaterhouseCoopers report.
In the short term, economic uncertainty threatens to erode advertising revenue further for all newspapers.
Under the circumstances, vision may be more critical than who’s in charge, according to Jehil Thakkar, a Mumbai-based media consultant at KPMG.
“I don’t think it matters whether a company is promoter-driver or professionally run,” he said. “What’s important is for media groups to diversify their portfolio into, say video, and radio and also into other regional languages, and advertising will follow.”