Bengali newspapers: a price war brewing

Bengali newspapers: a price war brewing
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First Published: Wed, Aug 15 2012. 12 30 AM IST

Graphic by Ahmed Raza Khan; photograph by Indranil Bhoumik/Mint
Graphic by Ahmed Raza Khan; photograph by Indranil Bhoumik/Mint
Updated: Fri, Aug 17 2012. 12 02 AM IST
Kolkata: During the weekend, ABP Pvt. Ltd and Bennett, Coleman and Co. Ltd (BCCL)—India’s two leading news corporations—took turns to proclaim a price war between two Bengali newspapers to be launched in September, capping months of speculation and a mad scramble for outdoor advertising boards in Kolkata.
BCCL announced on Saturday through its flagship publication The Times of India that its new Bengali newspaper, Ei Samay (literally, Times Now), is to be a broadsheet priced at Rs 175 for the first six months, or less than Rs 1 a copy. Within a day, ABP said it would launch a tabloid—the first in Bengali, it said—priced even more aggressively at Rs 150 under an inaugural six-month offer.
To the dismay of other advertisers ahead of the festive season, billboards at all key intersections of Kolkata have been taken for the next few months by ABP and BCCL as they square off to fight the price war on all fronts.
Both are to have lean editorial teams—most of the content is to be derived from the existing newsrooms of the two organizations, but adapted to appeal to new-generation urban readers with a significantly different taste from the readers of Anandabazar Patrika and other established local-language newspapers in the state.
That BCCL was preparing to launch a Bengali newspaper has been known for several months. Even its aggressive pricing wasn’t a secret—newspaper vendors have been soft-peddling Ei Samay among potential readers for weeks now.
ABP’s tabloid, Ei Bela (literally, This Moment) was kept under wraps until Sunday, though journalists have been speculating over it for weeks. The reason: ABP couldn’t afford to look the other way, and it was impossible for it to fight the price war with its flagship newspaper Anandabazar Patrika, which sells 1.25 million copies a day.
Anandabazar Patrika, the highest circulated Bengali newspaper with an estimated daily readership of 5.9 million, is priced on weekdays at Rs 4, and at Rs 5 on Saturdays and Sundays.
For ABP, the financial implications of reducing Anandabazar Patrika’s cover price to Rs 1 would have been devastating—it would have shaved off around Rs 30 lakh a day from the company’s revenue, net of vendor commission.
And the war may not end in six months, according to a former ABP executive, who did not want to be named. BCCL’s Ei Samay will be selling only a few thousand copies a day initially, and the company could extend the inaugural price beyond the first six months.
Graphic by Ahmed Raza Khan; photograph by Indranil Bhoumik/Mint
What is more, newspaper vendors would not have taken kindly to a cut in Anandabazar Patrika’s cover price—it would have substantially affected their income as well. Newspapers pay at least 25% of their cover price as distribution commission—a cut on Anandabazar Patrika’s cover price would have led to a huge decline in vendors’ earnings, unless ABP agreed to compensate them for the loss. But that, too, wouldn’t have been a sustainable arrangement, according to the former ABP executive.
Watch Video
Bennett, Coleman and Co. Ltd, the publisher of The Times of India, and ABP Pvt. Ltd, publisher of Anandabazar Patrika, have proclaimed a price war between two Bengali newspapers to be launched in September, capping months of speculation. Mint’s Aniek Paul and media consultant A.S. Raghunath tell us more
In the early 1990s, Bartaman—the second most read Bengali newspaper—had reduced its cover price by 50 paise on the back of a fall in newsprint prices. The result: Bartaman’s distribution was disrupted for months across West Bengal because the Centre of Indian Trade Unions—the labour arm of the Communist Party of India (Marxist)—rose up in arms, opposing the newspaper’s cut in distribution commission.
“A war on the cover price can only be fought by creating incremental income for the vendors,” said the former ABP executive. Vendors are important because they influence purchase decisions significantly. “They hold the key for impulse buying to convert into repeat buying,” he added.
Timing
The timing of BCCL’s launch of a Bengali newspaper is “intriguing”, according to an editor of Anandabazar Patrika, who, too, declined to be identified. “You wouldn’t normally expect a news organization to launch a newspaper when advertisement revenues are weak.”
But it seems to be a “strategic decision”—BCCL is taking on ABP at a time when the latter’s finances are stretched—it was indebted to the tune of Rs 480 crore until about a year ago, which is a big sum considering that its net profit has never exceeded Rs 50 crore in a year—and the group has fallen out with the state’s one-year-old Trinamool Congress government for daring to criticize it.
Until last year, Anandabazar Patrika was at the forefront of newspapers rooting for an end to the Left Front’s 34-year rule in West Bengal. But the paper has since become a bitter critic of the government led by Mamata Banerjee, not known for her tolerance of dissent. Editor-in-chief Aveek Sarkar has also been forced to obtain anticipatory bail, according to several ABP editors, who didn’t want to be named. Sarkar could not be reached for comment.
ABP’s managing director and chief executive officer D.D. Purkayastha refused to comment. So did BCCL’s executive president Bhaskar Das—he did not answer phone calls or reply to text messages sent to his mobile phone.
“What could well determine the success of Ei Samay (BCCL’s Bengali daily) is its ability to use newspaper vendors to its advantage,” said the head of one of India’s oldest advertising companies. He, too, did not want to be identified. The vendors are unionized, and if BCCL manages to get political backing for the launch of its Bengali daily, ABP’s circulation team could end up fighting “an unsavoury battle” on the streets of Kolkata, he added.
Bartaman
For years, BCCL has been circling the Bengali newspaper market. Some six-seven years ago, it tried to acquire Bartaman, which currently sells more than half a million copies a day. It made several offers, according to Subha Dutta, its editor. But the late Barun Sengupta, the newspaper’s editor at that time, refused to sell out.
BCCL had made a “compelling offer”, according to the head of the advertising agency cited above, through the late Jit Paul, a Kolkata-based philanthropist and entrepreneur, who was a close friend of Sengupta. “We encouraged him to sell out, but he refused, citing his emotional attachment to Bartaman,” he added.
Eventually, when Sengupta was unwell, he approached ABP’s Sarkar offering him control of Bartaman. “He wasn’t sure that we could run the newspaper after him,” said Dutta, Sengupta’s sister. “But we persuaded him to change his mind—we are glad that he did so.”
For ABP, it would have been a “prize catch”, said the former ABP executive cited above. “Bartaman would have been perfect expansion for Anandabazar Patrika,” he said. Bartaman has earned the loyalty of its readers by being a steadfast critic of the state government—it was as critical of the Left Front regime as it is of the current government.
Bartaman would have brought to the ABP group readers that Anandabazar Patrika could not, on its own, acquire,” said the former ABP executive. The two are different papers with a different sets of readers—the plan was to keep them separate—but if ABP could buy Bartaman, it would have given it “almost monopolistic control” over the Bengali newspaper market.
After Bartaman’s owners withdrew their offer to sell the newspaper, ABP trained its eyes on another Bengali daily. After nearly a month of discussions with its owners, ABP gave up, recalled its former executive.
Unlike ABP, Bartaman remains unfazed by the new publications. It is, however, concerned that it may lose some key people from its editorial team. “Our readers are different and are unlikely to be swayed by these new publications,” said Dutta, while admitting that Bartaman couldn’t afford to cut its cover price.
“However, with every such launch, we are reminded of the need to find new readers, but that, honestly, is a perpetual challenge,” she added.
Anandabazar Patrika, too, has been struggling to expand its circulation—lately it has fallen a bit because of its inability to live up to the expectations of the “urban youth”, said the editor of the newspaper cited above. “Many urban homes have switched to English newspapers, and our new offering, if successful, could get some of them back to read Bengali newspapers,” he added.
Turf war
Concerned that Anandabazar Patrika, its main money-spinner, could someday face competition on its own turf from BCCL, ABP has several times planned to expand into markets dominated by The Times of India with its English daily The Telegraph, according to the former executive cited above. “At times you need to attack to defend—who knows it could have resulted in a mutually convenient arrangement of keeping each other’s turf inviolate,” he added.
But ABP’s plans to take the fight to BCCL’s turf did not materialize.
“For one reason or the other, it didn’t happen, and some say that ABP’s management chose to defend its turf passively,” said this person, adding that the biggest constraint was raising the money to launch new editions of The Telegraph—the company had to borrow to build printing facilities and later to expand in television, which the management thought was a better bet.
He was referring to ABP’s acquisition of a controlling stake in Media Content and Communications Services (India) Pvt. Ltd (MCCS), which runs news channels in Bengali, Hindi and Marathi—earlier under the Star brand. The company is now fully owned by ABP, which recently bought out the stake of Rupert Murdoch’s News Corp. in MCCS.
But even MCCS hasn’t brought in much money for ABP—at the end of fiscal 2011, it had an accumulated loss of Rs 250 crore.
Because it could not expand outside the eastern region, ABP was unable to secure a larger share of the money advertisers spend through newspapers. According to the head of the advertising agency cited above, ABP receives at best 5% of the advertisement revenue of all Indian newspapers put together, while that for BCCL would be around 40%. This gives BCCL immense pricing power.
Securing revenue for its new vernacular daily is not going to be difficult for BCCL: it has traditionally sold space through packages combining editions of The Times of India and other publications, according to the head of the advertising firm. Yet, BCCL may not able to determine advertisement tariffs for Bengali newspapers until at least two-three years later—it will need that time to build readership, he said.
The publications of HT Media Ltd, the publisher of Mint, compete with those of BCCL and ABP in some markets.
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First Published: Wed, Aug 15 2012. 12 30 AM IST
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