‘Achhe din’ for newspapers?
There is enough runway for newspapers to grow in India’s highly fragmented media market
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It’s official. English daily The Indian Express, owned by Viveck Goenka, is not up for sale. Anant Goenka, wholetime director of The Indian Express Ltd, head of new media and son of Viveck Goenka, clarified that the paper was not being sold either to News Corp. or to Reliance Industries Ltd, as rumours over the months have suggested.
He claimed that the company had posted a good profit in 2014-2015 and said there was no reason or desire to sell. The company’s flagship brand The Indian Express was redesigned this week (its tagline “journalism of courage” will soon be replaced by a new one). Its Marathi newspaper Loksatta posted a 25% jump in advertising revenue and has ramped up its circulation.
The company has also invested in its own new office building in Noida, on the outskirts of Delhi. In short, the mood of the publishers is upbeat.
Uttar Pradesh-based Hindi daily Amar Ujala is similarly buoyant about its future. Its initial public offering will help it raise money for expansion into states such as Rajasthan, Madhya Pradesh, Punjab and Haryana. Diversification into news television, with channels for UP and Uttrakhand, may also be on the cards. Its advertising revenue grew by 18% and a distinct digital push is evident in the company’s move to establish real estate, matrimonial and jobs portals for consumers in smaller towns.
Executives at Bennett, Coleman and Co. Ltd, which publishes The Times of India and The Economic Times, say that the year gone by was good for the industry and fabulous for the company, which is likely to report a profit before tax of close to Rs.1,500 crore. Advertising revenue for the company grew at 8%.
Nine out of the top 10 newspapers listed in the 2014 Indian Readership Survey saw their readership numbers increase, although several major newspapers have rejected the findings, citing technical flaws in the data.
The positive outlook of newspaper publishers—though not all may agree that growth is healthy—does not mean that the digital media and other challenges peculiar to the industry have vanished. Yet, a number of English, Hindi and vernacular newspapers say that the year was fairly good. And the future may be better.
Take a look at some of the research reports that spoke of the performance of print last year. This Year, Next Year, a report by WPP’s global media and planning firm GroupM, said the print industry grew 7% in 2014. However, C.V.L. Srinivas, GroupM’s chief executive in South Asia, quickly added that the report does not make a distinction between newspapers and magazines, or Hindi, vernacular and English languages newspapers. Magazines declined, but newspapers may have done better on the back of advertising support from categories such as e-commerce, automobiles, telecom, packaged consumer goods, education and healthcare.
The packaged consumer goods category, a big television advertiser, is increasingly reaching out to consumers in smaller and upcountry markets via newspapers. New retail advertisers are also expected to use print. Another report released by industry lobby Federation of Indian Chambers of Commerce and Industry (Ficci) and consulting firm KPMG pegs the growth of print slightly higher at 8.5% in 2014 over 2013. It is projected to increase at a compounded annual growth rate of 9.7% between 2014 and 2019. In 2015, the ad revenue is projected to touch Rs.19,200 crore.
To be sure, the print medium may get the biggest share of the advertising pie, but it has been steadily declining over the years to the current 43%.
It’s not difficult to see why newspaper publishers are not complaining. The promise of a stable government, which took charge in mid-2014, is driving positive sentiment about the Indian economy. That may also be encouraging businesses to build brands. Besides, newspapers have innovated too. They are open to large format ads with premium positioning that is attracting a host of advertisers, especially in the e-commerce sector. The 2014 Lok Sabha election spending also boosted newspaper revenues.
Newsprint prices stabilized in 2014, with the cost declining by $70-80 per tonne. Every rupee saved on newsprint adds to the publisher’s bottomline.
That is not all. Growth for newspapers came not from the six metros, but from the smaller markets and cities. Advertisers are expected to use print as a medium to reach their audiences in tier II and tier III cities and rural markets that are seeing rapid urbanization. Brands in product categories such as consumer durables, food and personal care are in demand in these markets.
According to the Ficci-KPMG report, the print industry saw its circulation revenue rise on the back of increased cover prices and subscriptions. This was helped by low media penetration, population growth, and rising income and literacy levels. Even now, there is enough runway for newspapers to grow in terms of volume and revenue in India’s highly fragmented media market.
The optimism of newspapers is justified. Things look good for some time to come, says GroupM’s Srinivas.
(HT Media dailies, Mint, Hindustan Times and Hindustan compete with newspapers mentioned in this column in some markets.)
Shuchi Bansal is Mint’s media, marketing, and advertising editor. Ordinary Post will look at pressing issues related to all three. Or just fun stuff. Respond to this column at email@example.com