The Indian Newspaper market, with its near 8% CAGRover the past 6 years, has been well-insulated from the doom and gloom that has pervaded the Western newspaper industry. Thanks to the increasing number of neo-literates and a rapidly growing middle-class, there is considerable demand for the print product (110mn+ copies a day, a 21% global share and the largest in the world) even as the western world has seen double digit declines over the past 6-7 years.
With another 300million people yet to become literates, there still seems sufficient headroom for growth, says Robin Jeffrey, author of India’s Newspaper Revolution. In fact he thinks there is another 10-15 years of growth left in the Indian newspaper industry before what happened in the West repeats itself here.
Given all this, it wouldn’t have been uncharacteristic if newspaper company executives and their bosses attending the recent INMA (International Newsmedia Marketing Association) South Asia conference at New Delhi (7-8 August ’12) were to swagger around pompously and perhaps indulge in some self-praise. Yet strangely enough, there was humility in the air, or was it fear?
Perhaps the present mild recession or downturn had something to do with it. Or maybe it was the constant talk about digital and reinventing yourself, which is the constant refrain at newspaper conferences (thanks to the international speakers, no doubt). Or maybe it is because, some parts of the Indian newspaper industry have already begun to face some of the challenges that its counterparts abroad were undone by.
The state of the Indian newspaper industry
While the Hindi / Regional press has continued to see growth, though not uniformly – Hindustan Media Ventures which publishes Hindi daily Hindustan was up 7% in Q1 FY13 over the corresponding quarter of the previous year; Jagran Prakashan which publishes Dainik Jagran, India’s highest read daily was up 4% for the same period whereas DB Corp which publishes Dainik Bhaskar was down 1% – the English papers, especially the business papers have begun to face headwinds. While some of these headwinds are attributable to a gloomy macroeconomic outlook and the general belt-tightening that has begun among Indian corporates, there is strengthening belief that there are some secular, structural headwinds amongst these as well.
These secular headwinds emerge on account of 1) increasing digital penetration amongst the affluent leading to lower time spent on print consumption 2) growth story moving from the cities to the hinterland – most readers of the English dailies in Metros have all the white goods and financial products that their advertisers would want them to buy.
The first impact of these secular headwinds has been on the magazine industry. The magazine industry has always been an insignificant part of the media industry in India (it was about 1/10th of the Print industry about 7-8 yrs ago, is about 1/20th now). Of late, internal sources state that the revenues of some of the larger players such as Living Media (India Today Group), Outlook Publishing etc have fallen sharply. (Please note that this is not based on any financial releases – as both are private companies and numbers are hard to come by – but on hearsay.)
After the magazine industry, it is now the turn of the business press. The issues are similar – limited audiences (unique readership for all business papers will India will be around 1 million) with a large proportion of male readers who now have other more exciting, instantaneous options to get the same information / insight – though lower cover prices, ad bundling with other general interest papers etc., will ensure that the impact is lessened.
The larger English newspapers and the language press should be safe for the next 10-15 years though. With low cover prices, a reasonably large audience (The Times of India alone delivers 7.5 million readers a day) for each, sufficiently proactive ad sales teams, presence in high-growth Tier 2 and 3 markets etc, there should be sufficient traction here to keep headwinds at bay. Sufficient time to build a prospering digital business hopefully
What happened at INMA
The two-day INMA conference was a mix of the mostly familiar (speeches from newspaper chieftains) and the odd quirky (getting Nandan Nilekani to talk on identity, Santrupt Mishra from the AV Birla Group to talk on culture). And there were some interesting points made. Here are some of the more prominent ones.
Ravi Dhariwal, CEO – The Times of India Group
There is a need for newspapers to collaborate more and compete less. Newspaper could
- Come together to create a digital offering (similiar to CareerBuilder in the US)
- Come together to create a joint advertising offering to FMCG – one rate for all papers – compete with TV
Nandan Nilekani, Chairman – Unique Identification Authority of India
- Just as mobile liberated the person geographically from the pov of communication, creation of UIDAI helps in creating an identity that is liberated from a geographical basis.
- Businesses should develop products or build out businesses keeping in mind the thought that their consumer is always mobile. (Any implications for Real Estate?)
Shashi Sinha, CEO – Lodestar Universal
- Lack of power / electricity in hinterland is the friend of the Print industry . UP sees 12-hr powercuts and TV ads are just not visible hence – this has not been leveraged by the print industry
Mayank Pareek, Chief Operating Officer – Maruti Suzuki India Limited
- Maruti’s print spend has moved from 67% of overall spends to 23% in 5 yrs. TV has moved from 24% to 65% in the same period. TV effectiveness is much better.
- Car buying age has come down by 8 yrs in the past 5 years. This is phenomenal and is possibly unheard of elsewhere (China?)
MJ Akbar, Editorial Director – India Today Group
- A newspaper is like a thali – you need daal, rice, achar, veggies etc – but all of that is needed in certain proportions. You cant replace all of the rice with achar!
Santosh Desai, MD & CEO –Future Brands Limited
- ‘Order-making’ and sense-making of events is a key role that newspapers play – even after a disaster, people read the newspaper to get a grip on the incident . They want to hold the paper and get a sense of the proportion.
- In reality, brands are terrified of people and want to avoid all human contact. Hence we see IVRS systems with no access to human interface increasingly.
Rakesh Sharma, CEO – Aaj Samaj
- In many rural markets, our newspapers don’t reach as there are no delivery boys – NREGA has impacted access to cheap labour. Also rising aspirations mean that they are not interested in newspaper delivery job. Going forward newspapers will have no choice but to spend more money on hiring delivery boys.
Javed Jabbar, Chief Executive – JJ Media, Pakistan
- Beards and Hijabs (increasingly seen in Pakistan) are cultural markers, and not religious ones. People are assaulted by change as the society around them is transforming at a furious pace, and in such times people want to connect back to their roots
- TV is a bigger and vibrant sector than Print in Pakistan, with about 106 channels. English news channel by Geo was shut down though. English media overall is declining but English medium education is in big demand.
An Indian CareerBuilder?
Of the above, Ravi Dhariwal’s suggestion about newspapers pooling in their online offerings (classifieds) to take on the Online players is interesting. There is a precedent in CareerBuilder, the leading international online classifieds site operated by newspaper conglomerates Gannett, Tribune and McClatchy.
With revenues of $556m in 2010, and monthly uniques of 24-26m, it is USA’s #1 job listings site, ahead of Monster and Indeed. Interesting to note that Careerbuilder paid a dividend of $7.5m to McClatchy in 2011 (for its 14.4% stake). This would mean that it paid out $50m overall in dividends – clearly a site making sufficient money!
There is scope to explore a similar alliance to take on InfoEdge (naukri.com) which with its 416crs revenue and 122crs profits in FY12, is the most successful online classifieds site in India. As against this, HT’s shine.com is <50crs (basis FY12 reporting). While I do not have data on Times Jobs, it is unlikely if it is to be anywhere close to Naukri’s; so perhaps there is perhaps an advantage to be gained by pooling in with shine and other newspaper job sites to create a common site.
 Basis KPMG report on Media & Entertainment, Print (newspaper + magazines) sized at Rs 16,000crs in ’07 and 23,100crs in ’12. Works out to CAGR of 7.6%.