Rising newsprint cost forces publications to defer launches, raise advertisement rates.
# Metro Now, the English language paper for Delhi, born of a joint venture between HT Media and Bennett, Coleman and Company (BCCL), has deferred its plan to enter the state capitals. It has reduced its print run for the Delhi region and shelved the idea of a Sunday paper for the time being.
# BCCL’s designs to take its flagship publication, The Times of India, to smaller towns after launching the daily’s Goa, Chennai and Jaipur editions this year, are also on the back burner. It had plans to start editions in southern and central India.
# Business Standard has shut down the newly-launched Rajkot edition of its Gujarati paper.
Indian newspapers are the cheapest in the world. They may not stay that way as publishers have started announcing price increases to neutralise the impact of record newsprint costs.
Many publishers are postponing expansion plans, while some are jacking up advertising tariffs to neutralise the higher costs. These are testing times for an industry that has seen rapid growth in the last few years, but is now forced to consider cutbacks of various kinds.
Though few newspaper proprietors and executives admit it, many publishing houses are holding back their expansion plans, thanks to a 50 per cent newsprint price hike in the last six months.
“The current newsprint crisis is affecting the expansion plans of print media companies. They will not venture into new markets, and capacity additions will be deferred if not shelved,” says Mohit Jain, director (business and commercial) at BCCL, the country’s largest publisher.
Rajeev Verma, CEO of HT Media, declines to specify whether his company has put new editions on hold, and/or calling off circulation drives for Hindustan Times, Hindustan and Mint.
“It’s not our strategy to talk about changes, if any, in our plans,” he says. The company had announced the Kolkata launch of its business daily, Mint, then changed its mind and returned money that had been taken from subscribers.
The Mid Day group’s chief financial officer, Manajit Ghoshal, does not link the increased input costs to the company’s current focus on the web, but he says that there will be only one new edition of Mid Day this year. The paper was launched in Pune on Monday.
Meanwhile, in the eight months since its launch, Mail Today, the compact daily from the India Today group, hasn’t ventured beyond Delhi. At the time of its launch, the company talked about a presence in 20 cities.
Ashish Bagga, group CEO, India Today, says Mail Today is yet to zero in on the cities it wants to enter. “We have not shelved our plans, though I agree that the print media industry is not as bullish as it was last year,” he observes.
The company that is busy swimming against the tide is the publisher of the Daily News and Analysis (DNA), which was launched in Mumbai three years ago, and in Pune a few months ago. Diligent Media Corporation, which owns DNA, is now readying for the daily’s Bangalore launch.
If other newspapers’ growth plans are badly hit, so are their profit margins. A regional newspaper proprietor, speaking on the condition of anonymity, said that his paper’s profit has plummeted from Rs 90 crore to about Rs 40 crore, owing to spiralling newsprint costs.
“The valuations of media companies have gone for a toss, too. If things don’t change, the print industry will be wiped out,” says BCCL’s Jain.
In fact, the shares of print media companies such as Jagran Prakashan and HT Media have been under pressure, cost inflation being one of the reasons. Between March and August 2008, the HT Media stock price dropped 36.6 per cent, more or less in line with the Sensex which lost a third of its value, while the Jagran Prakashan stock saw a 46-per cent drop.
In an unusual response to the newsprint price surge, the Indian Newspaper Society (INS) has advised its member-publications to reduce their newsprint consumption by 20 per cent. H
owever, newspapers have not waited for INS guidelines, and many have already taken action. Business Standard has cut its number of pages on some days, according to its president Akila Urankar. “We have also increased our cover price in some markets by 50 paise,” she adds.
Others too are raising cover prices. The Economic Times, which too has become slimmer than before, has increased its cover price to as much as Rs 4 in Pune, and by smaller amounts in some other editions (it is Rs 2 in most other markets).
The Times of India’s combo price in Mumbai (and several other markets) has also gone up from Rs 4 to Rs 4.50. However, in the intensely- competitive Delhi market, arch rivals HT and ToI are each waiting for the other to blink first and announce a price hike. The Outlook group, meanwhile, has increased the cover price of Outlook Money from Rs 20 to Rs 30.
INS office-bearers met the information and broadcasting minister last week to press for a 50 per cent increase in the rates for government advertising.
Priyaranjan Dasmunsi promised action within a week, indicating a tariff increase of 30 per cent. Meanwhile, some publishers have increased rates for non-government advertisments by between 25 and 40 per cent. “Advertisers will find it difficult to absorb the cost,” says Sejal Shah, vice-president at the buying company Indian Media Exchange.
She feels that the increased ad rates may push brands to switch to television and radio, or other mediums. She cites the case of an airline company which has halved its Rs 15-crore spend on print. It is now preparing to launch a television commercial. “Retail clients are also shifting money to TV,” says Shah.
Ashish Bhasin, India chairman of the Aegis Media group, does not agree. “Print is strong in India. People will accept the new rates after some initial resistance, unless, of course, advertisers start conserving their budgets on account of a slowdown,” he adds.
BCCL’s Jain says that advertising growth may have slowed down for some players. “It hasn’t happened as yet, but we may see a 10 per cent drop in volumes owing to the price increases,” he says.
With newsprint prices showing no signs of softening in the next six months, and revenue streams at risk, these are challenging times for Indian newspapers.
6 months ago