Jan 30, 2009

Business - Bucking the trend: Print players surge ahead, slowdown or not

Swapna Rahul Shah

While a lot has been written about how the slowdown is adversely impacting different sectors, the situation is not without some positive developments taking place along side. Print players, too, have had to bear the burden of the slowdown coupled with hike in newsprint costs. There have been job cuts, pay cuts, launch and expansion plans put on hold.

However, the focus of this report is on bringing out some of the strongest positive aspects of this slowdown for the print industry. Some media experts believe that this is the time when the best managed companies would get an opportunity to emerge as the strongest company from among the lot.

Slowdown is also an opportunity

Giving his perspective, Rahul Kansal, Chief Marketing Officer, BCCL, said, “At the time of slowdown, various sectors end up cutting costs. But in actuality, for any industry, slowdown is also an opportunity for the best managed companies/ brands to emerge strongest from the rest. It is also a time to see how individuals are performing. Then hopefully, companies will emerge stronger after shaving some inefficiency from their system.”

According to KU Rao, Chief Executive officer, DNA, said, “The first positive aspect of the slowdown is sensible pagination by newspapers. Many newspapers were going on increasing the pages than what was required. But the slowdown has made everyone focus heavily on the cost side. And therefore, pagination reduction has been one of the positive outcomes of the slowdown that, in turn, has reduced the production cost in a big way.”

He continued, “The second positive aspect of the slowdown is wages/salaries, which were literally getting out of control. It was becoming a high wages island in the industry. But now, the situation has changed and the wages/salaries have come down to a reasonable level. The third aspect is that there was excessive hiring of employees by many print companies, but now that is also getting corrected.”

“Lastly, the slowdown has also helped us in increasing cover prices. The print industry was totally advertising led, but now, print companies are improving by increasing cover prices and covering some more cost. Accountability and transparency have also improved in the organisation due to the economic slowdown,” he added.

Manajit Ghoshal, CEO, Mid-Day Infomedia, noted, “Some concrete advantages have happened because of the economic slowdown. The biggest one of course is that newsprint prices, which were touching around $1,000 (they reached around $980), are now quoting at $700. There has been a huge drop in newsprint prices, which is almost 50 per cent of the total cost structure of any newspaper companies. That has substantially helped us in terms of saving money. The prices of ink and plates have also come down. In fact, the price of ink this year is now quoting at lower than what it was last year.”

He further said, “The other thing is concerning fixed cost, that is, real estate cost (rent of premises) and salaries. Earlier, the salaries of individuals were shooting up and it was very difficult to retain people in the organisation. We had to increase salaries of individuals by 20 per cent year on year basis. But now, this kind of pressure is no more there, we can get good quality talent at reasonable cost. At an individual point of view, it may sound as disaster, but from the business point of view, it’s a great positive side. Real estate price has also come down, so in that way we are saving significant amount there as well.”

Ghoshal noted, “The major impact of the slowdown has been in the big metros in India. For Tier II cities, for example, Pune is not that greatly impacted due to the slowdown as compared to Mumbai, Bangalore and Delhi. So, the print industry in the second rung cities is doing reasonably well, there is no issue there.”

Giving his point of view, Sandeep Bhushan, COO, Mint, said, “As advertising revenue comes under pressure in the downturn, the shakeout will be in favour of media vehicles that meet the two critical criteria – one, tightly defined editorial that genuinely offers readers a reason to stick with a product, and two, an effective solution delivery to advertisers, who will look to make their reduced moneys work harder. This is clearly healthy from a long term view of the industry, since this will focus on editorial and put pressure on creating appropriate solutions for advertisers.”

He added, “From a Mint perspective, we are well placed as a differentiated editorial offering that has relevant content, which creates stickiness in readers, Four out of five of our readers do not need another business paper as per IRS. And this is the best reader profile in the category. From the advertiser perspective, Mint offers advertisers the ability to target the top end professional and decision maker with no wastage in duplication or profile – through not just print and livemint.com, but top end events as well. This is a unique and relevant benefit and we are seeing advertisers reacting extremely positively to our capability to reach a precious TG through a range of complementary solutions.”

Thus, while for employees it might not be a good time with job cuts and pay cuts, for print players, this slowdown has perhaps given the best opportunity to take corrective measures to cut the flab and improve efficiencies.

No comments: