Foreign Newspapers are Entering India Through Local Partnerships

Last week, Khozem Merchant, Director of Business Development of Financial Times, addressed the Club on ‘The changing face of Indian media’.

Rtn Roda Billimoria introduced Mr Merchant as a journalist who had held senior reporting and editing positions in UK, Japan and India in the past two decades with the Financial Times.

Khozem Merchant said at the outset that he would present sketches of Indian media which, given everything that was happening in India, dramatically affected all of our lives.

“Being from a foreign newspaper, it has been quite a tricky experience to get into India in the past decade. The Financial Times is arguably the doyen of foreign newspapers which have been knocking on Indian doors in past decades. The foreign direct investment regulation in this country has been such that we haven’t quite been able to get through the door, and behind us is a long queue of other publications,” he said.

JOINT VENTURES

“As a consequence of a fairly harsh regulatory framework (thanks to a very competitive local industry which is very protective of its market), Indians are unable to see on our breakfast table any of the foreign titles, which have effectively abandoned, in order to get rights to publish newspaper in India. What the foreign publishing houses have done is to bring out hybrid products, as they can’t use their titles in India. Hindustan Times is coming out in the shape of something called Mint, launched a couple of months ago in partnership with Wall Street Journal. Mint represents foreign participation in media in this country, with a title that does not offend the regulators, and contents that represent the best of Indian and foreign journalism. The back office process abroad and in India is what makes it a good newspaper.

“This is the future of foreign newspapers in India. For the first time, the interests of foreign newspapers and local newspapers are aligned. We are no longer focussed on getting the Financial Times or The Daily Mail or The Wall Street Journal per se printed here; we want to bring them in as purely local products. That is the direction we are all headed in.

“It effectively means that we are no longer bothered about the acquisitions regulation, because it is a major challenge. Instead, we prefer to work on the basis of local partnerships with people and institutions who know the markets better than us.

“The same things are happening with foreign magazines, which became politically contentious issues facing serious hurdles, but they have finally come in a big way, which have a pretty direct correlation with the consumer boom here.

“From the foreign newspapers’ point of view, why is it happening? One significant reason is that in their home countries in Europe and North America, newspaper readership and newspaper sales are on the decline, as the markets have matured. There is a decline in circulation, and advertising revenue is also migrating on a fairly large scale towards emerging countries. India is the only large, free, democratic country in the world where the print media is expanding. That is a fantastic opportunity. And that’s why all these titles are lining up and accepting local partnership, despite having stood firm previously in their efforts to publish on their own.

“Why do they come in here? One of the reasons is that printing industry is expanding here as literacy is rising, spawning annually five million new readers. Consumption — which is part of that information chain — is expanding with larger incomes in people’s hands, along with the production of Indian goods growing at breakneck speed.

“So large groups like The Hindustan Times and The Times of India have shown extraordinary speed and pace in spite of the huge growth of television, radio and other forms of media. The print media sector is demonstrating fantastic opportunities for investing risk capital, as currently, more money is going into this industry here than any other country, or in any other era. Genuine large-scale capital has been coming in and trying to seize a piece of this opportunity.

A GROWING PIE

“You might ask: What are the challenges to those coming in? And isn’t the place becoming overcrowded?

“It’s not. The remarkable thing about the Indian market, particularly Bombay and Maharashtra, is that despite the entry of several new titles in the past couple of years, no one has really lost out. The market is expanding. Everyone’s circulation and share of advertising revenue is rising.

“And so, what we see here is a fairly large growth by Indian standards, and with foreign entrants coming in and expanding the pie. Certainly, that’s what’s happening elsewhere in India and in other sectors also, whether it is finance or consumer products. More and more new publications are coming and knocking on the doors, and more and more investors are coming in with their capital, wanting to support their ventures.

SEGMENTATION

“What are the effects of having a crowded publishing market, particularly in Mumbai, the city where 80 to 90% of all advertising takes place in English language publications? It is forcing large publishers like The Times of India or Mid Day to finetune their products in a way they have never been required to earlier. In any industry, you call this segmentation. In Bombay, we have seen this in a fantastic way. Publications like Time Out which might not have survived here about three or four years ago, are today shaping into very resourceful niche products that are commercially viable. They are finely tuned, with very creditable market research skills providing the data around which the product is designed.

“For the first time, newspapers which previously took an approach of one title for every one — for both the young professionals with lunch time to spare in Lower Parel and bankers in South Bombay — were forced to come up with different niche titles. Mid Day, a tabloid newspaper, which is unmatched in this country for its sophistication, is a fine example of segmentation.

“Segmentation is all about competition, which is the direct result of market liberalization. That is good for every one. We have monopoly publishers in this country who persist despite liberalization having opened up this market and allowed capital to come in. Those in the vanguard of Indian media for many years raised a powerful voice for nationbuilding, democracy and so forth. Liberalization has made people realize that there are a lot more readers beyond the circulation figures and the number of subscribers. And this is the first time in India that readers have a wide choice of good content.

“The wide choice of content is one of the greatest benefits of competition and liberalization in the past four years. This has been happening not only in print media, but also in TV and other forms of electronic media. In TV media however, news is often passed off as a form of entertainment, not pure information.

“I am sure the wide choice and content available to discerning readers will differentiate between a very large expanding community of publishers. For the first time newspapers will have to think about the kind of content they are producing, and finetune it in a very segmented way for the readers in Borivali, or any other parts of Bombay. There is pressure on publishers to ensure that they understand their readers through market research.

TRIVIALIZING

“While we have seen an abundance of this and often excess of this, we also frequently noticed trivialization, and tabloidation of news happening. It is following the trend in every other mature market. I wouldn’t say it was dumbing down, but would certainly say that it was providing content that people have not had before.

“And if they want to read about Bollywood, and its new sister in the industry, i.e. television, that is fine; Abhishek’s wedding is an example of the mass frenzy about the trivialities connected with it. And the kind of coverage the media was giving them and the kind of pictures that the photographers were shooting were an indication of the people’s choice. Do such things matter? I think they do matter to some people, in fact a wide section of society.

A vigorous scrutiny is necessary whether it is public officials, or it is Bollywood, or Abhishek’s wedding. In other countries, where news media has matured, many public officials have been held to account by this kind of journalism. It is a direct consequence of liberalization and competition between newspapers for producing content that their consumers want.

“Consumers in Delhi may be political class, while the consumers in Bombay may be Bollywood fans or business class. What the media strives to give is what the market is asking for. This phenomenon has an upside and also a downside. But without it, a vigorous growth of a fast growing economy and civic character in this country is unthinkable.

“Foreign newspapers are not going to act as guardians of what some sections of Indians might like to defend and campaign for the cause. Because, as I explained earlier, these newspapers are a relationship based on partnership, rather than the one based on their titles here.

Q&A

Rtn Sitaram Shah: What role does media play in upholding and directing ethical standards of society?

Khozem Merchant: An important role is the one being played by TV media in bringing public officials to accounts, particularly during elections times in this country. In India it is a new phenomenon. It is a new source of public pressure. Also at the Parliamentary arena, it is making politicians conduct themselves in a better way, and bringing about a transformation in public life.

The examples we have seen in the past 18 months, whether it was in Jessica Lal case, or in the transactional corruption in arms industry in Delhi, the role played by the media, particularly the TV was exemplary. Indeed the TV reporters have been young and did not have the legacy of ethics or wisdom gained by past experience. Hopefully newspapers have to follow.

Question: Does the fourth estate enjoy any immunity when it intrudes into privacy when it conducts sting operation?

Khozem Merchant: In countries like England which have mature media markets, media doesn’t enjoy any powers for invading right of privacy, even if it is for a sting operation. In mature markets like the US , UK or in European continent, news is being transformed into an entertainment industry, almost.

In India there is no self regulation or any regulatory authority, and the press has far more freedom to conduct itself as it likes. Sometimes, Indian TV media insensitively portrays ghoulish scenarios from the hospitals or from elsewhere, unmindful of the harmful impact such portrayal may have on the impressionable minds.

VOTE OF THANKS

Proposing a vote of thanks, Rtn Pradeep Saxena said, “The other day I was reading an interesting piece of news that Warren Buffet, whose company has major investments in newspapers in the US, opined, ‘The newspaper business has been bad and it isgetting worse now’. Then I looked at this statistics which said that newspaper shares in the US had declined by 9%. Outside the US, they have grown 25%, and of the ten largest increases, three are from India — The Deccan Chronicle, the HT Media, and Dainik Jagaran.

“What has affected print media in the US is the rise of the internet, and other forms of media, which have invaded the traditional domain of newspapers. At some stage, we too will get there. So what is the window of opportunity for these print media companies to make money?” asked Pradeep, concluding on a sobering note.