After a decade of dread, media houses are now breathing easy

Ten years ago, most media houses were scared out of their wits, bombarded with prognostications of doom. The newspapers, it was said, “are going to die after ten years” because of the advent of “new media” such as cable, TV, radio, internet and so on.

So, is the newspaper dead? On the contrary, newspapers have ridden through that dire decade and emerged stronger. Although there has been a declining trend in the more developed economies, in India there has been a consistent rise in both the readership and the circulation of newspapers.

More publications, especially magazines catering to new niches, are being launched and, wonder of wonders, the traditional and the new media are not only co-existing but also serving as complementary to each other rather than being substitutive.

Mr. Darda answers a pointed question from Dr. Nayna Dastur at the last meeting. To his left is President Dr. Rumi Jehangir

“Cross-promotions are happening all around. The Times of India is cross-promoting Radio Mirchi, Radio Mirchi is cross-promoting Times internet or IndiaTimes.”

Making these observations at the last meeting, Mr. Devendra Darda, Executive Director of the Lokmat group of newspapers, who was speaking on “Building a media conglomerate”, could not resist narrating his favourite story about e-news versus old news.

Imagine that you are taking a walk in the park. What do you do when you want to catch up with the news? You sit on a bench, unzip your laptop bag (weighing four to five kg.), take out your laptop and power it up. After it boots, you connect to your ISP (internet service provider) at a speed of say 10 to 15 kbps.

Then you go to your news site to actually get your news. On the news page, you have to keep scrolling, carefully balancing your laptop on your knees, all the time at the mercy of the speed of the network provider.

Alternatively, you can carry your newspaper into the park, sit on a bench, open your newspaper and start reading. This convenience that the newspaper offers “is not going away for many years to come”.

Electronic paper, electronic ink, wi-max (wide wireless network) and other advances are being made which would make it possible to roll or fold an electronic newspaper with equal ease. But till that happens, the humble newspaper will continue to rule the roast.

Mr. Darda recalled that it was in 1994 that the media houses experienced the first tremors of the ’quake that saw them losing advertising revenue to the rash of new television channels.

That year, the government, through a new cable TV policy, allowed the down-linking of channels. Zee TV was the first on the scene; and soon a slew of channels appeared in the entertainment sector, followed by the news genre.

Around the same time, mobile telephony was also launched and so were internet services and FM radio. To top it all, the then government, with the late Mr. Narasimha Rao as Prime Minister and Dr. Manmohan Singh as Finance Minister, was able to ensure “a good economic and political climate” in the country.

With the new media and rush of TV channels fighting for space, things reached such a pass that rockbottom rates (even Rs. 500 for a tensecond advertisement spot!) were quoted

Power quickly shifted from the media houses to the advertisers and advertising agencies. Advertisers had a field day playing the media against each other, drawing the best rates. In the blink of an eye, the new electronic media took away nearly 45% of the advertising share (earlier, 90% of the total advertising spend went to the print media).

Put together, these factors were responsible for the unprecedented upheaval that rocked all media houses and resulted in consolidation in the advertising agency business.

Mr. Darda pointed out that as the economy grew and as businesses prospered, many advertising agencies failed to keep pace or to service clients across the country; and they became prey to the phenomenon of “mergers and acquisitions”.

This resulted in a “squeeze of the media”. It happened like this. Earlier, a group such as Lokmat had, say, Bajaj and TVS as two separate twowheeler clients, each represented by a different advertising agency.

But with these two advertising agencies coming under the umbrella of a single parent company (that had indulged in M&A), that parent company got to know the advertising strategies employed by various media companies and started to play the media companies and the agencies against each other.

Almost at gun-point, the media companies were forced to diversify into alternative media, or within the verticals, so that they had more choices and could face the threat from the advertising agencies.

Fortunately, with economic prosperity, lifestyles also started changing. People started travelling more, more often in cars; they started listening to radio while travelling; and they started using the internet in a big way.

The paradigm shift in lifestyles made it essential for media companies to discover new ways to reach the consumer. They had to diversify, move out of their comfort zones.

Both western and eastern models for change being available, it became clear that the best solution would be to create a bouquet of media offerings that would give greater reach to the advertising agencies and spread the risks of the media company itself.

With efficient methods of content generation and distribution, it was possible to create news from one source and distribute it to a TV channel, through a radio channel, or to newspapers, so that the cost of content generation was spread out.

Mr. Darda surprised his audience by pointing to the plethora of media “touch points” now available.

In a group of three. Abhinav Aggarwal (centre) and Daniel Zoneshine seen with Ms Pritti Kumar (left), who is the Editor of ‘G2’ magazine which belongs to the Lokmat group

For example, in print there were newspapers and magazines; in television, cable TV, satellite TV, DTH and IPTV; in radio, local, satellite, FM and internet radio; internet itself; in telephony, sms and mobile TV; as also malls, airports, railway stations.

“The key issue is addressability. How do I reach my target group? Who am I targeting, how do I reach that target group? How do I avoid the slippage of my advertisement revenue because of the vast choice of media? And what are the challenges before the media itself in the face of the vast variety of choices?

“Your remote control has become a weapon. If you don’t like what’s coming on, flicking the channel is just a matter of pressing one switch. Therefore, media companies face a big challenge about the kind of content to create so that viewers and listeners stick to their channels; only then will they be able to give value to their advertisers.”

As for the advertising scenario, Mr. Darda said the total market size last year was Rs. 15,000 crores. Of this, 48% went to print; TV took 40% of the share of advertising; radio 3%; internet 1%; others (including cinema, out of home, hoardings and so on) 8%.

Print had fought back over the last three years and taken back a higher share from TV. Five years ago, TV had a higher share. But due to the plethora of channels and fragmentation, advertisers had realised the importance of print and were returning in a big way.

“The last three years have been extremely good for print and we expect that the print sector will continue to do well. The market size is expected to be about Rs. 50,000 crores in three years.”

This 300% rise was possible as the media was among the fastest growing sectors; it was among the top five employers (it was No. 2 after IT services two years back); there was a favourable FDI policy; a favourable capital market; and, in an era of alliances, instead of intense competition there were more alliances and co-operation than before.

The Times of India was tying up with Sandesh and Vijay Karnataka; Zee and Dainik Bhaskar had come together to launch DNA; and various other companies were together who would otherwise have been competitors.

Even the Times and Hindustan Times, which fought for each other’s blood in the Delhi market three years ago, had formed a joint venture to launch a tabloid daily. “Suddenly, the scene has changed and you see more and more co-operation.”

The key growth drivers, according to Mr. Darda, were the government’s liberal cross-media ownership policy and the low per GDP advertising spend in India. Countries like Australia and the UK had strict crossmedia ownership laws but India was more liberal and allowed one to be a player in multiple media.

As for the low per GDP spend, India had an ad spend of only 0.34% of its GDP; in comparison, the US spent 1.34%. But while India had a GDP of about $1 trillion, the US was between $4 and $5 trillion. One per cent of $4 trillion was a lot of money to spend on advertising.

Yet another factor responsible for the boom in the media was the boom in the retail and real estate sectors. Mr. Darda quoted Mr. Mukesh Ambani as telling him that at present the total size of the advertising industry was about $3 billion; but that would be the size of the advertising spend of retail alone over the next three years.

Shifting attention, finally, to his own media group, Mr. Darda said Lokmat was one of the youngest in the country, born in 1971. It printed out of 11 centres in Maharashtra. It was No. 1 in Maharashtra in Marathi and Hindi, selling 1.3 million copies of its Marathi, Hindi and English editions put together, with about ten million readers daily. Lokmat was the fourth largest daily in the country as per the National Readership Survey of 2006 and had a vibrant online edition which attracted more than 70,000 hits every day.

It planned to go multi-media and to create “a bouquet of offerings” to leverage its existing advertiser and consumer relationship.

A magazine division, Cymbal Media headed by Ms Pritti Kumar, had launched its first magazine “G2” which, in a very short period of time had won accolades, including an international award for the best new launch in Asia. It was a niche magazine catering to the Gujarati and Parsi communities.

More niche magazines were proposed to be launched, as also a TV channel (in association with TV18 and its CNN-IBN division) and one for Marathi news and current affairs. Apart from this, Lokmat was also bidding for radio licences in several cities and was planning to launch a newspaper in the Hindi belt.

Mr. Darda asserted that the language segment was growing very rapidly but, on account of the advertisers being based mainly in the metros, it got short shrift.

He recalled an interesting experience four years ago when his advertising team was pursuing Hewlett- Packard for an advertisement of their printers. The client was not interested, saying “your readers (Hindi and Marathi readers in Maharashtra) are not our target group”.

Finally, Mr. Darda himself offered one free insertion to HP. Even then the company was reluctant to release an advertisement. One single insertion was printed in one edition. The response was tremendous. HP immediately called the sales head and signed up for the rest of the year.

At the end of one year, it signed up all the editions across the state. Now brands like Compaq, IBM, Lenovo, even luxury cars like Mercedes and Audi, were being advertised.

Answering questions, Mr. Darda told PDG Manibhai Doshi that in the current scenario, there was far more growth in the Hindi and language segments than in English.

Sitaram Shah said newspapers were becoming bigger and thicker; often, readers found it difficult to read the entire paper. But wasn’t the print media putting more demands on nature (denudation of forests for manufacturing paper and pulp)?

Mr. Darda revealed a little-known fact – the newspaper sector was a major contributor to afforestation.

In both South and North America, where large tracts of forests were being cut for primary pulp, strict environmental laws were in force; if one tree was cut, six trees were required to be planted in exchange.

“So, although more newsprint is being manufactured and more trees are being cut, more and more trees are also being planted – which fact doesn’t come to the fore,” he added.

Abhinav Aggarwal introduced the guest speaker and the vote of thanks was proposed by Pradeep Saxena.

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