February 19, 2020
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Stop Press!

The early '90s boom is bust—even the biggies swim in red ink

Stop Press!

THE grand designs of the early '90s have been consigned to the footnotes of print media history. As financial viability eludes a large number of bloated, mismanaged dailies and periodicals across the country, several publications, old and new, have downed their shutters. Many others are floundering in a sea of red ink. Even relatively healthy ventures have cut down drastically on running expenses and placed all expansion plans on hold. "It is not that people are not reading newspapers," says B.G. Verghese, former editor of The Indian Express. "But the industry is in the throes of a severe recession aggravated by a diversion of ads to the electronic media."

Indeed, the writing is on the wall in stark black and white: the industry is up against an unprecedented cash crunch, with the advertising pie shrinking alarmingly over the last three years and debilitating price wars pushing the weaker players out of a fiercely competitive market. "The newspaper business needs an awful lot of money," says Ajoy Bose, a former executive editor of The Pioneer. "The smaller players stand no chance." But aren't ideological clashes between editors and proprietors and the increasing tendency to treat newspapers strictly as brands also responsible for the crisis? Veteran journalist Nikhil Chakravartty agrees: "The undermining of the editor's role does not necessarily affect a paper's fortunes. Limited resources do."

A major shakeout seems inevitable and it is bound to be excruciatingly painful. Whether it's Delhi or Mumbai, Calcutta or Chennai, Bangalore or Hyderabad, the battle will now increasingly be fought between the leader and the challenger, between the No. 1 and the No. 2. As for the rest of the field, unless they reposition themselves as niche products catering to a specific readership, it is going to a losing battle. "The ad scene is pretty bad," says New Delhi-based media consultant Ajay Kumar. "No client will waste the little money that is available on publications that don't figure among the top two in a particular market."

 The genesis of the trouble can be traced back to the first half of the '90s. As the stockmarkets soared and new investment came into publishing, print media ventures, mesmerised by the appeal of Manmohanomics, went into overdrive. An element of profligacy crept in as the battle for mindspace assumed frenetic proportions. Pages and sections were added to newspapers indiscriminately, salaries of journalists rose exponentially, the staff strength of virtually every mainline daily went up dramatically and as newsprint imports become prohibitive in the wake of the rupee's devaluation, operational costs went through the roof.

It all seemed to work wonderfully well for a while. Two years ago, the Times of India group registered post-tax profits of over Rs 90 crore, and other media houses, ensnared by dreams of emulating the leader's success, succumbed to a false sense of buoyancy. For three years in a row, adspend grew by 35 to 40 per cent—the usual annual growth hovers between 10 and 15 per cent—and dailies and periodicals went hell for leather. The wakeup call hasn't come a day too soon. "The inroads made by TV and the political instability of the last two years have taken the sheen off the print media," says Arya Bandopadhyay, manager, media, Madhyam ad agency. "What is happening today is a correction of the artificial boom of the early '90s," adds Aalok Wadhwa, chief operating officer, Business Standard.

Hence the dropouts and strategic realignments. Both in the print media and satellite TV. And with the exception of Zee, no Hindi language channel is making money although Sony is expected to recover its costs by the end of this financial year. Star TV is still a few years away from break-even point, while Home TV has changed hands. TVi, the Business India group's TV channel, is draining away resources to such an extent that editorial staff with the magazine as well as the channel go without chunks of salary for months.

The 'correction' process is proving to be rather costly. The Pioneer has lurched from one crisis to another during the past year, accumulating losses of over Rs 70 crore. The daily has been saved for the time being—it's been bought from L.M. Thapar by a consortium that includes editor Chandan Mitra (armed with the employees' combined compensation package, rumoured to be about Rs 7 crore) and Bahubali Shah, a BJP sympathiser who owns Gujarat Samachar. Will it work? Bose isn't too sure: "It's a high-risk arrangement. Five years ago, it might have been possible. Not today."

The tenacious Indian Express group, too, is in the midst of a major cost-cutting exercise following the three-way partition of the company's assets. While the group's real estate has gone primarily to Saroj Goenka, the widow of B.D. Goenka, the publishing business has been carved into two—the healthier northern editions going to the late Ramnath Goenka's adopted son, Vivek Goenka, and the southern editions to Manoj Sonthalia. The latter, who owns six editions of the Express, Andhra Prabha (Telugu), Dinamani (Tamil), Cinema Express and the Sterling group of magazines, has been hit hard by a steep hike in the rent for the building that houses his offices in the heart of Chennai—Sonthalia now has to shell out Rs 25 lakh a month for the premises.

"For the first time ever in the paper's history, salaries are being delayed," says a highly-placed Indian Express Newspapers (Madurai) Limited source. The company has been forced to cut down pages, while The Hindu has increased its number of pages. According to one estimate, the Express group loses Rs 36 crore a year on its printing business, but the rentals it receives from its 25-storey building in Mumbai's Nariman Point and other properties keep it going. In a bid to bring down operational costs, the Indian Express Newspapers (Bombay) Limited, located on Bahadur Shah Zafar Marg, has split its Delhi office into three, sending several editorial and administrative departments to less expensive locations.

The ABP group, which owns The Telegraph, is yet to fully recover from the huge losses it incurred on the Delhi edition of Business Standard. So while it economises, The Telegraph now rides piggyback on the Bengali daily Ananda Bazar Patrika to maintain a steady flow of ad revenue. Even Delhi's The Times of India, by no means a media weakling, has reportedly shelved all expansion and put a freeze on recruitments.

Media barons, hit by a wave of reverses triggered by a general economic slowdown and a consequent slump in advertising, are veering round to the view that the going has never been so tough. "In the last year and a half or so, no major public issues have been announced, robbing the print media of its prinicipal revenue-earner—corporate advertising," says Bandopadhyay. Moreover, he points out, many clients have deferred their product launches.

But all is not lost, asserts Wadhwa. "Major ad campaigns did go away to TV for a while. But a reverse swing is happening now." As long as a print vehicle delivers a fixed, clearly defined audience to the advertiser, it will definitely work as a market tool, he argues. "Advertisers are increasingly more comfortable with smaller publications which are delivering a stable and loyal audience." Verghese sees the shrinking advertising volumes as a temporary setback. "Readership will continue to increase in India for the next 20 to 25 years," he says. "I'm sure advertising will resume its upward trend once the economy is back on the rails."

 But in several markets in India, there are currently far too many competitors for the good of the industry. Take Guwahati. Though the Assamese capital has no industry worth the name, it has 20 dailies, seven of them in English. Except 60-year-old The Assam Tribune, the market leader, all the other English dailies have come up after 1982. Barring The Sentinel, none of them is making money. Says Jayanta Barua, owner of Asomiya Pratidin, the largest circulated Assamese daily: "We rely heavily on government ads. The big display ads released from the big metros are given only to the number one newspapers."

How do all the other newspapers survive? Those in the know say that except the top four or five newpapers, these dailies exist only on paper "to derive the benefits of being part of the fourth estate". While that may be true of a huge number of publications, even the serious dailies and periodicals are up against heavy odds. In Andhra Pradesh, for instance, more than half a dozen newspapers have folded up during the last three years, rendering over 1,000 journalists jobless. Things have come to such a sorry pass that journalists working with Andhra Prabha and Andhra Jyoti have to secure advertisements to get their salaries.

Up north, several industrialists entered the business during the last decade: Vijaypat Singhania, Sanjay Dalmia, L.M. Thapar and the Ambanis. Except the Ambanis, whose Observer of Business and Politics and The Sunday Observer have made little impact, all the others have quit the game, having realised that in post-liberalisation India, newspapers don't necessarily fetch you political clout anymore. But they definitely dig big holes in your pocket.

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