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A look at HT Media - Part II - Views on News from Equitymaster
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  • Mar 27, 2008

    A look at HT Media - Part II

    After an overview of HT Media (HTML) in the previous article, in this article, we highlight the important regions where it is present and its competitive standing. Hindustan is the third largest Hindi daily with a near monopoly position in Bihar and Jharkhand. A strong player in Delhi, it is rapidly expanding its presence in UP and Uttaranchal. It has editions in Delhi, Patna, Ranchi, Varanasi and Lucknow, Kanpur, Meerut and Agra. Hindustan Times (HT) is the number two player in terms of circulation of English dailies in India, after Times Of India (TOI).

    The Hindi daily
    Bihar and Jharkhand: Hindustan rules the Bihar and Jharkhand markets with huge readership difference with the nearest competitor. The readership base of the newspaper in both the markets has been on an uptrend. In spite of competition from Dainik Jagran and Prabhat Khabar, Hindustan has been able to comfortably maintain its leadership. At the last count, the Hindustan had 24 editions in Bihar alone, with a market share of 75% of the Hindi daily market.

    Uttar Pradesh: Hindustan is expanding rapidly in the state of Uttar Pradesh, which is the largest Hindi newspaper market. Three new editions have been launched (in Meerut, Agra, and Kanpur) in 2006, giving a further boost to its growth and reach within the state.

    Delhi: It is the 3rd most widely read Hindi daily in Delhi, having a readership base of around 40% of NavBharat Times, which is the leader. The Delhi market is highly competitive with players like Jagran Prakashan and Punjab Kesari.

    In FY07, Hindustan contributed about 50% to HTML's circulation revenues. Hindustan, on an average, has an ad-edit ratio of 40:60. The company plans to spend Rs 2 bn from internal accruals over two years to set up 10 printing presses and launch editions in Uttar Pradesh, Uttaranchal and Madhya Pradesh years to exploit rising corporate advertising spend across northern India. Although Hindustan is present in Bihar, Jharkhand, Uttar Pradesh and Delhi, it has addresses only 40% to 45% of the Hindi belt. With entry in the new regions it will be able to cater to 60% to 70% of the market. For Hindustan, we expect a broader reach in the Hindi readership belt to drive growth. Further, the regions where it is present, the average readership is in the range of 15% to 18% as compared to the national average of 20%, which leaves enough headroom for growth. The company is also planning to separate the Hindi business into a different entity in order to concentrate more on this segment and garner more revenues.

    The English daily
    Delhi: The Delhi edition accounts for the bulk of its ad revenues. The uno position keeps rotating altering between HT and TOI. Delhi is a matured market and HT enjoys brand loyalty. Earlier, when TOI entered Delhi, highly competitive price war was witnessed. The competition between HT and TOI in the Delhi market has become rational after HT's entry in Mumbai. The two share each other's printing resources. Both have recently joined hands for publishing a new newspaper in Delhi in order to combat the threat from new competitors

    Mumbai: In order to become a relevant player, HTML made a foray into Mumbai, which is the largest ad market. Mumbai and Delhi together account for 40% of the ad revenues. The Mumbai print market is estimated to be around Rs 15 bn in market size and the leader Times of India has around Rs 7.5 to Rs 8 bn of the market. HTML along with DNA forayed into the Mumbai territory where TOI had had a virtual monopoly. This led to a price war and introduction of free editions. With the entry of HT in Mumbai, its target market expanded. Also, with the presence in Mumbai, there has been a rub-off effect in Delhi, leading to higher advertisement grip. HT Media has been successful in garnering higher circulation and readership. As per IRS 2007, R1, HT touched the readership base of 320,000 in the first two years of its launch. Though currently it is the 3rd largest paper in Mumbai, its ad revenues witnessed a 50% growth over the last 2 years.

    Also HT Media has an advantage over DNA, as it is able to bundle its advertisements with its basket of offerings. Its pan India presence also would be able to command higher rates. We expect the Mumbai editions to breakeven in coming few quarters and narrow its subscription gap with DNA.

    Mint: The company entered into the financial news daily segment in association with The Wall Street Journal under the brand name Mint. Currently, only 0.4% of the country's population reads business papers of any kind. The business daily segment is estimated to account for 8% of the total dailes market. Economic Times is the market leader with nearly 65% of the share. A huge gap existed between ET and the second player. Eyeing this huge opportunity, Mint was launched last year in Delhi and Mumbai and has laready become the 2nd largest player with circulation of over 120,000 copies in these markets. It has an ad: edit ratio of about 15: 85 and enjoys a premium in ad rates over Economic Times on the CPT (cost per thousand) basis. In November 2007, it launched the Bangalore edition of Mint, which already crossed 15,000, and the edition is strongly leveraging the business publication's national presence to draw quality advertisements. The management has planned to publish Mint in the top 10 cities of India in the coming few years. Though currently it is loss making, it is expected to break even in the coming 20 to 24 months.

    Tabloid: Competition in this segment was growing. After the battle between Mid Day and Mumbai Mirror in Mumbai, Delhi was the likely next target. Sensing competition from India Today Group's Delhi Today and Mid Day Multimedia's Delhi Mid Day, HT Media and BCCL Group started a tabloid under the brand ‘Metro'. A '50:50 JV it is aimed to target the metro commuters in Delhi. The plan is to initially target a readership of 0.1 m to begin with. It faces competition from Today, brought out by Living Media, publishers of India Today, and Mid-Day. Both have a relatively small circulation in Delhi.

    To conclude
    HTML now offers multi regional, segment and language presence. Through this basket of offering it is able to provide a wider and attractive package to its clients. Further, it would be able to use the same printing facility and the distribution network leading to better margins (18.6% in 9mFY08). Though currently its new offerings and some editions are still in investment mode, going forward, it would improve the profitability of the company. The basket of offerings and pan India presence would lead to better prospects.



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