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Indian Print industry: An overview - Views on News from Equitymaster
 
 
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  • Sep 14, 2007

    Indian Print industry: An overview

    The structure of the Indian print media industry is highly fragmented with importance to regional dominance. The Indian print media segment primarily comprises newspaper and magazine publishing. Book Publishing also forms part of the print media though currently the share is not substantial.

    As per PwC report, the print industry is expected to grow from Rs 128 bn in 2006 to Rs 232 bn by 2011, at 12.6% CAGR. While the newspaper industry is estimated at Rs 112 bn, the magazine segment is valued at Rs 16 bn.

    Growth drivers

    • Higher literacy levels: In 2006, the literacy levels increased to 71.1% as compared to 69.9% in 2005. While rural literacy is at 64.8%, urban literacy touched 85.3%. Currently Indian print media is estimated to reach over 220 m people, and has immense growth potential since close to 370 m literate Indians are believed to not be served by any publication. Also, the reach of newspapers is only 27%, as compared to the global average of 50%.

    • Lower cover prices: Earlier, due to strong hold over a region, the newspaper had higher cover charges. However, with increasing competition and venture into newer regions the companies have reduced the cover prices to augment more sales. Many English dailies are sold for as low as Re 1 or Rs 2. The initial subscription offers of 'DNA' and 'Hindustan Times' (HT) in Mumbai, during their launch period, further reduced the cost of the newspaper to around 50 paise for an average issue

    • Higher ad spends: Print media accounts for 48% of the total Rs 137.5 bn advertising spend in the country. However, the ad spend in India is just 0.4% of GDP as against 0.5% in China, 1.3% in the US and a world average of nearly 1.0%. With rising consumerism and growing interest from domestic and global brands in Indian market, the growth in ad segment is expected to be strong.

    As per the registrar of newspapers, there were approximately 6,529 daily newspapers as of March 2005. No single newspaper had a national circulation. In 2006, India had the second largest circulation of newspapers with 88.9 m copies per day; second only to China with 98.7 m copies a day.

    Urban & Rural Urban Rural
    Base Population (m) % (m) % (m) %
    Any Publication 184 23.6 99.9 42.2 84.3 15.6
    Any Daily 170 21.9 93.8 39.6 76.6 14.2
    Any Hindi Daily 62.9 8.1 35.6 15 27.3 5.1
    Any English Daily 17.4 2.2 15.9 6.7 1.6 0.3
    Any Magazine 58.9 7.6 33.8 14.3 25.1 4.6

    Source: Ficci PWC, companies

    Newspaper Place of strong hold
    Jagran Prakashan Uttar Pradesh and Uttaranchal
    Times of India Mumbai
    HT Media Delhi, Bihar, Jharkhand
    Deccan Chronicle Andhra Pradesh
    The Hindu Chennai
    The Telegraph Kolkatta
    Deccan Herald Bangalore
    Punjab kesari Punjab
    Source: Companies, Equitymaster
    Fragmented industry
    The regionalism aspect is clearly visible in the newspaper sector. The print media is further divided on the basis of the languages. Of the daily newspapers, about 46% are vernacular, 44% are in Hindi and 10% are English. Hindi and vernacular language newspapers offer a local and regional flavour to their readers. The content and circulation of English-language newspapers, on the other hand, are largely focused on the primary urban centers. Approximately 7% of the population in urban areas read English-language newspapers, compared to a readership of only 0.3% of the population in the rural areas. (Source: IRS 2005) In contrast to this, Hindi-language newspapers have a proportionately larger readership in rural areas, in addition to their strong presence in urban areas, with a readership of approximately 15% and 5% of persons in urban and rural areas, respectively. The newspaper industry is regionally divided, with existing players enjoying strong brand loyalty. For e.g. Times of India follows strong brand loyalty in Mumbai and it was difficult for Hindustan Times to enter Mumbai.

    The newspaper industry has relatively high entry barriers due to the strong brand equity of existing players. Also, existing players have strong control over the distribution network, making it difficult for new players to enter.

    Domestic Company Investor Amount Invested
    (Rs. bn)
    Jagran Prakashan Independent News& Media 1.7
    HT Media Public (IPO) 3.7
    Jagran Prakashan Public (IPO) 3.3
    Deccan Chronicle Public (IPO) 1.5
    HT Media Henderson Henderson 1
    Dainik Bhaskar Warburg Pincus 1.5
    Amar Ujala DE Shaw 1.2
    Ushodaya Enterprises Blackstone 12
    Source: Ficci PWC, companies
    Attracting foreign investment
    Most Indian print players continued to dominate the local regions and did not enter new territories, mainly due to lack of funds. However, foreign investment regulations were relaxed in 2002. Currently, up to 26% foreign direct investment (FDI) is permitted in newspapers and periodicals dealing with news and current affairs. In non-news publications, 100% foreign investment is permitted. Since the changes in the regulation many foreign investors have taken strategic stakes in the domestic print media companies.

    Going forward
    A booming Indian economy, literate population on the rise, increasing consumerism, entry of global brands in the country and opening of the sector to foreign investors would drive the growth in print media. Als,o with newspaper companies entering into newer regions and segments would lead to stronger growth.

     

     

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