Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Print media: A look at circulation revenues - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Sep 21, 2007

    Print media: A look at circulation revenues

    The primary source of revenues for a newspaper company is advertising and subscription. The other sources include providing news to other agencies and sale of scrap paper. The subscription revenues formed nearly 39% of the total print media revenues of Rs 128 bn in 2006.

    Circulation revenue is "net paid sales" of a publication as per an ABC certificate. Or in other words, it refers to the cover price of a newspaper recovered from its readers. It is a function of market share and penetration. Rising circulation means higher market share and hence higher penetration. This helps in the increase of ad rates. In India, competitive pressures in the industry have tended to compel newspaper publishers to maintain or reduce cover prices. Therefore, the growth in circulation revenues has stagnated while advertising revenues has become a growing portion of overall revenues.

    Newspaper circulation has a direct correlation to a country's literacy levels. Inspite of 200 m readers, the penetration of print media is estimated at 27%. In recent times however, there has been a rise in the readership. Newspaper circulations worldwide rose by 2.3% YoY in 2006, with Indian sales increasing the most recording a 12.9% YoY growth (Source: World Association of Newspapers). This is due to increasing literacy in the country. Literacy has improved from 69.9% to 71.1% in 2006, while newspaper circulation has also moved up from 59 m in 2001 to 89 m in 2006. Literacy levels are expected to move further northward, and we believe that newspaper circulation will keep increasing in the near term.

    Copies sold daily (m)
    China 98.7
    India 88.9
    Japan 69.1
    US 52.3
    Germany 21.2

    Penetration: With the reach of newspaper in India estimated at 27%, significant scope exists for increase in readership. Further, there are around 359 m people who can read but are not served by any publications. Print in India reaches an urban population of 137 m, which is next only to the population of 188 m reached by television.

    SEC Reach (m) % of total Reach
    A1 7.57 95.2
    A2 13.9 90.5
    B1,B2 31.97 81.1
    C 33.78 69.5
    D 29.28 52.6
    E1,E2 20.99 30.1
    Source IRS 2005, Round 2.
    SEC Rural
    Reach (m) % of total Reach
    R1 14.12 67.7
    R2 33.07 55.4
    R3 78.37 36.9
    R4 28.31 11.4
    Source IRS 2005, Round 2.

    As shown in the table above, the print media penetration in India is higher, percentage-wise, among people in the upper socioeconomic classes compared with those in the lower socio-economic classes. However, due to the sheer number of people who fall into the lower socio-economic classes, the number of readers in the lower socio-economic classes still outnumbers those in the upper socio-economic classes on an absolute basis, which indicates that there is much more room to grow readership numbers. We believe that as newspapers push circulation and reduce cover prices, readership growth will continue.

    Readership and circulation drivers going forward:

    • Quality of content: The belief of the reader in the independence and integrity of the reporting and analysis is an important factor in readership and circulation.

    • Width and breadth of content: A mix of national, regional and local news is necessary.

    • Pricing and incentives: Circulation can be influenced by the price of a newspaper and incentive and promotional schemes/campaigns.

    • Brand pull: Brand recognition and brand loyalty, often based on a family history of reading the same newspaper, also drive readership.

    • Capability of distribution network: The availability of a particular newspaper in a timely fashion may also influence readership.

    Share of languages: While English newspaper accounts for 27% of the total subscription revenues, regional newspapers lead the pack with 45%. Hindi and regional newspapers have a multiple of readership to circulation of generally 7 to 9 times, whereas English-language newspapers generally have a multiple of 2 to 4 times. Lower average income of readers of Hindi and regional newspapers leads to the sharing of the newspaper among the family and hence the higher multiple of readership to circulation.

    Further, in English newspapers, circulation contributes only 5% to 15% of the revenues against 35% to 45% for Hindi players. To increase its reach, the newspaper companies need to increase their circulation and hence they reduce the cover prices. The cost of production is higher than the selling price and hence the newspapers companies lose money. This is however compensated by advertising revenues. Hence, higher the readership and circulation, higher the advertising revenues.

    To conclude...
    Subscription revenues for the print industry are expected to grow at a CAGR of 9.6% during 2006 to 2011. Increasing literacy and rising income would aid the growth. However, with increasing competition and existing players looking at newer avenues, the subscription prices could witness pressure going forward. Further, the trend of free dailies too can affect revenues in the future.



    Equitymaster requests your view! Post a comment on "Print media: A look at circulation revenues". Click here!


    More Views on News

    Zee Ent: GST Short term Negative but Long term Positive (Quarterly Results Update - Detailed)

    Aug 14, 2017

    The management believes that GST will aid the advertising spends in the long-run.

    S Chand and Company Ltd. (IPO)

    Apr 26, 2017

    Should you subscribe to the IPO of S Chand and Company Limited?

    GTPL Hathway Ltd. (IPO)

    Jun 21, 2017

    Should one subscribe to the IPO of GTPL Hathway Ltd?

    Zee Ent: Advertising drives revenues (Quarterly Results Update - Detailed)

    Aug 1, 2016

    Zee Entertainment has announced its results for the first quarter of the financial year 2016-17 (1QFY17). The company has reported 18.5% YoY growth in sales and a 13.7% YoY growth in profit after tax.

    Zee Ent: Taxes, lower other income mar bottomline (Quarterly Results Update - Detailed)

    Feb 3, 2016

    Zee Entertainment has announced the third quarter results of financial year 2015-2016 (3QFY16). While the topline grew by 17% YoY, bottomline fell 11% YoY during the quarter.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 21, 2017 (Close)