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  • DECEMBER 19, 2007

Jagran Prakashan: Getting diversified

With new players attempting to cannibalise the existing market, established players in the India media and newsprint industry are increasingly trying to expand the pie itself. While the newspaper business continues to be the mainstay for Jagran Prakashan (JPL), in order to face the increasing competition and to diversify its revenues, the company has moved into newer verticals. It also has ventured into English newspaper segment, with the launch of City Plus and i-Next. English newspaper earns more than twice the advertisement revenues than that of Hindi newspaper. Also it de-risks the model. In this article, we give an insight into the company's diversified business model.

City Plus: It is a free English infotainment weekly covering lifestyle, health, fashion, food, gizmos and shopping guides, with a very focused target group of age bracket of 18 to 35 years in SEC-A & B regions. It was launched in September, 2006 in Gurgaon, Noida, Ghaziabad and Faridabad. The business model is solely dependent on ad revenues with high ad-edit ratio of 60% to 70%. The company hopes to leverage on the BPO, retail and real estate boom in these regions to earn high advertisement revenues. However, brand loyalty for a free newspaper is low and also does not have a large readership base. Further, there are no subscription revenues for the company. JPL has plans launch the product in 10 to 12 townships by FY08 and 25 to 30 townships by FY09 depending on the response.

i-Next - JPL launched a second brand iNEXT in Kanpur and Lucknow in December, 2006, with a subscription price of Rs 2. It is a bilingual daily in a tabloid format targeting the 18 to 34 age group in SEC A and B1. The company does not have to incur additional expenses as it would be able to use the existing infrastructure. JPL's aim is to target new advertisers and readers. The company is envisaging launching this brand in 6 to 7 key cities in the next fiscal. Though initially the margins might be affected, over a longer period the strategy is likely to pay off.

JPL entered into a strategic partnership with Independent News and Media PLC for publishing the facsimile edition of the Independent (international edition). Independent News has a global reach with operations in national, international, radio and outdoor advertising. It is more of a branding strategy entered by JPL. The company is also looking at acquisitions in the English newsprint front.

Beyond newsprint...
To diversify its exposure from print revenues alone, JPL has ventured into two new businesses: event management through Jagran Solutions and OOH advertising under the brand 'Jagran Engage'. The move is to offer its existing clients complete package in advertising, catering to local needs and hence have synergies with current operations.

OOH: JPL has ventured into OOH under Jagran Engage. JPL has launched its OOH operations in FY07. Jagran has brought 500 sites under its fold in the first few months of operations. The company has already earned Rs 180 m from OOH in FY07 (3 % of total sales), and expects it to scale up to Rs 1.3 bn by FY10E (11 % of total sales). The management is also positive on it breaking even in FY08. The OOH industry was estimated at Rs10 bn in 2006 and is expected to grow to Rs 21.5 bn by 2011, at a compounded annual rate of 16.5% (source PWC report).

Event management: The company entered this segment in FY05 and has grown at a CAGR of 230% over the last two years. Further its partnership with Independent News and Media would help JPL. It has earned Rs 120 m from this segment in FY07 and expects to touch Rs 500 m in FY10E.

Further, JPL also launched its internal portal (www. Jagran.com) in 1997 and has tied up with Yahoo India to launch a new co-branded Hindi news and current affairs internet portal.

To conclude...
The new businesses are linked to the existing client relationships and infrastructure and hence capex requirements would be low. Further, these segments have higher margins, thereby improving the margins of JPL in the long run. However, the execution risks remain.

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