• OUTLOOK ARENA
  • SPECIAL REPORT
  • DECEMBER 22, 2001

Print Media: Down but not out

In our last report on Print media we focused on how the medium is finding it hard to sustain its prominent market share in the total advertising pie. Click here for the last report. Let us now consider some other interesting trends in print media. India has more than 700 publications covering a very wide spectrum of languages with varying frequencies. Though the industry faces stiff competition from emerging media platforms there is huge untapped circulation base, which offers growth opportunity for the industry going forward.

There are two primary sources of revenues for the print industry viz, Circulation revenues (Cover price) and the advertising revenues. Over the years, cover prices of most circulations has shown a plateau mainly due to concentration of most publications towards select reader base (mainly urban). I.e. competition in the industry has resulted in circulation revenues as a percentage of of total revenue dropping significantly.

Thus, the industry is increasingly getting dependent on advertising revenues for its survival, which inturn is directly related to the general economic scenario. Typically, advertising revenues account for more than two thirds of total revenues for a publishing company. Let us take the example of Midday Multimedia. Inspite of being a market leader in the tabloid business, the per unit circulation revenue has remained almost constant in last 5 years. The chart below shows that advertising revenues now command more than 85% of the print business.

Though the volume of advertisements in print media is showing an uptrend, the ad-space rates are facing stiff competitive pressure. The growth in ad-revenues thus is showing signs of stagnation due to this dip in average ad-rates. Available data on print media revealed revenue dropped for magazines by 5% and daily and Sunday newspapers by 7% and 10% in FY00. On the other hand syndicated networks and cable television showed gains of 5% and 6% respectively.

A slowing global economy is shrinking corporate ad-budgets. The chart below shows projected advertising revenue growth rates in the global advertising market, which shows a grim picture of ad-spend growth for the next two years.

Ad spends Growth: A Grim Scenario
Growth (%) 2000 2001E 2002E
Newspapers 2.0 -1.5 -1.2
Broadcast Networks 10.1 -3.5 -3.5
Radio 12.0 -5.0 -2.0
Magazines 12.0 -3.5 -1.5
Network Cable Television 22.0 5.0 5.0
(Source: The wall street Journal)

Considering this backdrop the print media is now exploiting content across different delivery platforms including the Internet and television. Media players are trying to offer an integrated bouquet of advertising services to provide a package deal to a prospective advertiser.

Another interesting trend emerging in the print industry is reducing frequency of publications to maintain the relevance of news. This assumes significance considering the fact that the industry faces double jeopardy from TV / Cable news as well as from online web news. Apart from real time nature of these new delivery channels what makes them attractive is the digestable form in which audio-visual channels present news. To counter this, newspapers are becoming more innovative with colourful layouts, additional features and increasing number of supplements giving in-depth coverage on specific subjects. At the same time magazines are also changing their frequency by converting from once a month to fortnightlies and so on.

Amidst a tough scenario, a silver lining for the print industry is an opportunity to widen circulation base. The growth in newspaper readers in India since 1996 has been more than 25%, which is amongst the highest in the world. There is further scope for growth as 59 m urban adults are literate but do not read any publication. The challenge for the print media would be to convert this population in to readers. A higher reach and readership would inturn translate in to higher advertisement revenues. Further, only 17% of the literate population in rural India is served by publications, which offers a huge opportunity for niche lingual press.

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 (Research Analyst) bearing Registration No. INH000000537 (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, Canada or the European Union countries, 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 (Research Analyst)
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