Good news for newspapers
The newspaper trade is growing after five years. How publishers use this bounty will determine its future
The big surprise in the annual Federation of Indian Chambers of Commerce and Industry (FICCI)-EY report released this week is not the growth of digital. It is the 4 per cent revenue growth in print (largely newspapers) in 2023 over 2022. The report expects print to continue to expand at a compound annual growth rate of 3.4 per cent till 2026.
This is the first time in five years that newspapers have grown both advertising and pay revenues. That should not be so surprising. There are reams of full-page ads across India. TAM Adex data shows that advertising volumes and value have risen over their pre-pandemic levels (see charts).
On the ground, too, some of the largest newspaper publishers are having a good year. DB Corp has just had its 10th straight quarter of growth in revenues and profits. The publishers of Dainik Bhaskar (Hindi), Divya Bhaskar (Gujarati) and Divya Marathi among other brands made a net profit of ~169 crore in the financial year (FY) ending March 2023. In the first nine months of FY24, DB Corp had already crossed this figure to hit ~303 crore in net profit. It should finish the financial year at twice the FY23 number, say analysts. The Malayala Manorama Company more than doubled its net profit to ~81 crore. Other publishers are set for a nice growth in net profits in the year ending March 2024.
The reasons? “Newsprint prices have fallen to $500 a tonne (in the last quarter) and cover prices (across newspapers) have increased, ”says Girish Agarwal, non-executive director, DB Corp. Newsprint forms 45-50 per cent of the total cost of publishing a paper.
Therefore, any variation in its price hits both the top line and bottom line. Add the advertising bounty and “print is doing very well”, he adds.
“There is a confidence level print has established that keeps advertisers coming. And over the last 10 years, the choices we make for the top four cities haven't changed,” says Shrikant Shenoy, associate vice-president, Lodestar UM, a media buying agency.
This is in spite of there being no metric to measure what is actually happening to newspaper readership and circulation (copies sold). There has been no readership survey since 2019 and audits of circulation no longer offer a clear picture because publishers jump in and out of them all the time.
“The metric doesn’t matter to us because 75 per cent of our advertising is local,” points out Agarwal. Jayant Mammen Mathew, executive editor and director, Malayala Manorama, agrees: “Advertising is going to the top players; the dealers know what response they get from the number one and two papers in a city.”
The real problem the business faces is that “after Covid the general narrative is not favouring print”, says Agarwal. Media buying agencies, which get 30-40 per cent margins on digital against say one per cent on newspapers, have been talking up digital long before print or TV started maturing.
The real news about newspapers
That said, “circulation has been under a lot of pressure”, says Mathew. Depending on the language there has been a fall of anywhere from 10-30 per cent in copies sold and a subsequent fall in readership. In 2019, newspapers logged a total readership of 421 million — just about half the reach of television and about 80 per cent of the internet currently.
In general, though Indian newspapers are in better shape than their American or European counterparts because home delivery and the reading habit ensure circulation doesn’t plummet the way it has in the West. Over the last two decades, newspaper sales in the US have halved — from 55 million to about 23 million copies. More than 2,200 local papers have shut down. India still sells 226 million copies of daily newspapers, going by Registrar of Newspapers data for 2021-22.
Through the early part of the millennium when the West was seeing its sharpest decline in (physical) newspaper reading and sales, the same numbers were rising in India. This gave many owners the time and money to focus on digital. The Times Group, The Indian Express, DB Corp all have a huge presence online and are among the top sources of news for Indians. But none of it brings any serious revenue thanks to the dominance of tech-media firms. Google (Search, Youtube) and Meta (Facebook, Whatsapp and Instagram) took away more than 80 per cent of the ~57,600 crore spent on advertising online in India in 2023. That leaves very little for publishers, streaming firms or any other media operating online.
Some of this can be dealt with a la Netflix, which has created its own world where people pay to watch the programming they want without ads. This involves spending money on the tech tools and people needed to generate, analyse and distribute news much like say The Financial Times or The New York Times do. Soon after the pandemic wiped out 70 per cent of their top line, Indian publishers started working on raising cover prices, investing in paywalls among other things.
Agarwal reckons that print has a (cyclical) bounty that should be invested in strengthening the business by investing in editorial, tech and hiring more people. Often than not the firms that are aggressive about investing in the future are helmed by the younger generation of the founding family or owners. The ones where the older generation is still in charge have been slow or resistant to change.
It won’t take much guesswork to figure which brands will come out stronger once the digital dust settles.