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Despite increasing threat from the internet, newspaper circulation in India has witnessed healthy
growth. The industry is characterised by high fragmentation and regional diversity. The Hindi and
vernacular newspapers, comprise of 90 per cent of the total daily newspaper publications while English
newspapers make up the rest.
State of the Newspaper Industry
Aug 26, 2013
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Newspapers
Introduction
India, along with China, is one of the largest newspaper markets in the world where readership is growing despite increasing threat
from the internet,primarily owing to ever-increasing literacy levels and the relative under-penetration of newspapers. Whilearound
68 million copies were circulated on a daily basis in 2012, the readership increased by 4 per cent y-o-y to about 260 million.
The newspaper industry size was estimated to be around Rs 180 billion in 2012 and CRISIL Research expects it to grow by about8
to10per cent in 2013. The key players in this industry include Bennett Coleman and Company Ltd (BCCL), Jagran Prakashan, DB
Corp, HTMedia and Amar Ujala.
Industry structure and characteristics
Highly Fragmented industry
The Indian newspaper industry is characterised by extreme fragmentation and regional diversity. With over 2,000 daily newspapers
in the country, no single newspaper dominates national circulation. Out of the total daily newspapers published, around 90 per
centare Hindi and other vernacular language newspapers, while the restare inEnglish.
The newspaper industry can be segmented across languages i.e. English, Hindi and other vernacular languages or across genres
i.e. general and business. The content and circulation of English language newspapers are largely focused on the large urban
markets. Hindi and other regional newspapers have a more local and regional focus compared to English newspapers and cater
mainly to readers in smaller towns and villages.
Newspaper: Publication and region of dominance
Non-Englishnewspapers have a higher readership-to-circulation ratio
Circulation deals with number of newspapers sold whereas readership consists of people who have read orlooked at a publication
in its periodicity (that is, the day before for a daily). Generally, Hindi and regional language newspapers have a readership to
circulation multiple of 4-6 times, whereas English language newspapers have a multiple of 2-3 times.
The higher readership-to-circulation ratio of Hindi and vernacular newspapers in comparison with English language newspapers can
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be attributed to the following reasons:
Historically, the cover price of non-English newspapers has always been higher than English newspapers.
The rise in literacy rates, increasing demand for region-specific content, and expansion by players into new languages and
geographies(Tier-2 and Tier-3 cities) to further enhance readership.
The average reader of a non-English newspaper belongs to a lower income group than that of English newspapers. Hence,
the tendency of sharing the newspaper among family members and other members of the community is stronger in case of
non-English newspaper readers.
Supply chain for newspapers
Newspaper publishers in India are yet to be affected by the worldwide proliferation of the internet. Newspapers, in physical form,
continue to record healthy circulation growth. News is a highly perishable product and newspaper sales involve distributing under
severe time constraints. If a subscriber does not get his daily dose of news in time, he is most likely to switch over to competitors.
Therefore, having an efficient and responsive distribution network focused on achieving on-time delivery is of utmost importance in
the newspaper publishing industry.
Distribution process
Source: CRISIL Research
There are three main players in the newspaper supply chain - the newspaper publisher, distributor and vendors. Once a newspaper
is published, it gets dispatched to various distributors across a region, either through private carriers within the local area or public
transport/couriers in case of longer distances. The distributors in turn appoint agents/hawkers/vendors who deliver newspapers at
the door step of the subscribers or sell newspapers at their stands. Newspaper publishing companies pay a commission for the
distribution of the newspaper, which is usually around 30-35 per cent of the selling price of the newspaper, which is shared amongst
the distributors and the vendors appointed. Generally, the vendors, the last link in the supply chain, get the highest commission.
Newspaper revenues
Newspapers earn their revenues from two primary sources -the sale of advertising space in publications (referred to as advertising
revenues) and sale of newspapers (referred to as circulation revenues). Newspaper publishing companies report advertising
revenues as net of commission charged by advertising agencies (usually around 15 per cent) and circulation revenues as net of
commission paid to distributors, agents and vendors.
Circulation revenues earned by a newspaper are a function of the following factors:
Price, brand strength and distribution muscle of the newspaper
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Intensity of competition among newspapers in a market
Quality, relevance and credibility of content
Advertising revenues earned by newspaper publishers are dependent upon the following factors:
Readership reach (used by media buyers to determine cost per thousand readers) and profile.
Geographical coverage and positioning of the newspaper
Advertising mix (advertisement revenues are earned from classifieds, displays, cinema and entertainment, appointments,
matrimonials etc.) and level of advertising in the newspaper.
Advertising revenues drive the newspaper industry
The newspaper industry grew at6 per cent in 2012. While advertising revenues, which are a direct play on overall macro-economic
environment,grew ata muted4 per cent owing to the slowdown, circulation revenues grew at11 per cent owing to an increase in
circulation as well as selective rate hikes effected by leading publishers. We expect the overall newspaper revenues to increase to
around Rs 196 billion in 2013, with continued support from advertising revenues, which are estimated to grow on the back of events
such as the IPL and the Assembly elections in a few states.
Allnewspapers heavily dependent upon advertising revenues
Advertising revenues are currently estimated to account for around 70 per cent of the total revenues earned by the newspaper
publishing industry, while most of the remaining comes from circulation.
English newspapers garner the larger chunk of corporate advertising spends, despite lower circulation numbers as compared to
regional newspapers. English newspaper readers are considered to be from the higher income bracket and have better purchasing
power than Hindi or vernacular newspapers; hence, advertisers channel a larger portion of their advertising spends through English
newspapers.
However, thistrend is witnessing a change lately, withmore of the advertising spendsbeing directed towards Hindi and vernacular
newspapers. The recent slowdown in advertising (particularly national advertisers) has had a comparatively lesser impact on
non-Englishpapers, since they have been able to garner more ofthe local / regional advertising pie.
Advantages of print media
Lengthy, complex or detailed information and descriptions can be communicated through advertisements in print media
Readers have the option to refer back to newspaper advertisements, which is not possible in any other media
Readers have the freedom to read a newspaper at a time and place convenient to him/her, whichmay not be possible in
other media.
Disadvantages of print media
Viewers tend to switch television channels during commercials, which they cannot in the case of print.
Viewers have access to multiple channels on television, whereas newspaper readers read only selected newspapers.
The popularity of print media as an advertising medium has always been challenged by television. Now, radio and digital media
(mobile & internet)are also establishing themselves as credible advertising platforms with a wide reach and are gradually eatinginto
the print media advertising pie.While the larger newspapers may not be impacted much by this development over the medium term
owing to their wide reach, smaller players would face challenges incontinuing to garnersizeable advertising revenues.
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