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Mainstream, VOL LV No 19 New Delhi April 29, 2017

Three Paths to Media Salvation or Perfidy

Sunday 30 April 2017

by Amitava R. Sinha Roy

Newspapers are at an inflection point today as readership habits are changing due to digital adoption being faster than expected. The future of the print media is at stake with big national dailies shutting editions, laying off staff, slashing costs and freezing expansions and investments. Smaller papers have been travelling on this path for quite some time.

A slow but relentless fall in the number of readers, time spent in reading newspapers, advertisement rates and volumes coupled with the November 8 demonetisation bombshell made Indian newspaper managements an extremely worried lot as 2016 drew to a close and into the New Year. With the newspaper industry facing a massive resource crunch, three major groups took different routes to weather the storm. While The Telegraph cut pages, supplements and laid off staff, The Hindu raised its cover prices and the Hindustan Times shut editions and bureaus apart from laying off staff.

 Two wrongs and a rigHT (a pun on HT!)? Or so, it would seem. But, on a more discerning look, not quite so.

 According to an e-mail sent on December 6, 2016, by Rajiv Verma, the HT Media CEO, addressed to everyone in the group: “Our revenue streams on print business have been under strain for a prolonged period now. With every passing quarter, we are staring at a possibility of serious profit erosion for the company. It is high time that we bring in some proactive inter-ventions... We have therefore decided to undertake a serious introspection of our costs & spends, followed by all necessary actioning that would help us reduce costs and become a more productive & efficient outfit. Partnering us in this endeavour would be the Boston Consulting Group (BCG) and their team has been deployed on the ground. The program will focus on all core functions — Procurement, Manufacturing, Editorial, Sales, Marketing, Circulation, IT & Admin...”

Hindustan Times wound up its business bureaus in Delhi and Mumbai. To add insult to injury, the HT management then announced the closure of the newspaper’s Kolkata, Ranchi, Bhopal and Indore editions. HT bureaus in Allahabad, Varanasi and Kanpur were also shut.

HT shrewdly, but, of course, sadly for journalists, decided to close editions which were not market leaders and not expected to make headway. Similarly, bureaus which had poor newsgathering records and were situated in skimpy news areas were shut. The money saved is expected to be invested in hiring journalists, among other activities, in Delhi, where it is the market leader, and in Mumbai and Chandigarh where it is seen to be surging. The tree gets fresh impetus to grow when the dead leaves and branches are pruned, so to say.

This is one path righteously travelled.

But the most intriguing and idealistic move has been made by the venerable The Hindu which recently raised its cover prices. Is this marketing ‘no no’ likely to offend loyal readers? Will the circulation of The Hindu be affected by the price rise? The cover price has been raised in Delhi from Rs 8 to Rs 10 on weekdays and from Rs 8 to Rs 15 on Sunday, effective from February 17. The cover price for weekdays in Chennai is Rs 4, on Friday it is Rs 5, on Saturday Rs 6 and on Sunday, it rises to Rs 12. With this, the circulation numbers may not hold. Marketing circles say that it is too early to tell but at least 1000 The Hindu subscribers in Chennai could have stopped buying on Sundays as of now since the cover price is Rs 12. The number is expected to go up.

 The price-conscious readers of The Hindu in Chennai and other parts of Tamil Nadu may move to a cheaper English newspaper. Also, 50 per cent of English newspaper readers who read a Tamil daily could shift to lower priced products. Hence, The Times of India may not be the only one which could gain numbers. Indian newspapers have kept cover prices among the lowest in the world (Rs 3-5 per copy on an average) so as to keep them affordable for readers for whom the newspaper is a source of not just information and entertainment, but also education and knowledge. As result, circulation revenue remains low and does not come anywhere near covering the cost of producing and distributing newspapers (adver-tisers cross-subsidise readers), according to a recent Times of India editorial, Indian newspaper industry: Red ink splashed across the bottom line. Hence, The Hindu decision to raise cover prices is revolutionary or may even be termed foolhardy.

There is always a certain section of middle- class readers that is price sensitive and may not see value in subscribing to The Hindu at a higher cost; the returns from raddi will not compensate for it. They may move to TOI,The NewIndian Express or Deccan Chronicle. TOI looks like the natural choice, though The New Indian Express too is sprucing up quality. But, TOI has a better pull as of now.

 In Tamil Nadu, a rough estimate would indicate that only a quarter of all newspapers sold are in English. But given its high level of literacy and affluence, Chennai, unlike the rest of TN, is not overwhelmingly a vernacular market. More than 50 per cent of all newspapers sold in the city are in English. TN’s per capita income is third highest in the country among large States (I’m not including smaller ones like Delhi, Goa, etc. in this ranking). One reason for TN being a strong regional market may be the fact that Tamil newspapers are well produced, offer plenty of variety and connect with the ethnic culture and mindset of the masses.

There is a floating population of English newspaper readers who switch loyalties depending on the pricing. For instance, when TOI launched the Chennai edition in 2008, the introductory offer was Rs 199 for an annual subscription with a travel bag thrown in as a gift. Lots of so-called long-time readers of The Hindu snapped up the TOI offer and discontinued The Hindu. Some media experts say they were always waiting for a more vibrant newspaper and hence may have decided to shift. In my view, TOI’s economical rates did help to hasten that move. Conversely, I’ve also seen people in tier-II/tier-III cities in TN who stopped subscribing to an English newspaper when both The Hindu and TOI increased their prices.

 Of course, The Hindu management would have anticipated the likely fall in circulation when it raised prices. But, it may have an exalted view of the brand equity and expected a negligible/marginal drop. Or, they were counting on reader loyalty and became myopic. It is believed that an attractive subscription scheme to stop the erosion on Sundays is now being planned. The Hindu management may have anticipated a small drop in circulation, but it may try and offset it by offering more complementary or concessional copies in a way that makes the newspaper more visible. For instance, they may sell it at a subsidised cover price to hotels, restaurants, coffee shops etc. Advertisers, after all, care more about readership than circulation numbers.

Does it make sense for an essentially regional, South-based and Tamil Nadu-entrenched group to try to have a high-cost all-India footprint?

Delhi is fine as the product is meant essentially for bureaucrats and IAS aspirants and gives a presence for editorial to get government/political and international news that all the newspaper’s editions need. A higher price and not playing to the advertising market is fine for the edition. But, the jury may be out on the other smaller non-TN editions. It also depends on how deep your pockets are and how badly you want to hurt TOI in the TN market. According to market- watchers, The Hindu may have already lost 1 lakh circulation in Chennai over the past few years. It doesn’t seemingly have the solutions to stop this bleeding. And this could affect circulation and revenue. One view is that to fight TOI, you have to be a better TOI, not a better The Hindu.

Is The Hindu doing all the wrong things that HT tried before it resigned to becoming a TOI clone and managed to arrest the slide?

 It may be financially wise with cut-throat competition to invest in your core Chennai market where TOI is snapping at your heels than expend intensive funding in also-run editions. The Hindu should concentrate on Chennai, followed by Hyderabad, Bangalore and then the smaller southern towns which are quite big as TN and Kerala are urbanised states. Another view: Nothing quite wrong there. It’s like what HT did. TOI shook up its Delhi flagship, so HT said we will attack TOI where it hurts, that is Mumbai. Whether or not it worked is debatable. Mumbai Mirror would not have happened if HT had not opened its Mumbai edition, so in a way TOI was forced to react to a situation. Having said that, TOI’s marketing and branding team is way too professional and will come up with strategies to make the competition bleed further. The Hindu’s muddled Mumbai foray doesn’t quite help.

 For The Hindu, it is important to expand its footprint in Mumbai, Delhi and Bangalore because it is aware that it has a small, albeit committed, following in these cities. A significant percentage of bureaucrats, politicians, diplomats, writers, artists, lawyers and civil service aspirants sees The Hindu as a thought leader. This is largely because of the stickiness of readership driven by its special brand of content. (But, in a countertrend in recent times, The Hindu has been refashioning its content and becoming less distinguishable from other national newspapers. It is also possibly spending less on news gathering than before, cutting down drastically on its state capital postings as well as network of foreign correspondents.)

 (An aside: The overall trend now seems to be of traditional news organisations focusing less on original content due to the pressure on profitability. This trend would eventually cede advantage—in terms of eyeballs and advertise-ment revenues—to giant aggregators like Facebook and Google who are cannibalising existing media brands.)

 It wants to entrench itself deeper in this constituency because it thinks opinion-makers can help expand its reach and influence. With the Right-wing on the rise, it wants to position itself as the voice of reason, as a newspaperpaper that is meticulous with its facts, sober and elegant in its style, investigative in its reporting, and high-minded and liberal in its approach.

I don’t know if this makes financial sense, but the owners hope to reinforce the idea of a newspaper that is bigger and more important

than its circulation would suggest. And it has worked to an extent. Media planners tend to see them as a strong or dominant player in the South with a growing national footprint.

This journey has started down another path in the quest for salvation.

 The Anandabazar Group recently decided to reduce the pages of Anandabazar Patrika and The Telegraph. Also, a number of supplements for both newspapers have been suspended. Several regular pages are being scrapped as is The Telegraph’s popular Sunday magazine Graphiti.

 To this was added the spectre of massive retrenchments. After being asked to study the group’s workings for nearly six months, Hey Consultancy Ltd of the US recommended streamlining of the group’s various newspapers, magazines and news channels to cut losses by slashing expenditure. The Hey report observed that the group has at least 47.5 per cent surplus workers.

 The move comes a few months after Aveek Sarkar stepped down as Editor-in-Chief of the group’s two main publications, Anandabazar Patrika and The Telegraph, leaving his younger brother Arup Sarkar at the helm of affairs as the chief editor. Arup Sarkar’s son Atideb was made executive director of the ABP Group. For the last two years, the ABP Group has been in a bitter spat with the ruling Trinamul Congress and West Bengal Chief Minister Mamata Banerjee, resulting in the State Government stopping advertisements to the ABP’s publications.

 Cutting flab is one thing, but cutting into a newspaper’s muscle and bone by reducing vital creative staff, regular pages and widely-read supplements is akin to being suicidal. Specially so in Kolkata and West Bengal where The Telegraph is locked in a deadly struggle for primacy with the formidable TOI.

The ‘Third Eye’ is believed to be all seeing, but does the third path lead to salvation or perfidy?

Only time will tell.

The author is a journalist who has spent 36 years working in newspapers in Delhi.

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