Media industry in India was badly hit by the global economic downturn and yet it is only their greed and ignorance that is to blame.
On a sultry February evening, the high and mighty of print media in India, namely, Indian Express’ Shekhar Gupta, HT’s Shobhana Bhartia, and TN Ninan of Business Standard dropped for a visit at Shashtri Bhavan to meet Anand Sharma, then the MoS for Information and Broadcasting.
The meeting was unusual as the triumvirate of Gupta, Bhartia and Ninan were meeting the Minister not as condescending journalists but as supplicants pleading for a bailout especially for the newspaper industry due to pressures borne out of the economic slowdown.
Apparently, the minister gave them a kind ear and promised to look into their demands. Within a few days, the government announced a stimulus package that comprised a waiver of 15% agency commission on DAVP advertisements and a 10% increase in rates for the ads released by the DAVP.
Certainly, it must have been a major embarrassment for the proud Czars of the Fourth Estate to mollycoddle the very government they are prone to stick a knife into. But ever since the tide turned in the US markets and thereby the rest of the world, the media industry in India and elsewhere has been under severe pressure in terms on increase in input costs and a massive reduction in revenues.
Not such a ‘fine print’
Indeed the inputs costs in terms of newsprint prices have really ballooned over the past year so or so– by around 60% since 2007. According to recent study done by FICCI-KPMG, the sudden escalation in newsprint prices is one of the primary reasons why the newspapers have suffered. The study estimates the print media industry to be collectively worth around Rs. 17260 crore for 2007-08, and due to the pressures from within and outside the collective growth of the industry has been pegged at a paltry 7.6% and projected to grow by some 6% in the current year.
The media sector that is accustomed to grow at dizzying double digits is unable to cope with this speed breaker and is looking at ways and means make the gloom go away. It was this scenario that compelled the likes of Shekhar Gupta and Shobhana Bhartia to implore the government for some succor. And yet, somehow the heart really does not go out for the printwallahs, because for all the tears they might be shedding at the moment, they are to be blamed for the muddle they are in. The mess, so as to say, is of their own making.
There are basically two reasons, why the media industry and more specifically the printwallahs find themselves at the mercy of the market forces. Let’s take them one at a time.
Too much focus on Mammon is the primary ailment that the media sector suffers from. In fact for all the claims of virtuosity, the Indian media is inherently dependent on the moods and fancies of a few capitalist barons became obvious in the wake of this crisis. In their obsession to rake in more and more moolah, the printwallahs completely let go of business and logical rationality. Sample this, every day, when the Times of India, is delivered at your doorstep the cost to Bennett & Coleman (the publishers of TOI) is around ten times the price you fork out for the copy. According to estimates, the cost of publishing a newspaper of the size and format of TOI is around Rs. 50-55 per copy. And, yet the company continues to grossly subsidize the paper, by charging the reader Rs. 5 instead of Rs. 55. The answers like in the numerous adverts that abound in the paper. The paper charges a premium to its advertisers and thus able to offset the loss in terms of cost overruns.
The chief reason why the printwallahs have not really increased the prices of their edition is because of their misplaced belief that the consumer will not be ready to pay a higher price for their product, and thus they are completely dependent on advertising revenues as a source of income.
Consider this, of the Rs 17260 crore income, around Rs. 10840 crores came from advertising revenues, that’s around 63% of the total revenues, while circulation and stand revenues constituted for the rest 37%.
Thus, in some strange odd ways, the health of the print media industry is not dependent on the discerning reader but on the financial outlook of the Airtels, Videocons, Colgate Palmolives, P&Gs, etc. So, when the economic gloom descends over these companies, the printwallahs suffer. And 2008 was a year of suffering.
With the advertising revenues drying up fast and quick, the lulled management in various media went into a panic mode, slashing jobs, reducing pay, folding up editions. In fact, they did everything except for the thing that really mattered reduce the dependency on advertising revenues by being honest with the readers and ask them to take on a share of the burden.
Another factor that is probably stopping them to do, is because there is little love between these different media companies, ToI hates HT, IE wants to upstage HT, BS is under fire from BL, ABP is cutting out DB, and so on. Hence, the reason why ToI does not want to increase the rate is because it is not sure whether HT will do so and vice-a-versa. And yet all of these media barons have been united in begging the government for better ad rates and lower duties. If only they could learn to work among themselves as well.
The second ailment is the archetypical mindset. While the world over, thanks to technological innovations like the Internet and mobile devices have truly changed the way the user consumes content. Indian media companies still seem to be stuck in the nineties. Indeed almost all of them have a web portal or a mobile version of their papers, but that’s where it starts and ends. They have not yet found a way to monetise the content effectively and that’s a major bane. For instance, take the case of the IDG Media Group, an international media conglomerate that publishes over 300 magazines especially in the B2B space across the globe. Over the years, the company has steadily worked at shifting it publications on to the Web and now, according to estimates more than 50% of IDG’s revenues now come from online. None of the media organizations really have a plan for the online, except probably engaging the audience and this is proving to a big lacunae.
While the printwallahs have suffered due to the downturn, the TVwallahs have not done any better. In fact, they are much worse hit by the economic downslide. The sad irony is that they suffer from the ailment as their print cousins do; the difference is their dependence on ad revenues is much more critical, as all their revenues come from it. Result, as the big buck companies put a stop on spending, the TV news channels had little option but to reinvent themselves as Infotainment channels. Thus scores of shows on lifestyle, entertainment and sports were introduced so as to spread the advertising net as far as possible.
And in their attempt to “be all for all”, the news channels have not only lost their true essence, but had to resort to lowbrow gimmicks to attract the eyeballs. This was especially in the case of regional Hindi channels that are fighting it out for the revenues of the chaddi-baniya companies. Sensationalisation became the norm; everything from sex to crime was employed as tools to amass an audience.
But even the high-brow English news channels have not been insulated from the mad rush for eyeballs, and again and again one can see journalistic ethics being sacrificed on the altar of greed with a simple explanation; “what to do, the masses want it”. Under the guise of delivering what the masses want, the electronic media is again and again touching new lows, from airing silly astrology predictions to doing covert sting operations. And the sad part is, if the economy continues to dither, these channels are going to become much crasser.
Meanwhile the radio is too small a medium to be genuinely affected by the downturn. On the contrary it will only benefit at the moment, as the advertisers slash budgets while trying to advertise. In fact the industry is growing at healthy CAGR of around 20%, the revenues of the Radio channels, inclusive of AIR, are pegged at Rs. 840 crore. Thus, the only medium that has not been affected by the downturn is the Radio.
Crystal gazing into the future
Honestly speaking, the picture is not really that bad. Since, China and India have really bucked the international trend of falling newspaper readership and channel viewer ship. It is only that a little bit of sanity and rationality is all that is required on the part of the media bosses. Rather than snipping and slashing at their employees they should be reassessing their strategy, lest they don’t have to stand with a begging bowl in front of ministers or media barons.
And finally, I am reminded of an incident took place in the early fifties, S Sadanand, the avant-garde founder editor of The Free Press Journal, had staked his reputation and money in establishing a wired news agency from India. Sadly at that time he got into a confrontation with the government over some of the anti-establishment stories being carried out in the newspaper. The government of the day tried to stall the negative criticism and apparently one of the senior most ministers in the Nehru cabinet had a meeting with Sadanand, and told him in no uncertain terms that if he did not relent, the wired agency being set up by him would not receive the necessary clearance from the government and he would be ruined.
Without a flinch, Sadanand chose financial ruin over loss of integrity and continued his tirade against the government even at the cost of his dream being nipped in the bud.
I sincerely hope that current heir to Sadanand’s legacy, namely the Guptas, Bhartias, Ninans, would be a little more discerning when it comes to parrying favours from the government. It is high time they started paying attention to setting their house in order, so that they are immune to ups and downs of the economy and not forget just one basic principle of journalism; By the reader, for the reader. At the moment, it just sounds like a silly phrase; though it is certainly not.
(Media Praxis, a new magazine ‘on’ the media, had invited me to write a piece for the inaugural issue. Since, I have had a ringside view on the business of journalism, I chose to pen an article on the impact of downturn on the media. In the process of jotting down the piece, the scope of the article kept increasing and finally it took shape of an overall comment on the industry. I somehow managed to pull myself out of the labyrinth and this piece is a result of the same exercise. Media Praxis (mediapraxis.in) is edited by the renowned journalist Prabhat Sharan.)