Monday, April 03, 2006
Indian Media Boom Revisited
From the Guardian: With a burgeoning middle class and consumer market, India is a target for the UK's newspaper groups.
On the chaotic streets of central Mumbai, where taxis and motorised rickshaws clog the polluted streets below the city's dilapidated colonial buildings, there is a newspaper vendor on every corner. The array of titles on display, laid out on collapsible plywood tables, makes even the vibrant British market seems positively sedate. Dozens of daily broadsheets and tabloids, regional and national, printed in more than a dozen languages, vie for readers' attention. And on Mumbai's packed commuter trains, discarded newspapers litter carriage floors.
The Indian newspaper market is one of the healthiest in the world, with hundreds of daily titles - and it's growing. Total newspaper circulation rose by 8 per last year, according to the World Association of Newspapers. Over the same period, UK circulation fell by 4.5 per cent. Indian sales are likely to continue climbing. With a population around 1 billion, and millions of people migrating from the countryside to the cities every year, new readers are being created by the day. The country's literacy rate, currently running at around 60 per cent according to the World Bank, is rising; the economy is growing; and India's educated middle class is expanding rapidly. The main languages, including Hindi, Urdu and English, are gaining ground at the expense of local dialects, which increases the potential audience for the biggest papers. Most importantly of all, perhaps, there are no constraints on press freedom, in contrast to other emerging markets where economic reforms have not been accompanied by greater democratic freedoms.
The Indian press is as abrasive as any in the world, and the largest English-language title, the Times of India, has a circulation of 2.6 million, dwarfing that of any other English-language paper. It is not difficult to see why Western newspaper groups, including Independent owner Independent News & Media and DMGT, which publishes the Daily Mail, find the Indian market compelling.
IN&M paid £17.4m for a 26 per cent stake in JPL which publishes the Hindi paper Dainik Jagran, in 2004. DMGT executives, meanwhile, have spent 18 months searching for a potential joint venture partner of their own. Independent chairman Sir Tony O'Reilly has already seen his company's stake double in value after JPL floated on the Indian stock market earlier this year, but he has no intention of cashing in. The Indian investment is part of IN&M's long-term expansion, which has already seen it become the biggest newspaper publisher in South Africa and one of the largest in Australia. Last week it confirmed plans to gain a foothold in Russia and there are moves to make investments in the Far East. 'My view for the future of all media is you've got to be location-indifferent, language-indifferent and platform-indifferent' says O'Reilly from his US home in Pittsburgh. The company publishes a Zulu language title in South Africa and more foreign language titles will follow.
Only 5 per cent of the world's population speaks English as a first language, O'Reilly says, so ambitious newspaper publishers need to learn to publish in foreign tongues. 'You also need to choose markets with consumer purchasing power because the lifeblood for newspapers is advertising'. he adds. With an economy growing at 8 per cent per annum, India meets that criterion. 'You can't afford not to be there', O'Reilly says. 'They are going to have better houses, better cars, new clothes, and so on.'
A DMGT source says that it is keeping a watching brief on India, although it is wary of entering the market until restrictions on foreign ownership, already eased to allow overseas investors to buy stakes up to 26 per cent, have been lifted. O'Reilly is more pragmatic. 'You've got to work at these things - 26 per cent is a damn good start.' In Australia, foreign ownership was initially limited to 15 per cent, and restrictions are being loosened nearly a generation later.
DMGT is also keen to 'internationalise', although its overseas sojourns have so far been limited to launching an Irish edition of the Daily Mail. According to a DMGT source, 'we've been monitoring the Indian market because it's English-language, there's an expanding middle class and a voracious appetite for newspapers.'
Executives at the group were approached some time ago by an Indian businessman who wanted to launch an Indian version of the Daily Mail, which would appeal to a similar middle class readership. That is still a possibility, although it would probably not take the Daily Mail name. Nor would it include any localised content culled from the British title. Although many UK papers print editions abroad, they are aimed at British ex-pats or holidaymakers, providing a useful circulation fillip rather than a potentially lucrative new market.
DMGT has also considered launching a free paper, although a company executive says there is a good reason that hasn't been done already. Poorer Indians would be more likely to sell free newspapers for recycling than read them, which is unlikely to lure advertisers.
DMGT is unlikely to enter the market in the short-term, partly because the Indian stock market has soared in recent months and shares in media groups have almost doubled in value. Buying a minority stake now would be expensive. Should that change, the privately-owned Times Group, which owns the Times of India, could be the most likely partner for a British company. Set up by two Englishman in 1838, it passed into India ownership following independence in 1947. It is currently chaired by media baron Indu Jain, who has a $24bn fortune and was last year named the world's 317th richest person by Forbes magazine. The Times sits at the centre of a media powerhouse that includes two TV channels and four papers and has an annual turnover of $400m.
From this perspective, much of the gloom about newspapers in the developed world is misplaced. Advertising revenues are buoyant and if internet readership is added to circulation figures, the press is in ruder health than many observers admit. But increased sales in developing countries have compensated for a steady fall in the West for the last five years, a trend that has not gone unnoticed by western proprietors.
Rupert Murdoch's Times announced last week that it is appointing sports columnist Ashling O'Connor as its new Mumbai-based Indian business editor. A News International spokesman says the move is editorial rather than a precursor to a more aggressive launch on the Indian market, but that could change. Murdoch already has a foothold in the country in the form of satellite TV operator Star, and the opportunity to share in India's economic upside may prove too tempting to resist.
On the chaotic streets of central Mumbai, where taxis and motorised rickshaws clog the polluted streets below the city's dilapidated colonial buildings, there is a newspaper vendor on every corner. The array of titles on display, laid out on collapsible plywood tables, makes even the vibrant British market seems positively sedate. Dozens of daily broadsheets and tabloids, regional and national, printed in more than a dozen languages, vie for readers' attention. And on Mumbai's packed commuter trains, discarded newspapers litter carriage floors.
The Indian newspaper market is one of the healthiest in the world, with hundreds of daily titles - and it's growing. Total newspaper circulation rose by 8 per last year, according to the World Association of Newspapers. Over the same period, UK circulation fell by 4.5 per cent. Indian sales are likely to continue climbing. With a population around 1 billion, and millions of people migrating from the countryside to the cities every year, new readers are being created by the day. The country's literacy rate, currently running at around 60 per cent according to the World Bank, is rising; the economy is growing; and India's educated middle class is expanding rapidly. The main languages, including Hindi, Urdu and English, are gaining ground at the expense of local dialects, which increases the potential audience for the biggest papers. Most importantly of all, perhaps, there are no constraints on press freedom, in contrast to other emerging markets where economic reforms have not been accompanied by greater democratic freedoms.
The Indian press is as abrasive as any in the world, and the largest English-language title, the Times of India, has a circulation of 2.6 million, dwarfing that of any other English-language paper. It is not difficult to see why Western newspaper groups, including Independent owner Independent News & Media and DMGT, which publishes the Daily Mail, find the Indian market compelling.
IN&M paid £17.4m for a 26 per cent stake in JPL which publishes the Hindi paper Dainik Jagran, in 2004. DMGT executives, meanwhile, have spent 18 months searching for a potential joint venture partner of their own. Independent chairman Sir Tony O'Reilly has already seen his company's stake double in value after JPL floated on the Indian stock market earlier this year, but he has no intention of cashing in. The Indian investment is part of IN&M's long-term expansion, which has already seen it become the biggest newspaper publisher in South Africa and one of the largest in Australia. Last week it confirmed plans to gain a foothold in Russia and there are moves to make investments in the Far East. 'My view for the future of all media is you've got to be location-indifferent, language-indifferent and platform-indifferent' says O'Reilly from his US home in Pittsburgh. The company publishes a Zulu language title in South Africa and more foreign language titles will follow.
Only 5 per cent of the world's population speaks English as a first language, O'Reilly says, so ambitious newspaper publishers need to learn to publish in foreign tongues. 'You also need to choose markets with consumer purchasing power because the lifeblood for newspapers is advertising'. he adds. With an economy growing at 8 per cent per annum, India meets that criterion. 'You can't afford not to be there', O'Reilly says. 'They are going to have better houses, better cars, new clothes, and so on.'
A DMGT source says that it is keeping a watching brief on India, although it is wary of entering the market until restrictions on foreign ownership, already eased to allow overseas investors to buy stakes up to 26 per cent, have been lifted. O'Reilly is more pragmatic. 'You've got to work at these things - 26 per cent is a damn good start.' In Australia, foreign ownership was initially limited to 15 per cent, and restrictions are being loosened nearly a generation later.
DMGT is also keen to 'internationalise', although its overseas sojourns have so far been limited to launching an Irish edition of the Daily Mail. According to a DMGT source, 'we've been monitoring the Indian market because it's English-language, there's an expanding middle class and a voracious appetite for newspapers.'
Executives at the group were approached some time ago by an Indian businessman who wanted to launch an Indian version of the Daily Mail, which would appeal to a similar middle class readership. That is still a possibility, although it would probably not take the Daily Mail name. Nor would it include any localised content culled from the British title. Although many UK papers print editions abroad, they are aimed at British ex-pats or holidaymakers, providing a useful circulation fillip rather than a potentially lucrative new market.
DMGT has also considered launching a free paper, although a company executive says there is a good reason that hasn't been done already. Poorer Indians would be more likely to sell free newspapers for recycling than read them, which is unlikely to lure advertisers.
DMGT is unlikely to enter the market in the short-term, partly because the Indian stock market has soared in recent months and shares in media groups have almost doubled in value. Buying a minority stake now would be expensive. Should that change, the privately-owned Times Group, which owns the Times of India, could be the most likely partner for a British company. Set up by two Englishman in 1838, it passed into India ownership following independence in 1947. It is currently chaired by media baron Indu Jain, who has a $24bn fortune and was last year named the world's 317th richest person by Forbes magazine. The Times sits at the centre of a media powerhouse that includes two TV channels and four papers and has an annual turnover of $400m.
From this perspective, much of the gloom about newspapers in the developed world is misplaced. Advertising revenues are buoyant and if internet readership is added to circulation figures, the press is in ruder health than many observers admit. But increased sales in developing countries have compensated for a steady fall in the West for the last five years, a trend that has not gone unnoticed by western proprietors.
Rupert Murdoch's Times announced last week that it is appointing sports columnist Ashling O'Connor as its new Mumbai-based Indian business editor. A News International spokesman says the move is editorial rather than a precursor to a more aggressive launch on the Indian market, but that could change. Murdoch already has a foothold in the country in the form of satellite TV operator Star, and the opportunity to share in India's economic upside may prove too tempting to resist.
# posted by Narayan Lakshman @ 3:17 AM 
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