Industry Characteristics

8/10/2019 Industry Characteristics

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Despite increasing threat from the internet, newspaper circulation in India has witnessed healthygrowth. The industry is characterised by high fragmentation and regional diversity. The Hindi andvernacular newspapers, comprise of 90 per cent of the total daily newspaper publications while Englishnewspapers make up the rest.

State of the Newspaper Industry

Aug 26, 2013

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NewspapersIntroductionIndia, 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. While around

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 about 8

to 10 per cent in 2013. The key players in this industry include Bennett Coleman and Company Ltd (BCCL), Jagran Prakashan, DB

Corp, HT Media and Amar Ujala.

Industry structure and characteristicsHighly 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

cent are Hindi and other vernacular language newspapers, while the rest are in English.

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-English newspapers have a higher readership-to-circulation ratio

Circulation deals with number of newspapers sold whereas readership consists of people who have read or looked 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

No part of this Report may be published/reproduced/distributed in any form without CRISILs prior written approval.

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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 ofcommission 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 at 6 per cent in 2012. While advertising revenues, which are a direct play on overall macro-economic

environment, grew at a muted 4 per cent owing to the slowdown, circulation revenues grew at 11 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.

All newspapers 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, this trend is witnessing a change lately, with more of the advertising spends being directed towards Hindi and vernacular

newspapers. The recent slowdown in advertising (particularly national advertisers) has had a comparatively lesser impact on

non-English papers, since they have been able to garner more of the 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, which may 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 eating into

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 in continuing to garner sizeable advertising revenues.


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Industry Characteristics