The cash flow problems in the industry began in 2019, and almost every publisher is bleeding.
Three weeks ago, the promoters of Dainik Jagran, claimed to be the world's largest-read daily, tried to quell the speculation in the stock market that they were cash-strapped and had pledged their shares to raise funds for operations.
In a communique to stock exchanges, dated May 1, Jagran Prakashan Ltd said they in fact raised Rs 250 crore through a private placement. The proceeds will surely help it refinance existing debt and/or infuse working capital in the immediate future as both advertising and circulation revenues have turned a trickle.
Jagran's readership numbers and the share price have typically moved in tandem, though the promoters would have preferred them to be decoupled. It is true that the economic growth slowdown and the resultant fall in advertising revenue had indeed dealt a nasty knock on the stock.
Over the last one year, its share price tumbled 68 percent from the yearly high of Rs 119. In line with many other media stocks, the value of the promoter's stake at Jagran Prakashan Ltd shrank to Rs 700 crore, nearly one-third from its peak.
The Indian Readership Survey (or IRS 2019), of which numbers for the entire 2019 are available now, show that the average issue readership, or AIR, of Dainik Jagran has fallen steadily from 2.03 crore in January-March 2019 to 1.69 crore in October-December. (AIR is the number of people who have read or looked at a newspaper in a day, while total readership, or TR, is the number of readers who read a newspaper in the last one month.)
However, despite the 17 percent fall in AIR, Dainik Jagran retained the numero uno position in India thanks to a general drop in readership for most of its competitors.
In Uttar Pradesh, the biggest market for Hindi newspapers, Dainik Jagran's fortunes have reversed in 2019. Its AIR dropped from 1.2 crore in the first quarter to 99.7 lakh in the fourth quarter. In Bihar too, its numbers fell from 34.1 lakh to 29.7 lakh.
Well, that is the pre-Covid era.
The IRS shows only half the picture since it comes with a lag of four or five months. The real tribulations began post the pandemic outbreak. The prolonged economic slowdown with a severe drop in ad revenue, and then a complete collapse of advertising and circulation revenues since mid-March, has paralysed the entire newspaper industry.
For Jagran Prakashan Ltd, measures to tackle the cash-flow mess were initiated well in advance. On January 31 during a conference call, RK Agarwal, chief financial officer of the company, said that there is a 5-6 percent growth in employee’s salary "which cannot be avoided till we reduce (the) strength".
"Maybe next year, there is no growth in employee’s salary or a still lower growth in employee’s salary because we have already started working on rationalising these costs," he said.
He added: "There is no doubt, without growth in revenues, sustainable growth in profit is not possible. But businesses, especially those which depend on discretionary spend, cannot perform independent of the overall economy. Media entertainment industry is also a victim of these headwinds.”
A senior journalist with Dainik Jagran said some editions were discontinued and some sub-editions merged last year. "This may have hit the numbers," the journalist told Newslaundry.
Newslaundry reached out to Shailesh Gupta, the director of Jagran Prakashan Ltd and president of the Indian Newspaper Society, for comment. He asked that a questionnaire be sent on email. The story will be updated if a response is received.
A predicament across publications
Since last year, many newspaper promoters have taken the conscious decision not to spend money on wasteful circulation. The focus has been on hiking cover prices, albeit in smaller measures, even if it causes some loss of circulation, so long as such loss does not adversely impact the market position of the brand. Some have introduced a paywall for their epapers to increase revenues as the lockdown has forced many of their readers to go online for their daily dose of news.
They also want to believe that the readers who are relevant for advertisers are not as price-sensitive as it's commonly perceived, and that if the publishers do not commoditise the newspapers, readers are willing to pay for the content and its quality.
Dainik Jagran’s predicament is not uncommon to the other players in the industry today. Declining readership, dropping advertising revenues, and falling credibility in a politically polluted atmosphere have created a life-and-death situation for most of them.
The cash flow problem that originated in early 2019 has continued to strangulate the industry. The government's move to ease the import duty of newsprint in the budget couldn't save the situation.
For many slowdown-battered publishers, Covid-19 has come as a blessing in disguise. Despite the government directive not to slash jobs and cut salaries, almost everyone has initiated "cost rationalisation" measures in a desperate bid to stay afloat. Newslaundry has reported on several such instances in the past two months.
Almost every publisher is bleeding thanks to the fall in advertising revenues. And the Covid pandemic may have dealt the last blow to them, with their circulation stumbling and advertisers doing a Houdini's act.
As per the latest IRS figures (for the fourth quarter of 2019, from October to December) newspapers have continued to face a steady drop in readership. Seven out of top 10 newspapers have seen a steady drop in AIR. Apart from Dainik Jagran, Hindustan, which is the third largest-read, from the HT Media stable, has reported a spectacular fall in AIR of 28 percent in 2019. Rajasthan Patrika fell 22 percent while two Malayalam dailies — Malayala Manorama and Mathrubhumi — dropped 22 percent and 25 percent respectively.
"It is a big challenge to keep newspapers afloat,” said MV Shreyams Kumar, the joint managing director of Mathrubhumi. “Every newspaper has cut the number of pages because of a substantial drop in advertising...It is heavily subsidised by ads without which everyone is bleeding. I am also bleeding. The cover price hardly takes care of the cost."
Only three from the Top 10 — Dainik Bhaskar, Dina Thanthi, and Lokmat — have seen their numbers either move up marginally or stay steady.
Sudhir Agarwal, the managing director of DB Corp Ltd, which owns the second largest-read daily Dainik Bhaskar, believes the industry is going through a tough phase. “The present market conditions continue to be challenging on the back of weak consumer demand and a general economic slowdown," he said on January 23, while commenting on the company's financial performance in the previous quarter.
Interestingly, Dainik Bhaskar's readership numbers have been steady through 2019, and it has come within a striking distance of its arch rival, Dainik Jagran.
The IRS numbers show that Dainik Bhaskar gained some ground in Bihar to compensate for its drop in its biggest market, Madhya Pradesh. Its readership numbers have crawled up from 1.54 crore in the first quarter (January-March) of 2019 to 1.56 crore in the fourth quarter (October-December) when most other newspapers saw a steady decline.
A senior journalist with the DB Group said he doesn't trust the Dainik Jagran numbers published by the IRS. "How can they have higher readership when Dainik Bhaskar is clearly ahead in circulation numbers, as per the Audit Bureau of Circulation?" he asked.
Dainik Bhaskar, which runs 46 editions across 11 states in the north and west, was featured in the World’s Top 3 most circulated newspapers in 2019, the DB Group journalist added, as per the World Association of Newspapers and News Publishers. While Dainik Bhaskar reported 4.3 million in circulation, the other two newspapers that took the leading honours are Yomiuri Shimbun and the Asahi Shimbun from Japan, with a circulation of 8.1 million and 5.6 million, respectively.
On February 12, the DB Group said in a statement that Dainik Bhaskar has strengthened its position globally from being at the 35th position in 2013 with 1.6 million copies, to fourth place in 2016 with 3.8 million copies, and then to third place in 2019 with 4.3 million copies.
DB Corp’s managing editor Sudhir Agarwal said on January 23: "On the revenue front, growth continues to be challenging for the industry; however, softening newsprint prices is a silver lining. This coupled with our cost-rationalisation measures has enabled us to improve profit margins."
Pradyuman Maheshwari, a former editor turned media commentator and entrepreneur, said, "The issue is that while the consumption has increased, ad spends have gone south. Meanwhile, the spend on news gathering has also increased."
He continued: "The government may have issued directives not to slash jobs and cut salaries, but is it guaranteeing business for the news media? But in the case of the newspapers, newsprint costs would’ve also gone down, so one needs to closely examine the profit and loss accounts to get to the root of the problem.”
According to Maheshwari, a large number of the publications that have announced job cuts and pay cuts have, in fact, been earning profits. "Times are tough, but surely they can dig into reserves and even borrow money."
The Chennai battle
Chennai has turned out to be the new battlefield for English newspapers, as per the IRS. While the two rivals in the English news space, the Hindu and the Times of India, fight it out in Chennai for the pole position, the top Tamil newspapers — Dina Thanthi, Dinamalar and Dinakaran — all are steadily increasing their readership numbers in Tamil Nadu, charting a reverse trend.
Both TOI and the Hindu have entered into a war of words. Interestingly, TOI quoted the AIR, which is what most advertisers and media agencies take into consideration. In a report dated May 11, TOI claimed it is the Number 1 English daily in Chennai, growing steadily over the last four quarters to touch an AIR of 2.96 lakh. The IRS for the fourth quarter of 2019 shows TOI Chennai increased its lead over the nearest competitor, the Hindu, to 49,000 from 1,000 in the first quarter.
While TOI Chennai’s AIR grew by 17,000 between quarters three and four of the IRS, the Hindu’s AIR dropped by 20,000.
TOI also claimed it's the fastest growing English daily in the rest of Tamil Nadu with a 165 percent growth in 2019. In the fourth quarter alone, TOI’s AIR grew 12,000 in the rest of Tamil Nadu, compared to the Hindu’s growth of 2,000.
But the Hindu was quick to respond. In an article dated May 12, the Chennai-based daily said it is India’s fastest growing English daily, with total readership growing by six percent and AIR by four percent in the third quarter of 2019 — registering the highest growth rate among the top three national English dailies. The TOI and Hindustan Times, on the other hand, declined in AIR.
Sadanand Dhume, a columnist with the Wall Street Journal, subsequently took a swipe at the Hindu.
It's an easy conclusion that the next IRS for January-March 2020, expected in next four or five months, will be pretty scary given the fact that the home delivery of newspapers has gone for a toss in several cities and rural markets since the third week of March. Recently, several newspapers raised objections to the free circulation of their epaper PDFs in WhatsApp and Telegram groups, claiming that it led to a loss in both subscription revenue for the print newspapers as well as epapers digitally. This, of course, kicked up a controversy, as expected.
For Indian newspapers, it's a typical comorbidity issue in the time of the pandemic. Most of them were in ICU earlier, and now they’re on a ventilator.
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