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Print players tighten their belts to counter slowdown pangs

18-September-2013
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Print players tighten their belts to counter slowdown pangs

The current slowdown in the economy as well as the depreciation of the Rupee has put pressure on several sectors. In the media industry, print media has been particularly hit by the tough economic conditions as it also grapples with rising cost of newsprint.

The last few months have seen the closure of several magazines, besides some newspapers have increased their cover prices.

The scenario is not likely to improve in the near future. GroupM has revised its forecast of ad spends for H2 to 4.7 per cent from the earlier estimate of 7.3 per cent. The H2 slowdown brings down full year growth from 9.9 per cent to 8.5 per cent. Print has been the hardest hit, with revised adex estimate standing at 0.7 per cent, as against the earlier estimate of 4.8 per cent.

According to Arunabh Das Sharma, President, BCCL, “The weakening of the Rupee will affect any important product, hence newsprint costs have been impacted as well.”

Commenting on the increase in cover prices, he said, “What we don’t want to do is have pricing become a barrier for penetration; however, we will rationalise pricing. But unless we raise the cover price of the paper by 10 times, we will never recover the costs. We are currently selling the paper at one-tenth of its production cost. Even if we increase the cover price of the paper from Rs 3 to Rs 4, it is just an increase of Re 1; we are still subsidising Rs 26. Therefore, raising the cover price is not our strategy. Cost rationalisation and price extraction from the market is an ongoing process for any company, and we too are looking at that.”

Sharma felt that despite the slowdown, print is still in good shape in the country. “Slowdowns will come and go, it is just a media equation of few days,” he remarked.

Industry experts say that it is the English newspapers that are more adversely impacted by the slowdown. According to them, regional print publications are faring much better.

Ajit Nair, VP and National Head, Advertising, Lokmat said, “I think the slowdown is seen mainly in the English newspapers in the metros. The market is buzzing in the tier II and III cities. Lokmat, which operates in these markets, is doing extremely well.”

At the same time he said, “Newspaper printing cost has increased, and in any case, when newsprint cost goes up, some correction does take place.”

Speaking on the road ahead is, Nair said, “Print will survive in India because of the diversity of the country. Regional print media particularly enjoys a large reader base and that is going to continue.”

Meanwhile, to counter the rise in printing cost, Lokmat has reduced the number of pages in few of its editions.

Giving an advertiser’s point of view, Satyajit Sen, CEO, ZenithOptimedia India said, “Given the slowdown in the economy, there is a demand side problem and there is a supply side problem.”

Sen elaborated, “Advertisers might have less print space available because the media owner may print less space. The rise in Dollar is hurting them. Advertisers need to keep in mind the value of the opportunity lost. But if the media owner is back to having the same quantum of supply as before, the lost opportunity can be rectified.”

According to Anant Nath, Director, Delhi Press, the situation is more worrisome for magazines than newspapers. “Magazines that are heavily dependent on advertising will face tough conditions, while those that are circulation-driven will be better placed,” he added.

“Niche magazines are the first ones to take a big hit when marketing spends are cut down, because these are not the most important spends area for most marketers,” Nath concluded.

 

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