Growing all the time
This is an expanded version of the Media Matters column in the Hindu Sunday Magazine,
Sevanti Ninan
Since the beginning of this year two more TV channels (NDTV Profit and Awaaz from CNBC) and at least one more newspaper edition (Nai Duniya in
What does so much growth signify? An industry that is in the pink of health? Or one in which expansion is increasingly becoming both a technological necessity and a matter of surviving the competition? With the advent of DTH platforms it is no long enough to have one or two channels to offer, you need half a dozen to make up bouquets. And when another newspaper comes into your territory you have to go out and give it competition in its own territory if you don’t want to get hammered.
Growth fuelled primarily by advertising will remain the norm, but avenues of financing are changing in the media business. Each successive year sees more and more media houses going in for initial public offerings. Deccan Chronicle, NDTV, TV Today, TV Eighteen, Balaji Telefilms have all see enthusiastic public responses to their IPOs. Expansion has meant the following: more and more media stocks on offer, the entry of foreign investment both direct and institutional into Indian media, media houses diluting equity through private placement, pushing for new avenues of advertising, doing journalism on the cheap, and investing in new territories. Of the expansion cited in the earlier paragraphs, both the Hindustan Times and the Dainik Jagran have acquired strategic partners in
When family-owned companies go public it opens up their functioning to the scrutiny of a market regulator. When foreign direct investment comes into a paper like the Dainik Jagran or a Hindustan Times as happened recently, it also leads to due diligence by the prospective foreign partner, and so theoretically, more transparency and professionalism all around. In theory doing charming things like charging money for publishing news, printing just for raddi or the resale value of the newsprint, adopting unfair trade practices such as price undercutting should become more difficult. But one must not underestimate business ingenuity.
Or sheer inventiveness. Eyes popped within the media last week when a newspaper reported that the Bennett, Coleman and Co. Ltd. (BCCL), publishers of the Times of India, have worked out an altogether amazing new approach to ensuring a flow of advertising despite growing competition from TV and other publications. It is buying equity in companies which are expected to be big advertisers and sewing up deals whereby they will advertise exclusively with BCCL. It is picking up a stake in Pantaloon Retail and Celebrity Fashions, the Chennai-based owner of a menswear brand. Times have changed. Earlier newspapers were owned by companies that produced sugar and textiles. Today newspapers are setting out to own stake in fashion wear and retail chain stores.
And what will BCCIL do for its new partners in return? It will promote their brands in its newspapers, web portal, radio and tv channels. What will it get by promoting them, in addition to locked in advertising? The value of its investment in those companies goes up. When it wants to get out of the arrangement it can exit by selling the stock it has bought. The company says it intends to do many more such deals. Think of the many promotional news items that will sprout on its pages and channels as a result. Pragmatism will replace any shred of idealism that might remain about media objectives, and media consumers will have to come to terms with this.
Will this route to assured advertising be emulated by others? The catch is that most media houses do not have the spare cash to take such a route. BCCI is incredibly rich in comparison with many other media companies. In the last financial year it made a few hundred crores in post-tax profit which it has the freedom to invest.
When media stocks become listed, that too changes public perception of media motivation. Published criticism of the media’s overreaction to the stock market crash when the UPA government was being formed, attributed the TV channel frenzy to the fact that stocks of recently-listed TV companies like NDTV had also been affected by the fall. Then again, when CNBC initiated the entire Ambani controversy by asking Mukesh Ambani a question on the channel, much was made of the fact that Anil Ambani held a small percentage of stock in this business channel through a mutual fund.
But all the eyebrow-raising comes primarily from within the media. Consumers are going out and investing in media stocks, subscribing to the new media offerings and not worrying too much about motivation.