Growing all the time

This is an expanded version of  the Media Matters column in the Hindu Sunday Magazine, Jan 30, 2005.

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 Gwalior) have made their appearance. Last year saw several  examples of expansion and consolidation. This year will see many more. Before the year is out, the Hindu’s bastion Chennai is likely to see the entry of at least two more English newspapers. One of them will also go to Trichy and Coimbatore. Mumbai may actually see the long-promised arrival of the Hindustan Times, as well as of the Divya Bhaskar. Punjab may see a new Punjabi player called Dainik Jagran. Only the Eastern region—barring Bihar and Jharkhand,  seems immune to the compulsive flowering of yet more and more media.  Several new TV channels are also on the anvil, including a scheduled launch in the first quarter of 2005  from the Jagran group. Exchange4media.com recently put their number at 25.

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 Australia and UK who will enhance their financial capacity to expand.

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.