Indrani Sen: Are Indian Newspapers Ailing?

23 Jan,2017

By Indrani Sen

 

Last week, on January 19, The Times of India carried an article by TOI Editorial Team on the edit page titled “Indian Newspaper Industry: Red ink splashed across the bottomline” blaming the implementation of the recommendations of the latest wage board and the damaging impact of the demonetisationfor accelerating the degrowth newspapers in India. The article also cautioned that if the effect of demonetisation continues and the flow of advertising to the newspapers declines further and if implementation of GST results in raising taxes, then 2017 will be the worst year in the recent history of Indian newspaper industry.

Though the newspaper industry in the West has been declining for some time due to spread of internet and digitisation, it continued to be growing in the East, particularly in India and China. For some time though, the insiders in the Indian newspaper industry have been indicating that all is not well across the industry. This writer pointed out in this column on September 28, 2015 that a comparison of projected growth in the FICCI KPMG Report for the newspaper industry over the years has been showing a decline in the growth rate. We will not see the full effect of the gloom predicted by the TOI Editorial Team in FICCI-KPMG 2017 Report which will show the growth in 2016 over 2015. The story may be different in the next report, comparing 2017 and 2016.

On December 10, 2016 the media and advertising industry was stunned by the news of ABP group’s plan to retrench journalists and non-journalists and downsize its workforce by as much as 40% based on the advice of an American Consultancy firm for improving its bottom line. ABP also decided to cut down the number of pages of its two dailies and close some of the supplements which were not running profitably. WouldABP Group be the only one taking such drastic measures or would other newspapers be joining them during the course of the year? Is the newspaper industry really ailing?

The TOI article pointed out the anomaly between the DAVP and the market rate which effectively reduces the advertising revenue, the main source of earning for newspapers.  The editorial team mentioned the high exchange rate enjoyed by other currencies vis-a-vis rupee has a spiraling effect on the cost of imported newsprints which are required for the high-speed printing machines. They arguedin favour of the newspapers that in spite of such pressures, the newspapers have kept their cover prices low (one of the lowest in the world) keeping in mind affordability by the lowest common denominator among the current and the prospective readers.

All the above issues have been existing in the newspaper industry for a long time, but the continuous loss of advertising revenue to TV and digital media have highlighted their importance. The solution lies in Indian newspapers promoting their online editions and monetising them. It has been one-and-a-half years since the annual World Press Trends Survey released on June 1, 2015 by WAN-IFRA claimed that global newspaper circulation (print and digital combined) revenue had crossed global newspaper advertising revenue in 2014 (http://www.wan-ifra.org/wpt.). This was discussed in the article “The Seismic Shift” in MediaSense dated February 1, 2016. With half the population of the country under 25 years and at the top-end reading news only online, the newspapers will become sick unless they keep up with the changing time.

As far as the recommendations by the latest wage board is concerned, it is well-known in the industry thatlarge newspaper groups have been moving their employees from wage board stipulated pay scales to company pay scales through various means over the years. So, to what extent the recommendation of the latest wage board would affect the bottomline of the large newspapers is a debatable point. The medium and small newspapers who do not enjoy the muscle powers of the large newspapers are likely to be affected by the recommendation of the latest wage board.

The TOI article concluded with two suggestions for the government, firstly to review wage board and to remove non-journalist staff from its ambit and secondly to ensure zero-rating of the newspapers under the GST regime as alternatively, the entire industry may turn sick in next few years. There should not be any debate on the need for a reasonable fiscal and labour policies for the Newspaper Industry. However, from the tone of the TOI article, it appears that there is an apprehension that newspapers may be taxed unfairly with the introduction of GST. In that case, the newspaper industry will have to engage in a legal battle with the Government. I would like to humbly remind the newspapers by converting hard copies to online subscriptions, they can also avoid part of the taxation burden.

 

Indrani Sen is a veteran media agency and marketing services professional. She is currently an Independent Consultant and Adjunct Faculty, Media Management at Symbiosis Institute of Media & Communication, Pune. The views expressed here are her own.

 

Post a Comment 

Comments are closed.

Today's Top Stories
Videos