Girish Agarwal, Non-Executive Director, The Dainik Bhaskar Group says that the group is currently focussing on the untapped potential in the existing markets of its flagship Print product, and growing circulation in them.
BY SRABANA LAHIRI & SIMRAN SABHERWAL
Q] The DB Group has undertaken an expansion plan with specific focus on Bihar, followed by Rajasthan, Gujarat, Punjab, MP and Chhattisgarh. What potential do you see in these markets?
There is scope for Print to penetrate deeper in the markets of Bihar, Gujarat, Rajasthan, Punjab and Madhya Pradesh. For example, if the Print penetration in a market is 30%, the effort of Dainik Bhaskar is to take it to 35%-40%. By doing this, not just us, but everybody in the ecosystem will be able to take advantage of the increased reach. Drawing an analogy with Reliance Jio, while Jio provided the broadband and bandwidth and increased coverage, companies including Google, Facebook and YouTube were able to take advantage of it. In addition, even the consumers benefited. We are looking to emulate this and increase penetration in the States. If you look at Gujarat, if the combined sales of all newspapers today is around 20-30 lakh copies, can we take this up by 15% so that it becomes 35 lakh copies? This is a big deal and that is what we have been doing. Our purpose is to help expand the markets in Rajasthan, Punjab, Maharashtra and Gujarat. The advertiser too benefits as when the market reach goes up, and the medium becomes much more effective. So far, our strategy has been to expand to new markets, but now we are looking at expansion in our existing markets in a big way. We are the market leaders in Gujarat, and could be happy with a year-on-year increase of 2-3%, and we would have never thought of looking at 15% expansion in the State, that too in a year’s time. But we have set out to do just that. We are currently present in 11 of the 38 districts of Bihar. Our initial focus was to capture the big markets of Patna, Bhagalpur, Muzaffarpur and Gaya. Now, in the second phase, we are looking to be present in all the districts by December, giving us total coverage and expansion in Bihar. At the moment, we are at around 3 to 4 lakh copies in Bihar and with this strategy, we are hopeful that we will be able to touch about 7.5 to 8 lakh copies in total. Most importantly, our total combined circulation in Bihar and Jharkhand put together will be a million plus copies. With this, Bihar and Jharkhand will become bigger for us than Chandigarh, Punjab and Haryana (CPH).
Q] How did you decide to zero in on exploring the potential of your existing markets?
We saw the potential much earlier, but kept postponing the decision to invest. As it would happen, we had a meeting with our Chairman at the start of this year, where he said, “You guys are really going slow. You need to be much more aggressive.” We said that we have been aggressive, but he replied, “I don’t agree with you guys. You need to be much more aggressive. It’s a simple formula which we all know- more circulation gives you more dominance, more dominance gives you more advertising and pricing power. It also helps your advertiser to reach a larger market. It’s a simple calculation, so why are you ignoring it?” We then took the call to undertake this project.
Q] Are there any new markets that you would be looking at in the near future?
For the next 18 months, till March 2019, just like Arjuna in the Mahabharata, whose focus was on the eye of the fish, our sole focus is to grow circulation and tap the huge potential that is present in our existing markets. The GDP growth rate of all these markets is higher than the national average.
Q] According to the latest ABC figures, Jagran is slightly ahead of DB. Do you expect this circulation push to take you ahead of Jagran?
There is a very slight difference between Jagran and us. The ABC numbers that have come do not include the three lakh copies sold in Jharkhand. What happened here is that we did a trader scheme and the copies sold via this do not qualify into copy as per ABC norms. ABC is very stringent in the North and we are happy with that. For Jharkhand, the local team thought that this scheme will be better to initially move on. Later on, we corrected that, but as per ABC norms, we are disqualified. Hopefully by next year, we will qualify for ABC for the Jharkhand market too, and this will give us another 2.5 to 3 lakh copies from Jharkhand. In addition, the copies what we are adding now will get reflected when the ABC comes out next.
Q] Did anything specific urge you to issue a clarion call to all Print players just now?
I am very impressed with the Kerala market as the players - Malayala Manorama, Mathrubhumi, and other newspapers - have increased their penetration in that market. I would like to urge the entire Print industry to keep investing in the business and increase the penetration of newspapers. I would like to call other Print players my competition, but they are actually peers. Frankly speaking, Print is not competing with Print but it is actually competing with other mediums now. So, all Print players need to be together and compete with other media rather than with one another. As per the last ABC figures, newspapers grew at a CAGR of 5% in the last decade. I am confident that if all of us work together, we can ensure a CAGR growth of at least 10% to 15% in the next 2-3 years time. That’s possible.
Q] By when do you see newspapers achieving a CAGR growth of 10% to 15% in India?
In the last three months, Dainik Bhaskar’s circulation has grown by 8%. This has been achieved on the back of a high base and by not reducing the cover price. I am confident that growth will continue, going forward. Giving an example, at the end of June, we were roughly at 51 lakh copies; today we are at almost 55 lakh copies. Talking of projections, if we add the additional copies from Bihar – about 3.5-4 lakh copies – that will take us to around 59 lakh copies. Add 2-3 lakh copies from the other markets of Gujarat, Rajasthan, Punjab and Haryana, and we will easily be at 61-62 lakh copies by March. That’s a growth of almost 20%. Of this, the newer markets will add only 4 lakh copies. If we at Bhaskar can do it, I am sure there are legendary publications in our country who are also doing it, but I would still urge them to go all out and push for more numbers.
Q] Your digital business is still operating on losses…
Digital is a business where you need to keep investing for a while. I wouldn’t call it losses as in the Digital business an investment of Rs 30-40 crore annually is a bare minimum that you must do. We encourage our Digital team to spend, acquire more customers which they have been doing. Unfortunately, the revenues in Digital in the last two quarters have been very subdued. The availability of inventory has suddenly gone up, which means that earlier you were coming and looking at ‘x’ number of pages in my paper, now you are looking at double the number of pages because access to the Internet has become much easier. With the increase in inventory, the rates have crashed. I think that will get corrected in a couple of months’ time.
Q] About 85% of the Digital revenue or perhaps more is commandeered by the big players such as Facebook and Google. Does that leave enough scope for Indian media companies?
Programmatic will continue, and I agree that the market is commanded by them. However, they are facilitators. So, when a person comes on to Facebook or Google and reads Dainik Bhaskar news and sees an ad there, we do get our revenue share. When new people see Dainik Bhaskar through Facebook or through Google, we will share revenue and we don’t have a problem in that.
Q] How do you rate the quality of creatives, or advertising per se in the Indian language newspapers? Now that the sector is growing, there is more penetration and focus on Tier II and Tier III cities, do you think the advertising has evolved alongside?
I think the creative side of advertising in Print overall is not very exciting. I request the creative directors to please tell their teams to start thinking and conceiving in Print, rather than conceiving for an audio-visual medium like TV and then adapting it for Print. They need to change that approach. Print is the second largest medium in terms of advertising. For Digital, which is still such a small miniscule number right now, creative agencies are thinking Digital, but they need to think Print. Advertisers also need to encourage these agencies to think original Print. There is huge potential there, and I would be more than happy to provide any kind of support. If they want translators, if they want to get the local slang of our markets, we will be happy to provide them whatever they need. We have been telling this to our creative agency, Ogilvy, and all our other friends, and hope one day they will listen.
Q] What would be your comment on the future of Indian language Print media?
I think it’s pretty bright. Let me give you a small perspective. One Print media company is equivalent to all the news channels put together in terms of market cap. In other words, take two dozen news hannels together - in terms of their revenue, profit and market cap – and the combined entity will be equal to one Print media company. Take two Indian language newspapers or one English language newspaper versus all the news channels. All the Print publishers – big and small - are making money. Look at our balance sheet and the numbers. Our EBITDA was Rs 780 crore in 2016-17. It’s the same with Jagran and HT Media. They have numbers too, and a big EBITDA sitting on that. This industry has seen a fantastic performance. Yes, instead of a 20% topline growth, it has come down to single-digit growth because of market issues, but in spite of that, the numbers are pretty strong. Unfortunately, we media people don’t talk about ourselves and even worse, we forget to tell the advertiser and opinion-makers that ‘Guys, Print is growing’! Our readers are growing, and this is also true for Jagran, Malayala Manorama, Thanthi… and the others. But people sitting in Delhi and Mumbai, where the decisionmakers are, keep likening our situation to the decline of Print in the West. Sadly, nobody corrected their assumptions. DB Corp is listed and so are Jagran and HT Media, and all of us have grown our market cap and investors have put in their money. Why? Because of growth. But we forget to tell this to various stake-holders and this is our fault. Now, we have taken a call to speak out.
Q] What are the challenges facing the Print medium today, with the current macro-economic conditions?
The single challenge which our industry is facing is advertising revenue growth because of the subdued market sentiment.
Q] Finally, are you expecting the industry to respond positively to the new IRS?
I can’t say, until and unless we see the data, but this time I am very positive. They have really worked hard to iron out all the issues. It should look much cleaner.
