The Lokmat Media Group is one of India’s oldest and established regional publication groups. With a stronghold in Maharashtra cities, the media house has plans to consolidate its position and move to the leadership place across markets, before trying to expand its footprint.
While the industry is trying to cope up with the absence of IRS and get over the impact of demonetisation, BestMediaInfo.com had a conversation with Rishi Darda, Editorial and Joint Managing Director, Lokmat Media, about various issues in the industry and the plans for Lokmat. Excerpts:
The latest ABC numbers are very encouraging, but why is that the regional newspapers think they are not getting their due?
Regional print is growing the category in a big way. Most of the markets are seeing a lot of aggression from regional newspapers. Today the way ABC tabulates numbers on circulation, it does not take into account the competitive strategies of newspapers (especially when a newspaper is moving out or it is a new newspaper), where there is a lot of change in pricing. Hence the print order numbers and the growth in regional print in reality are stronger.
Also, if you look at Lokmat, the total circulation is about 16.45 lakh. Not only for us but for even other players in the category we have seen large editions, which are not in the certified zone of ABC but that doesn’t mean that they are not circulated. It’s a way of reporting by ABC. We continue to remain No. 1 in Maharashtra.
Having said that, all the numbers quoted by ABC are very encouraging and project a growth story, growth of newspapers is higher than these numbers. Hopefully the new IRS will complement this.
Despite all this growth, are the regional newspapers getting their due?
I think so. Since regional is ruling the roost, the brands have also started realising that the real potential and the engagement that the regional media is able to provide is not even met by the English Publications in many cases. In a few companies that are listed, the growth regional media has shown is much higher than what the English media has projected. Some of have them been flat compared to the regional media.
Releasing the latest ABC data, experts said digital doesn’t pose any threat to print. There could be marginal growth in circulation figures owing to different reasons but the industry knows reading habits are changing faster. Shouldn’t the industry be prepared to embrace the change rather than remaining in a state of denial?
I don’t think there is any denying whether digital is growing or not. Digital is definitely growing. In the 90s, when television was growing, everybody around the world was talking about how television is going to kill newspapers. In early 2000, internet started and the content side started building up, we remember losing a lot of journalists to the internet. Discussions in the early 2000s were about how digital is going to kill newspapers. In 2007, the discussion moved on to digital killing television. I think we finally found a way to coexist instead of eating into each other’s territory. It is still a stronger story, especially after the Bharat story, where a lot more people are coming into the literacy fold. Unlike in the west, newspapers are very affordable in India.
I strongly feel online has seen a rise majorly because of convenience and cost. While cost has been lower because of those discounts and sale and convenience as you get the goods delivered at your home.
India is the only market where newspapers are sold at such a low cost. The circulation to ad ratio would be anywhere between 15 and 20 per cent of the advertising ratio. Newspapers are sold at as low as Rs 2-2.5. Plus, in the west you have to walk those few kilometres to go to the newspaper stand and buy it, while it is delivered at home in India. I don't see the demise of newspapers. I see that both media, digital and newspapers, will coexist. Digital is growing and that is the main reason all the major media houses are taking digital seriously and putting in resources on digital properties.
But digital remains a big challenge for monetisation. How is Lokmat coping up?
We are slowly coming out of that challenge. If you see the market size, print is at Rs20,000 crore while digital is nearly a Rs5,000 crore industry. We will all go through a life cycle where the product becomes the most important. Once the product is established, it will automatically bring in the readers and hence the advertisers. For example, Facebook and Google, which have been there for about a decade now, have established their product and monetisation is not an issue. Over a period of time, once the content sites are able to showcase that they are continuously providing solutions, monetisation will not be a problem for digital properties.
We believe that in next three years, 30 per cent of our revenue will come from non-print media platforms – ClickStart, which is our completely digital domain, second is TapLight, which is completely solution-based (events, intellectual properties and activations) and third is Brand Equity.
We have been very aggressive in the market for doing brand activities with real estate, FMCG, consumer durables to take stake in their company. Specifically to digitisation, ClickStart is headed by Hemant Jain who has been given the responsibility of not only creating properties like lokmat.com, cnxmasti.com, but he is also looking at inorganic growth. We have a corpus of about Rs100 crore and we are planning to invest in various tech companies/ start-ups/ content companies. We have got Aniruddha Hajare to lead the brand solutions team called Taplight with focus on creating solutions for brands. In such a short span, we have started working with every major brand in the country for activations, events, brand solutions, IPs and other such big initiatives.
How bad is the impact of IRS’ absence on your revenues because not being able to show growth in readership from IRS 2014 must be halting the hike in ad rates?
Any performance data which is not available for any industry obviously hurts the industry. But I am quite sure people are working extensively on the new IRS and hopefully it should be out soon. Specifically for Lokmat, we have been very eagerly waiting for the new IRS. In the last three years, we have been extremely aggressive in the markets like Pune, Kolhapur and Mumbai. We have become No. 1 in Pune. We are hoping the new IRS will show our complete growth story of Pune and Kolhapur.
We have been able to hike rates by continuously showing to our clients that the value proposition has only been increasing. So, there is IRS on one side, and on the other side, you have a feedback mechanism that every company has. If there is an auto company, they will always take an opinion from their dealers on the ground.
Who is hurt more by the absence of IRS – regional or national newspapers?
Overall the whole industry would be awaiting the new IRS. Absence of any measuring data is not a very good thing for the industry. IRS will also show how print media is growing. In general, the data will be helpful for overall industry.
As IRS is scheduled to comeback in next few months, will it win the trust back it enjoyed over the years and what should be done?
If there are no anomalies, it would be able to get that respect. They have made a lot of changes through the presentations whatever we have understood from MRUC. This time they have made a lot of changes. I think the 2014 data was pushed aside mainly because of the anomalies. Since a lot of things have been changed, frankly speaking at this moment, it would not make a lot of sense to answer this. We will have to wait for the data to see what really comes out.
Have demonetisation effects subsided? What sort of bottom line increments are expected this fiscal 17-18?
Yes. Largely the effects have subsided. It was a major shock and drop in the revenues. November and December were highly affected, while in January-February, we saw the effects were coming down. But from April till now, mid-May, it has been quite a fruitful journey. The advertisers have now started coming back and spending that money. Both KPMG-FICCI and Madison reports have said that the truth will be double digit growth for the newspapers.
2017-18 fiscal would be better. This will be an exciting year and we are hopeful about it.
Recovering the losses will be difficult. It is a gone story. We are in an industry that has one of the most perishable products. Once the loss is done, I don’t know how one would recover that. The only thing one can look at is growing faster and with bigger numbers. In other industries, if there is some inventory left, one can try to sell it after two to three months too. But in media, the moment that day, hour, second is gone, it’s gone.
Is there a major trend that you are seeing in this year?
Affordable housing is a huge advantage for the regional media. Real estate is the largest advertisers for newspapers, more so for regional. I think the highest growth for the next five years will come from affordable housing. A lot of real estate developers who deal in luxury will also be looking at affordable houses. That’s the feeling that we have been getting.
Print industry has so far been enjoying tax holiday as far as service tax is concerned. How are the things going to change after GST is implemented and what would be its impact on the print industry at large?
I wouldn’t call it a tax holiday. I mean no other industry has a governed wage board but print does. We live in a free society/ market and the market should be the one deciding about everything -- the salaries, pricing of product/ advertisers. The industry as a whole has been making representations at the right places. We have been writing about the challenges that the newspaper industry face. The INS has made representations asking that there should be no tax.
Specifically about service tax, yes, we do not pay that and hope the government takes into consideration the challenges that newspaper industry is facing. The fact that a newspaper plays an important role in building up a country, hopefully they provide that tax holiday to the newspaper industry.
Recently, we witnessed a lot of rightsizing of operations and teams across major dailies. Although a business is within its rights to safeguard itself, what are more comfortable ways to avoid such situations which is never easy to implement for any employer?
We have been creating our own talent pool by continuing to hire from across industry. I would say a lot of employees recently have come from competition and that clearly shows that we are maintaining a healthy growth.
Downsizing is never an easy need for the publisher, nor for the team members because these are the people who have helped build the brand and business. I just hope nobody has to take that decision.
What are the checks and balances you keep in order to strengthen both top line and bottom line?
As an entrepreneur, you are continuously making sure that while the bottom line is steady, you are also looking at the growth opportunities. Either you stayed status quo and continue with the same amount of margins or else you become aggressive trying to push the envelope and put in a lot of money in the market. Like a lot of the other industries, news is very focused on their bottom lines because traditionally, they have been taught that bottom line is as important as the top line. Compare most of the other industries to print, it is not a valuation game for print.
The right realignment of the roles of the employees and their responsibilities is very important. We take pride in our HR policies. We feel like a family, call it Lokmat parivar. I don't think any other newspaper does awards ceremony only for the staff -- best photographer, investigated story, most studied story and other categories. We have the lowest attrition rate.
What are the expansion plans for the group, considering that regional media is expected to grow faster?
We asked this question to ourselves four years back. While it sounded sexy to go out of Maharashtra and explore other markets like Madhya Pradesh, Rajasthan and most of the entrepreneurs would want to take that step, we realised that we need to strengthen our foot in Maharashtra. We are still not No. 1 in Mumbai. So, if you look at the total market size of cities as Mumbai and Pune, it would actually be equal to the market size of Madhya Pradesh and Rajasthan. That is the strength of these two cities. So, we’ve put all our focus on Pune, Kolhapur and Mumbai in the last three years and the results are there for everyone to see. Sakal in Pune has moved to No. 2, as we become No. 1, similarly, Pudhari, the incumbent in Kolhapur, has moved to No. 2. We have now moved our focus to New Mumbai and Thane to replicate the same magic.
Which medium, out of events and digital, earns the most, after print? Which one is the major driver for the group, both perception wise and revenue wise?
Base for both digital and events (ClickStart and TapLight) are very small. The growth will be faster for these two, compared to print. Today, TapLight would be the fastest growing
While the previous generations prefer consuming news in their mother tongue, what are the attempts to attract youth and children? Especially, when schools also focus on English-only environment!
I don't believe that the youth considers English as the first language. Rather, they believe youth is their language. If people have moved from their regional language to an English medium, the only reason would be that specific newspaper has not been able to provide them with the content that he wanted to read. Frankly if you look at all the newer mediums like Facebook, Google, their major push has been on regional because they have realised that most of the people who login to Facebook and Google are below 30-35 years. If there is such a major push from these international companies to provide the content in the local language, you could realise that people actually want to read in that language. The growth of regional television channels in last five years also shows that they speak to the youth in the language that they want to hear. If any newspaper is losing out subscription or circulation and readership and an English paper is gaining, then you will have to search within as to why the person has moved. Across the globe, the person wants to read in his own specific language.
Most large newspapers have been spending a lot of energy, time and resources on understanding the new changes. One major change was when television took over and at one point in the early 1990s, you would only get two colour pages in the newspapers. As TV got stronger, people realised that ‘I cannot give them a black and white television feel (on newspapers) while they are watching an all colour television channel’.
That was a major shift and now every newspaper gives you all colour editions. If the consumption habits are changing because of social media and digital is becoming stronger, automatically the content would change and the editors would adapt to the new way of providing news. Also, the forums like Sakhi Manch, YuvaNext, Bal Vikas Manch and Campus Club give a major feedback from the ground.