India’s embattled print industry, which has seen its revenue stagnating in the last couple of years, is now looking at ways of absorbing the 10% customs duty on imported newsprint announced by the government in the union budget.
According to experts, the duty on the newsprint would increase the cost of operations by 3-4%, which will eventually shrink the margins that are anyway at an all-time low.
Speaking to BestMediaInfo.com on whether newspapers should re-think their business model, given that challenges in the current one were enormous, Lakshmi Menon, CEO, The New Indian Express Group, said, “We definitely have to look into increasing revenue generation and revisiting our figure because the plan we had is going to go for a toss.”
She said that in terms of business model, there isn’t much scope to change much but newspapers will have to revisit their annual operating plan and look for alternative revenue streams.
“Several newspapers are branching out to various other things like combining digital and on-ground activity or coming up with 360-degree campaigns for clients,” she added.
Highlighting the alternatives of additional revenue streams that are currently available to the industry, Menon said, “The streams available for print are subject-specific specialised editions or coming up with BTL activities. Now, some of the publications have large bandwidth which they can monetise by undertaking BTL activities for the client. Anything that is not going to use a large amount of newsprint basically will be a good alternative.”
Menon said that only new revenue streams won’t be enough for papers to sustain, the industry will also look at several cost optimisation measures to streamline the operations.
“Some newspapers can start looking at coming together and start more cost-effective distribution methods. Today, each newspaper has got its own distribution mechanism and so there can some movement towards bringing efficiency towards the cost.”
She did not mention if the industry was actively looking to come together and increase the cover price and pass on the hike to reader.
When asked if they would consider moving to domestic newsprint, Menon said there were twin challenges here.
“Quality is one aspect and production capabilities is another aspect, the reason being newspapers don't have the kind of production capacity required to use domestic instead of imported. So, capabilities are one challenge and quality also is going to be a challenge because there are mills that have optimal quality but their production capabilities are not enough compared to what is required to use domestic instead of imported.”
The newsprint duty has come as a shocker to the print industry as the cost of imported newsprint had touched an all-time high last year and the industry was hoping for an increased profitability as the cost seemed to be settling this year.
“Last year, the newsprint cost went really high and did impact the business, so the thought process of looking at business differently started a while ago and it was the necessity. The other thing that happened was that there was a certain course correction in the newspaper business; some newspapers were dumping copies, so a lot of that was happening. With international newsprint prices skyrocketing, the cost of doing that became very high,” Menon said.
“Now the market was settling down but the budget came about, so whatever measure taken last year will probably continue. Most publications will also look at how to manage expenditure within the budget so they can bring in cost efficiency. And this will certainly bring about a dialogue among the newspapers to see how they can come together in various processes,” she added.
A paper spends 30% or more of the total cost on newsprint. Industry experts said that in terms of cost optimisation, English papers may also look at reducing the consumption of imported newsprint from the current 85% to 60%. Increasing the cost of cover price was another option but no newspaper seemed to be doing it currently.