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Delhi Press's bold gamble

The publisher of titles such as The Caravan, Champak and Grihshobha is on an expansion spree even as uncertainty looms over the future of magazines

Vanita Kohli-Khandekar  |  New Delhi 

Delhi Press is one busy company. The publisher of Saras Salil, Champak and Grihshobha, three of the largest read Hindi magazines, has been expanding all over the place. The relaunch of its English magazine, The Caravan, as a New Yorker- inspired monthly with long-form journalism, is working very well. Last month it launched two English magazines for kids in a licensing arrangement with Highlights, an American brand. In the same month it acquired BS Motoring (previously owned by this paper). It checked out MW, a men's magazine that has been looking for an investor. About 18 months ago it picked up two Kannada magazines, Nimmellara Manasa and Butti. Five years ago it acquired Manohar Kahaniyaan and Satyakatha from Mitra Prakashan. Its current tally is 35 magazines across nine languages.

What is the plan? "There is no deliberate plan to expand. We just appraise the opportunities as and when they come," says Paresh Nath, publisher and editor-in-chief, Delhi Press "It is very difficult to classify our expansion. We are independent and family-owned. So the pace of expansion depends on our resources. This is a moderate pace," adds Anant Nath, executive director, Delhi Press.

Anant is also the editor of The Caravan, Paresh's son and the man whose entry into the company coincided with many of the changes it is going through now. This IIM Lucknow graduate did an MA in political science from Columbia before joining his dad's firm in 2005. It was till then a Hindi publishing company with editions of its popular magazines in Gujarati, Telugu and other languages. Anant however was full of ideas and wanted to do the intellectual's equivalent of The Atlantic or New Yorker for India. So The Caravan, a long dead brand from the company's stables, was revived in 2010. Many of the Hindi titles were given a makeover and their cover prices taken up in the last one year. The other moves - such as Highlights or BS Motoring - just happened, says the senior Nath.

Fast or slow, deliberate or not, this expansion places the estimated Rs 100-crore Delhi Press in an interesting position. It is one of the few standalone magazine publishers left in this country. Almost every other major magazine publisher has other businesses. The Rs 1,200-crore (estimated) India Today Group has a newspaper and television channels Aaj Tak and Headlines Today among other brands. The Rs 175-crore Vikatan Group has a thriving television production business, while the Rs 900-crore Malayala Manorama group which publishes one of the largest selling newspapers in India brings out Vanitha. So everybody is more or less buffered by larger, more profitable businesses. No one, it seems, is depending on magazines for their bread and butter.

Are magazines in trouble?
One look at the numbers tells you why. Overall magazine readership has fallen by over 30 per cent between 2007 and 2012 to hit 83 million readers, going by Indian Readership Numbers (See Chart). In the same period, Hindi, Delhi Press' key market, fell by 20 per cent to hit 35.5 million readers. According to the FICCI-KPMG 2013 report, magazine revenues were sort of stagnant at Rs 1,300 crore. It estimates that they will grow at 3.8 per cent per annum, roughly half of the 8.7 per cent growth it predicts for the Rs 22,400-crore print industry. Globally too the magazine industry has been in a blue funk for a long time now. Why then is Delhi Press investing more in magazines?

"Globally, standalone magazine are doing all right. Newspapers may have problems. But not magazines, per se," says Maheshwer Peri, head of Pathfinder Publishing. He points to news, current affairs or business, commoditised genres where everyone is doing badly. That is true. Since readership surveys are biased towards newspapers, they reflect only the bad news. The fact is that specialised magazine in India and abroad are thriving. Conde Nast (Vogue, GQ) or Vikatan (Aval Vikatan, TimePass) have managed to find profitable niches. For example, auto and kids magazine are among the fastest growing magazine genres in India. So Delhi Press's bets on BS Motoring or Highlights and its investment into Champak make sense.

Distribution advantage
"Our distribution and print infrastructure can support titles that independent publishers can't," says Anant. These are among the two biggest costs for a magazine company. By loading more relevant brands on to these, it gets economies of scale and therefore better profits. "If we didn't have our own press, we wouldn't have gone for it," says Nath. Ditto for distribution. For a standalone magazine, "it is very difficult to distribute because the distribution system has been hijacked by newspapers," says Nath. Newspapers with their large volumes and hefty incentives make low-volume magazines uninteresting for a hawker. So, most hawkers are not really keen to deliver magazines to readers' homes. But "you can't expect the reader to go to the stall every day. Home delivery is critical," says Nath. According to analysts, it is the single biggest reason print will continue to survive in India in spite of its annihilation in other parts of the world. By having lots of magazines Delhi Press creates the same pressure on the distribution channel that Hindustan Unilever does by offering lots of soap, detergent and food brands. You can afford to ignore one or two brands, not 30 or 35.

Delhi Press claims to reach 3,000 distributors and have offices in 12 state capitals. More than 50 per cent of its sales happen through home delivery. The rest is through a mix of subscription and stand sales. Some of this strength shows. Over the last year the cover prices have gone up by 15-20 per cent on an average, says V Natarajan, vice-president, brand and marketing strategy. For example The Caravan went from Rs 50 to Rs 60, Grihshobha (Hindi) from Rs 30 to Rs 35, Sarita from Rs 25 to Rs 30 and so on. Yet there has been minimal impact on sales.

Beyond Delhi and press
"They have a great understanding of their core audience of Sarita, Saras Salil and so on. But beyond Hindi I don't think they understand the market that well," thinks one magazine publisher. He points out that even the distribution strength translates only in North India. Anant disagrees. He points out that the only states where the company needs to beef up its distribution are Kerala and Tamil Nadu. In the North, Gujarat, Maharashtra and Andhra Pradesh it is doing well, though he refuses to share numbers.

Another magazine publisher reckons that the Delhi Press model has worked because it depended on subscription covering the basic costs with advertising bringing in the cream. "Now they are getting into genres where their dependence on advertising will increase. This is somewhat slippery territory," says he. Anant admits that The Caravan is an "editorial success, not a business success". However, he points out that overall circulation revenues have grown faster than advertising revenues in the last two years because of the cover price increases. At 60:40, Delhi Press' mix of advertising and circulation revenues is pretty healthy. In some of the genres it is going into, such as auto, circulation could bring in 70 per cent or more. So it is "very difficult to generalise," says he.

Why not expand into other areas, say online or events? That, says Anant, is work in progress. The Caravan is already online. Champak and Sarita are next in the queue. While the company has focussed on events in the last 18 months, Anant says that margins are smaller and the effort much more. TV, newspapers or radio will involve large infusion of capital - something Nath is completely against. "Any investor who comes in will demand his pound of flesh. We are a fiercely independent group. We don't want anyone to look over our shoulders and say we are not making money," says Nath emphatically. For instance, the group does not accept cigarette or pan masala advertising. As the pressures of building scale come into play that won't be a choice. So this 'moderate' pace will have to do for now.

First Published: Thu, May 09 2013. 22:40 IST