Ten newspaper brands, a slow-growth market and Rs 1,000 crore in ad revenues. Can DB Corporation's foray into the Marathi newspaper market shake it up?
The Rs 1,062 crore company, which publishes Dainik Bhaskar (Hindi), Divya Bhaskar (Gujarati) and DNA (English), among other brands, has been on a aggressive expansion spree. Its last major launch was in the tiny Jharkhand market last August.
By the end of May, Dainik Divya Marathi is scheduled to launch in Aurangabad followed quickly by editions in the 10 odd cities of Maharashtra, one of India's most prosperous states. In typical DB fashion, a survey of 140,000 households has been done in Aurangabad. It is estimated that roughly half of these will sign up as subscribers of Dainik Divya Marathi. Girish Agarwal, director, DB Corporation, expects the paper to start making operating margins in three-four years.
It may not be so simple.
|THE MAHARASHTRA MARKET SNAPSHOT|
|Per capita income (apprx Rs )||54,000|
|Literacy rate (%)||76.9|
|Newspaper penetration (%)||>50|
|Newspaper advertising (Rs cr)||1,000|
Aurangabad is home to the Rs 386-crore Lokmat Media. Its flagship, Lokmat, is one of India's largest selling newspapers and the biggest Marathi newspaper brand. There is bound to be a turf battle. Lokmat has filed its draft red herring prospectus and will come out with an initial public offer this year. Company officials were not willing to comment on the DB launch.
There are two reasons why Dainik Divya Marathi might be good news for the estimated Rs 1,000-crore Marathi newspaper market. It will force growth and may finally bring about a pan-Maharashtrian paper.
Take the first. An aggressive newcomer is bound to kick-start faster growth in readership. “The Marathi newspaper market has been stagnant for sometime now. While Marathi channels are growing, the growth rate for dailies has been less than the growth in population,” says Punitha Arumugam, CEO, Madison Media Group.
Marathi newspapers reach half its 112 million people. The state has one of the highest literacy ratios at about 77 per cent, so the potential to expand the market in readership terms remains. But will ad revenues follow?
Kumar Ketkar, editor, Dainik Divya Marathi, explains why he thinks they will. “Maharashtra is the most urbanised state in India, with more than 10 second cities, five of which will become major cities in this decade. By 2020, about 55-60 per cent of Maharashtra's population will be urban,” he says. That is what advertisers of most major product categories hanker after as a target group.
The second reason why it could do the market good is peculiar to the state. “The Marathi market is segmented. There are too many local players,” says Bharat Kapadia, director, Lokmat Media.
Lokmat is the only consolidated brands with 11 editions, reckons Kapadia. Adds Arumugam, “Each region has a strong player.” So, for instance, Sakal is strong in Pune and western/southern Maharashtra or The Maharashtra Times and Loksatta in Mumbai.
Ketkar expounds on the reasons. “These (six) regions of Maharashtra have different historical references, totally diverse agricultural eco-nomies, a variety in political evolution and culture and are environmentally far apart from each other. So much so that hardly anyone in Marathwada is interested in parts of Konkan or no one is bothered in Western Maharashtra about what is happening in Vidarbha. It is a politically 'manufactured' and 'culturally' fractured state. Dainik Divya Marathi has an opportunity as it does not have a specific geographical identity,” he says.
Not everyone agrees. A pan-Maharashtrian brand is a huge challenge given the very differences that Ketkar talks about, points out Janak Sarda, director, Deshdoot Group of Newspapers.
The bottomline: “It will be interesting to see if these guys (DB Corp) manage to consolidate the state readership. Especially, because they have other states too,” says Arumugam. DB has through its various brands a presence in 15 states, a rarity in India. The combination, therefore appeals, to advertisers.
This is where the challenges start. There are two key ones. One, in other states where DB is present, say Gujarat or Jharkhand, TV is not a strong competitor. In Maharashtra, DB faces the prospect of a strong television market. Marathi is one of the largest and more profitable genres in both news and entertainment. This is good because a whole lot of the market development work, of converting local advertisers to mass media, has been done by TV. But it also means that the margins print commands in other markets may not be available.
Two, price wars (a favourite DB tactic) may not always work in this market, reckons L S Krishnan, business head, Sakal Papers. He points to Pune where The Maharashtra Times launched in January this year with a Rs 11 for four months scheme. “We haven't lost a single copy in sales,” he claims. Sakal is priced at Rs 3 per copy in the Pune market. Pune, however, is Sakal's home market. When it entered Aurangabad in August last year, it dropped its price to Rs 2, an entry price as Krishnan puts it.
Many people within the Marathi newspaper industry echo this sentiment of “content will win over cover price”. “Marathi readers are very loyal,” emphasises Sarda. Maybe they are. However, across markets, largely, Indian consumers have shown that they are very sensitive to the price of their newspaper.
This one will, therefore, be an unfolding story.