As part of The Hoot's continuing commitment toward creating greater media awareness and fostering debates related to media issues we are excerpting two passages from Vanita Kohli-Khandekar's The Indian Media Business. New extracts will be posted on the site every month and readers are invited to send in comments, book recommendations, and reviews.
The media boom in India over the past decade and more has been the subject of discussion and debate. This growth, as Kohli-Khandekar argues, is not limited to print media • where there has been a considerable surge • but is also evident in the growth of television and, more recently, radio as well as new media. The book offers in-depth and empirical analyses of the business paradigms of various media ecologies in India. It is a compendium of valuable facts related to the media business backed by case studies and comparative frames with media in other parts of Asia, Europe, and the U.S. The excerpts are indicative of the breadth of content and analysis: the first dealing with the media behemoth Bennett, Coleman & Company Limited highlights how a traditional media company transformed itself and media management in India.
Vanita Kohli-Khandekar. The Indian Media Business. 3rd Edition. New Delhi, Thousand Oaks, London: Sage Publications, 2010. http://www.sagepub.in/browse/book.asp?bookid=1454&Subject_Name=&mode=1
The Indian Media Business
412 pages / Paper: Rs 495.00 (978-81-321-0235-9)
Case Study: Bennett, Coleman & Company Limited (BCCL)•A Look at India's Largest Media Company
India's largest media company fascinates people for many reasons. It is partly owned and tightly run by a recluse who has probably been photographed only once or twice. During my Businessworld years, the photographers had standing instructions that if they ever spotted BCCL vice-chairman (or VC as he is called internally), Samir Jain at any do, they should take as many pictures of him as possible. Though, managing director and younger brother Vineet Jain is more flamboyant and present at several industry dos, he is equally stingy about talking to the media.
One part of BCCL's allure stems from the reclusiveness of the two brothers who run it and also own parts of it, along with the rest of their family. The other part is simply performance. Inspite of its age, near monopoly status, mouth-watering profits and legendary cash reserves, BCCL remains one of the most aggressive media companies in India. In any industry, for a market leader to be proactive and keep setting the pace, leaving younger competitors huffing behind is an achievement. This, in spite of the several criticisms levelled at it, remains BCCL's lasting contribution to the publishing business.
BCCL is the flagship of what is now called The Times Group. In 1999 BCCL's revenues were Rs 9.71 billion and its operating profits stood at Rs 1.78 billion. Ten years later, in July 2008, its revenues had grown 4.5 times to Rs 42.82 billion with operating profits of Rs 13.28 billion. Its closest print rival, HT Media, is just over Rs 13 odd billion. So, everybody has lots of catching up to do.
Many of BCCL's brands lead in their categories but its most famous and profitable one remains The Times of India, India's largest selling English newspaper at over 3 million copies (2008). Then there are others such as•The Economic Times, Navbharat Times, Maharashtra Times• among others. It is spread across magazines (in a joint venture with BBC Worldwide), the Internet, radio, television, outdoor and events. Though media forms a bulk of its revenue, a significant amount is now coming in from its private treaties business (see Chapter one•Print) as well as its private equity investments into various companies.
The Times of India (TOI) was founded on 3 November 1838 as The Bombay Times and Journal of Commerce. It was a bi-weekly edition with news from Europe, America and the subcontinent. It was shipped between India and Europe via regular steamships. The daily editions of the paper were started from 1850 and by 1861, The Bombay Times was renamed The Times of India. BCCL was established in 1913. To begin with, it was British-owned and controlled. The last British editor resigned in 1950, about two-and-a-half years after India became independent. Later, the ownership of the paper passed onto the Dalmias, one of the largest industrial families in India and later to the Sahu Jain group.
When Samir Jain took over in 1986, turning it around was an imperative since the other family businesses•New Central Jute and Rohtas Industries•were in decline. Jain tried to look at a newspaper as any other consumer product and played around with almost every element in the product mix. It started with hiring people from a fast moving consumer goods (FMCG) background, fixing value and not volume targets for his sales people and trying almost everything possible. From colour supplements, to differential pricing, to cross-brand advertising packages and price-cutting, he did everything to maximise the return from each of BCCL's brands. He tried to work around and eventually shut down a host of brands like The Illustrated Weekly, Dharmayug, Dinman and Vama: magazines that were not great money-spinners, but were well-respected editorial products. It was during this time that the first advertising encroachments into editorial space started. One of the first few brands to do it, remembers one media planner, was Rasna. It ran an advertisement bang in the middle of editorial space in The Saturday Times, a colour supplement from TOI.
Many of the things Jain tried, such as differential pricing, come more naturally to the brand manager of a soft drink company than to an intellectual product such as a newspaper. The difference is that Jain did these things at a time when nobody thought that the 'commercial' function in a newspaper was important. Today, TOI Mumbai brings in an estimated 60•70 per cent of BCCL's revenues. It remained unchallenged for decades. No other business house•the Singhanias with The Indian Post or the Ambanis with The Business and Political Observer•has have been able to take on TOI in Mumbai. Even rivals like HT put off a Mumbai edition for over a decade before entering the market in 2005. Others like The Indian Express or The
Asian Age have been reduced to mere sideshows in the city.
The Big Changes
Till about 2005, the group believed in what is known as a BEDUM policy•broadsheet, English, daily, urban and metro newspapers only. However, for the last 10-odd years, small towns had prospered and advertisers wanting to reach them had been spending more on language newspapers. This, in turn, was being reflected in the valuation multiples that companies such as Jagran Prakashan were attracting. That is when BCCL changed course and decided that it had to go across India for growth.
It then started acquiring language brands. In 2006, it acquired Bangalore-based publishing house, Vijayanand Printers to tap the southern market. It signed a joint venture agreement with rival HT Media to launch Metro Now and allied with Rajasthan Patrika for the Rajasthan market.
While there are no estimates, its print business remains its biggest contributor to both revenues and profits. There are three other media businesses that BCCL has found some level of success with• radio, Internet and outdoor. Radio, outdoor and the events business which operates under its listed subsidiary Entertainment Networks India Limited or ENIL brought in Rs 2.29 billion or about 5 per cent of BCCL's revenues in the financial year 2007•08. The Internet, by one estimate, brought in Rs 2.5 billion or about 6 per cent of its revenues in the same year.
The Big Miss
In the summer of 1992, Li Ka Shing of Hong Kong-based Hutchison Whampoa, was trying to hawk a transponder on a satellite called ASIASAT 1. Among the people who made a bid for it were Vineet Jain, the Dalmias of the Sunday Mail, Subhash Chandra of Esselworld and Nusli Wadia of Bombay Dyeing. The satellite was already beaming Shing's Star TV into India. The magnate reckoned that if he could get somebody in India interested in buying a slot it would offset some of the costs of buying the decrepit old Chinese satellite and refurbishing it. India was the most logical choice because ASIASAT 1 was the only geo-stationary (and therefore stable) satellite broadcasting into Asia at that time. So, he sent his son Richard Li to talk to Indian companies and get the best price he could. Chandra bid the highest at US$ 5 million at that time, got the transponder and went on to launch the hugely successful Zee TV in October 1992.
The Jains lost out to Chandra because the latter's bid was reportedly five times higher than theirs. Though they had the money they chose to walk out. One former Times TV official remembers that broadcasting was viewed as a risky business at that time. Times TV used to market television shows and had also made the odd show for Doordarshan. For BCCL that was more than enough. Newspapers and news is what it understood. There was no need to dabble in this new-fangled Chinese satellite. In hindsight, it seems that BCCL should have taken the risk.
More than 15 years later television broadcasting is about one-and-a-half times the size of the print industry. And The Times Group still doesn't have a firm foothold in that business. More importantly companies born long after BCCL•such as Zee are now close to its size. At one point given Star's growth rate, it was estimated that it would overtake BCCL as India's largest media company. It did not (Kohli 2003). Times Global Broadcasting a joint venture with Reuters did finally launch Times Now (an English news channel) and Zoom, but largely the group is not yet seen as a force to reckon with in television, the way it is in radio or the Internet.1
BCCL also made a small foray in the overseas market with the purchase of Virgin Radio, a UK-based station in 2008.
There has been talk of The Times Group listing or raising money through private equity, but much of it has not amounted to anything. As and when various arms of its businesses have needed money the group has had little difficulty in getting the best private equity firms to back it. It has raised money for ENIL, for its outdoor, Internet and other businesses at various points in time (see chapter on Outdoor, Events and Radio for more details).
So far, BCCL has only been tested in Indian waters. Its subbillion dollar revenue seems like a drop in the ocean compared to the sizes of other global companies. Rupert Murdoch's News Corporation alone is about US$ 30 billion dollars. That is just short of two times the size of the entire Indian media and entertainment industry. You could say that the comparison is not fair because we are talking about two different markets and companies, but it gives you a sense of how far behind we are as an industry. Much of BCCL's growth will depend on how much it can grow across media.
For now, then, the inner workings of this sub-billion dollar media giant remain a closely guarded secret.
Note 1. In 2008, Reuters exited the venture by selling back its stake in Times Global to BCCL.