SILENT CRUSADER

BY IMPACT Staff

Jagran Prakashan CEO Sanjay Gupta has been quietly expanding the group’s portfolio of profit-making newspapers, but his move to takeover NaiDunia shows a new aggression in Hindi heartland

 

Life must be looking up in the print world, the sceptical might observe. After all, there is regular news of huge investments in new publications, leaders exploring new territories or launching new editions to consolidate presence in existing markets, dailies attacking competition through hi-decibel ad campaigns and possible takeover deals of healthy, profitable publications by other larger publications. The conversation picked up some more steam last week, when despite all talks of a tough year, industry leaders asserted that they had no intention to slow down in 2012. One of the most talked about developments on the subject in fact was Jagran Prakashan Limited (JPL) considering a takeover of Indore-based NaiDunia Group.
 

The thing about JPL is that it manages to move silently, even when it is cruising at top gear. For the last nine years, JPL has been publishing India’s, and arguably the world’s, largest read daily – Dainik Jagran. The Group has launched a whole host of editions in the Hindi belt to strengthen its leadership position. It has made parallel investments in other titles such as youth targeted title i-next and hyper-local offering City Plus in an attempt to cater to different TGs. It looked at different languages including English, Punjabi and Urdu to expand its footprint. It invested in other domains such as out of home and events to be able to offer more to advertisers.

 

And the company is facing worthy competition as well. DB Corp, publishers of the second largest read daily, Dainik Bhaskar, is rapidly entering new markets. Around mid last year, Bhaskar entered the most prosperous state in India – Maharashtra. Not just Dainik Bhaskar, even BCCL, publishers of The Times of India, has been expanding at a scorching pace. In 2008, the company bought Vijay Karnataka, the leading Kannada daily and last month, it teamed up with Mathrubhumi to launch in Kerala, the state rivalling UP’s cumulative newspaper readership with just 16% of its population. Expansion isn’t limited to the biggest players. Rajasthan Patrika, which for years had confined itself to its home state, went to Madhya Pradesh in 2009 and as per the latest readership figures, had matched NaiDunia, not only an established old player but also the object of JPL’s bid at present.
 

Madhya Pradesh: The Logical Expansion

 

In a conversation with IMPACT, Sanjay Gupta, CEO, Jagran Prakashan Limited, said, “Madhya Pradesh is a logical market expansion for us. As you would know, Dainik Jagran was there but we ran into some uncontrollable issues in the market. We are always looking for an opportunity to grow, and I have always been a believer in mergers and acquisitions.”
 

Merger and acquisition (M&A) is not new to JPL. In fact, according to Gupta, M&A is a better route in some cases, as it allows a company to begin in a new market with some kind of head start. Most markets are increasingly getting crowded, with space for smaller players shrinking. Large publishers with deep pockets are able to leverage their financial muscle to run a viable business, which smaller players find hard to sustain. Mid Day would be a case in point. JPL bought the tabloid two years back. With revenues of around Rs 100 crore in FY 2010, Mid Day was known as one the best monetized newspapers in the country due to its English readership. Post the buyout, JPL has shut down Mid Day’s loss-making divisions, ensured synergies in operations and made it more profitable than before. Recently, riding on Mid Day’s distribution and reach, JPL launched its hyper-local title City Plus in Mumbai.
 

Should JPL’s conversations with NaiDunia work out, it would spell immense value for JPL once again. NaiDunia is a 60-year-old publication with a loyal readership base across Madhya Pradesh, a key Hindi market where Jagran has a token presence and which is the home turf of its arch rival Dainik Bhaskar. Rajasthan Patrika entered this market almost three years back and in this time period has managed to launch over 12 editions crossing NaiDunia in readership, according to the latest round of the Indian Readership Survey. Despite stiff competition, media watchers say NaiDunia has managed to keep its revenue base intact, not allowing the new player to eat into its pie.
 

Experts estimate NaiDunia’s revenue to be in the region of Rs 100 crore. Acquiring the publication will add close to 10% to JPL’s topline, a neat addition given that it is getting a full-fledged, well run business that can start adding to bottom line straightaway. Like in the case of Mid Day, operational efficiencies will allow for streamlining of costs, making NaiDunia a seamless player in the larger set up. Media watchers estimate the size of the MP newspaper publishing market to be similar to that of another predominantly Hindi reader market, Punjab, which is said to be around Rs 600-700 core annually.
 

Aligning with Jagran will also provide NaiDunia the muscle to take on larger players like Bhaskar and fast expanding papers like Patrika. Though it has managed to keep its topline largely in place despite competition growing stiffer, industry observers say it might be a difficult task for NaiDunia to sustain for too long.
 

For Jagran, MP along with Rajasthan constitutes the last significant Hindi readership market which is yet to be plugged.
 

Language and not just States

 

In the last four years, while its competition looked at entering new markets, JPL looked to give more power to Dainik Jagran and in the process launch more editions in the Hindi belt. At the same time, focus on more languages for the Group became important. The Mid Day deal not only gave JPL a foothold in Mumbai, but also in the English readership market. JPL took some tough steps to streamline Mid Day’s operations in 2011 and the expectation now is to grow the brand further this year. In 2012, Dainik Jagran’s Punjabi offering would be a core area of focus for the company. Jagran Punjabi will soon complete six months.
 

Another language that JPL now is looking closely at is Urdu, through its publication Inquilab. Gupta informs, “Inquilab is a good product that has a strong market. We have launched it in the North -- in UP and Delhi, but it is in a very work in progress stage. We have got initial responses from the reader and there are some corrections that the product requires. Frankly, it’s not a language that I understand so I am completely relying on the editorial team to deliver and I am happy that they are able to do it so far. Once we consolidate UP, then we will look for Bihar and Jharkhand.”
 

Expanding presence across the Hindi belt, through its various offerings, could bring unique advantages for JPL as a similar language populace tends to have similar habits. From an advertiser viewpoint, these markets are easier to club together and target. On a broader level, regional print has outpaced total print ad increase, hence providing the company with continuously growing opportunities to cash in on.
 

JPL has had a good year. Sanjay Gupta reflects, “Even though the market presented its challenges, I am satisfied with the way we increased our numbers in Jagran and Mid-day.” While Jagran Prakashan’s Income from Operations or Net Sales increased from Rs 2,787 million in Q3 of 2010 to Rs 3,170 million in Q3 of 2011, it saw a drop in other operating income and operating profits to eventually record a drop in Net Profits from Rs 526 million in Q3 2010 to Rs 413 million in Q3 2011.

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