Govt has learnt nothing from KFA, Air India failures
Bajaj vs Hero: Now it is also a battle of confidence

Corporate Oct 2, 2012

New Yorker discovers India's paid media, but misses the point

By Anant Rangaswami

"While profits have been declining at newspapers in the West, India is one of the few places on earth where newspapers still thrive; in fact, circulation and advertising are rising. In part, this is because many Indian newspapers, following an approach pioneered by the Jain brothers, have been dismantling the wall between the newsroom and the sales department. At TheTimes of India, for example, celebrities and advertisers pay the paper to have its reporters write advertorials about their brands in its supplementary sections; the newspaper enters into private-treaty agreements with some advertisers, accepting equity in the advertisers' firms as partial payment. These innovations have boosted the paper's profits, and are slowly permeating the Indian newspaper industry," says The New Yorker.

The NewYorker gets it wrong on the growth in circulation, they get it wrong on the robustness of the advertising and they talk about old hat, pay-for-play, in The Times of India.

The article quotes one (or both?) of the brothers who run Bennett, Coleman and Company Ltd, (BCCL) as saying, "We are not in the newspaper business, we are in the advertising business." Even more famously, Vineet Jain, the group's Managing Director, says, "If you are editorially minded, you will make all the wrong decisions."

In the article, for the first time, there is a tacit admission that BCCL's pay-for-play revenue source, Medianet, was launched because the publisher learnt that journalists were being bribed for positive coverage - and decided to sort of legalise the practice. "(Vineet) Jain "contends that it is more honest than what existed before, when reporters were slipped envelopes with cash or accepted favors in exchange for positive coverage. "They are promoting a brand," Jain tells Auletta (the writer of the piece). "Pay me for it."

BCCL and The Times of India are hardly the only ones in the pay-for-play game. "Krishna Prasad, the editor-in-chief of Outlook magazine and founder of Sans Serif, a media blog, tells Auletta. "Each player in the Indian market, whatever the language, is left with very few options. And newspapers who say they are not doing it are basically lying. The toothpaste is out of the tube, and it can't be put back in," The New Yorker says.

Overall, the article sends out a mixed picture of the Indian newspaper industry - one where pay-for-play thrives, where the business is thriving and profitable.

The article, however, gets it wrong on the growing circulation (yesterday, IRS 2012 Q2 showed the top 10 newspapers cumulatively losing readers, with seven of them, including The Times of India, among the losers.

The New Yorker also was off the mark on the advertising growth front, making the now normal mistake foreign publications make of using rate card data rather than negotiated rates in their assessment. Deep discounts are common in newspapers, and, while the entire newspaper business might have grown thanks to new editions and titles, low cover prices make the business a low-margin one.

The goings-on at Deccan Chronicle demonstrate the state of the industry. "But the year 2010 brought with it the perfect storm for Deccan Chronicle's business. First, the cost of printing a newspaper shot up due to increasing newsprint prices and a depreciating rupee. Second, the prolonged economic slowdown and uncertainty since 2010 caused most advertisers to tighten their purse strings."

So what's there in The New Yorker article? They get it wrong on the growth in circulation, they get it wrong on the robustness of the advertising and they talk about old hat, pay-for-play, in The Times of India.

That's a big let-down, considering that the sub-head of the article says, "Why India's newspaper industry is thriving."

It's not, it's not.

(Disclosure: Firstpost is published by Network18, which has TV and other publications that compete with The Times of India group).

by Anant Rangaswami

Related Stories.