Regional print players better poised for bounce back post COVID-19 crisis
Advertising budgets are the first to be slashed during an economic slump. It is no different during the COVID-19 crisis. In 2019, owning to fears of a weak economy, advertising fell by 10 per cent in English language publications and 3 per cent in regional language publications (E&Y Media and Entertainment Report).
Out of the major traditional media (TV, radio, print), print media remains the most vulnerable to the effects of the Coronavirus pandemic due to its mode of delivery, physicality of the product and complex distribution chain.
Firstly, since the crisis is of global proportions, import of paper pulp from China and other countries has been impacted. In the Union Budget 2020, the Finance Minister offered some relief to print media players by slashing the 10 per cent import duty on newsprint by 50 per cent. Now print players, under the umbrella of Indian Newspaper Society, have asked for a complete removal of import duty, which they have claimed is an ‘unbearable burden’ while they face declining revenues.
Secondly, advertising revenues have obviously been impacted across the board, but it is important to understand that in some cases ad revenue has been wiped out completely.
This graph by E&Y Media and Entertainment report shows the top spenders on print media for the year 2019. As can be seen, FMCG, Auto, Education, retail and real estate & home improvement contributed to 50 per cent of ad revenues. In the COVID-19 environment, big spenders like auto and retail have pulled out completely as they have been directly impacted by the quarantine and lockdown. Real estate players have also slashed budgets, with only online brokers such as Magicbricks who remain active spenders. Travel & Tourism, whose ad spend grew by a robust 7 per cent over 2019, has been worst affected by the crisis and has stopped all spending on advertising during this period.
Vanita Keswani, CEO, Madison Media Sigma, observes, “Expectedly, there is first a looming lack of purpose in advertising during lockdown that is media agnostic, due to the sheer consumer sentiment and behaviour in the COVID-19 environment. Specifically, print as a medium is more affected because of distribution issues and circulation numbers being hit across markets, which has affected the medium’s reach. The categories that seem to be using print advertising are – Government, hygiene brands, FMCG, banks and a bit of online education.
Unlike television or radio, where signals or frequencies are used to transmit information, print media relies on the physical distribution of newspaper copies from doorstep to doorstep. Advisory by the Government to its citizens to take precaution and shutting down of essential public transport like the Indian Railways have put a burden on newspaper distribution. Already facing stiff competition from TV and digital media, if newspapers are not delivered to readers’ doorsteps first thing in the morning, it is unlikely that they will ever be able to read it.
When PM Modi announced the nation-wide lockdown on March 24, and subsequently the Government announced suspension of Railway services, newspaper vendors called off distribution in major metros like Mumbai until March 29. At the time of filing this report, newspapers in Mumbai are still not being delivered.
Here’s what leading regional print dailies have to say about newspaper circulation across the country.
Girish Agarwal, Promoter Director, Dainik Bhaskar, maintained, “All our markets continued to witness newspaper production smoothly. However, due to distribution breakdown, around 15-120 per cent of our copies could not be delivered for some short period, however, ground situation is improving gradually and we expect to restore to normalcy in next 10-12 days’ time.”
Along similar lines, Probal Ghosal, Director, Amar Ujala, said, “Our distribution network has not been disrupted to a large extent; hence our natural priority has been the safety and wellbeing of our network while it is delivering the newspaper. Vast majority of the distribution in our operating areas takes place in independent houses, where the distribution agent/ hawker door delivers the newspaper. Secondly, there are no major hyper local news sources either on TV or the Internet.”
On the other hand, M V Shreyams Kumar, Joint Managing Director, Mathrubhumi Group, admitted, “We have experienced a decline in circulation of our newspaper only in metro cities like Delhi, Mumbai with the Janta curfew in the country on March 22, newspaper distribution was suspended citing safety concerns of delivery vendors in the wake of COVID-19. In Kerala, we haven't faced much of these issues and the newspapers are distributed in a fine manner. Publishers have been quite assertive about newspapers being safe and not the carriers of the virus.”
Since metros are facing the brunt of distribution challenges, it is more likely that English print media players were worst affected in the early days of the lockdown.
In fact, yesterday a group of leading print publishers shared a statement to the media claiming that “newspaper distribution across India has largely stabilised, ranging from 75-90 per cent of the base number of February, with the exception of a few cities.”
It should be noted that the publishers who released this statement were only speaking about their respective markets. Most of these players were language publishers with the exception of Hindustan Times and Deccan Herald.
The statement also claimed that overall time spent reading print media has gone up by 50 per cent owing to the fact that a majority of people have more free time on their hands.
According to Soumit Deb, General Manager, MediaCom, “Print as a medium right now has gained immensely in terms of reputation, primarily due to our PM’s belief that the medium has the highest credibility and is building awareness of COVID-19 nationally as well as regionally. Also, the campaign – ‘Print is safe’, which is doing the rounds, helped. This, as a medium, can be surely used by advertisers for relaying out their communication to consumers. I am sure time spent on newspaper has gone up like that of television and mobile, unfortunately we do not have a robust mechanism in place in the country to gauge it.”
While negotiations with newspaper vendors are underway, some publishers like Amar Ujala have taken proactive actions to ensure that the product reaches the reader in time.
- Arranging the distribution of newspapers at the society gates, where in some cases Resident Welfare Associations (RWAs) have discouraged entry of regular milk vendors, domestic staff, etc.
- Newspapers at essential stores – Newspapers are being kept at milk booths, kirana stores and grocery stores.
- Temporary cash sale points: Creation of temporary cash sale points so that reader can come and buy the papers.
Print players will have to fight off these challenges without advertiser support, who have adopted a wait and watch approach while they evaluate the impact of the crisis on their individual business.
Commenting on the ongoing situation, Anand Bhadkamkar, CEO, Dentsu Aegis Network India, observed, “Print advertising will be down until the entire supply chain stabilises and we overcome the Corona challenge. Right now, while e-papers are available for all publications, in many cities reaching the reader with hard copy has become a challenge as newspapers are not being delivered at home during these times. While all publications have provided access to e-papers, but for an avid newspaper reader, the experience does not compare to a physical newspaper. Yet, newspapers are considered an essential commodity, so advertisers will return in the long run.”
Bhadkamkar further said, “At present, (ad spends) are more focused towards digital or television mediums, which offer a focused reach or visible reach. Brands are being responsible in this time of crisis and are focusing more on socially responsible advertising and messaging.”
So, print media will have to maintain its circulation numbers as it prepares for a bounce back after the scenario stabilises. If the period of lockdown is extended indefinitely, players might look for a bailout from the Government. In such a scenario, being deemed as an essential commodity by the Government is a good indicator.
Following are a few ways by the Government can ease the burden on the publishing industry (as suggested by FICCI):
- A subsidy on paper will enable the industry user to spread messages, advisories and precautions to be taken with regard to limiting spread of COVID-19 in a larger manner.
- Government could advice banks that there could be a delay in interest and instalment payments to the banks by publishers and allied service providers.
- Banks could give them more time to pay interest and instalment without paying charges, treat them as regular accounts and allow them some grace period.
- Request to provide 6 months of relaxation on principal, interest payments, loans and overdrafts, to bring in liquidity.
- Provision of Government backed low cost loan or credit on attractive terms which would help MSMEs to pay rents, salaries and other immediate expenses.
- Medium size businesses could be offered a small loan with interest waiver for the first 6 months.
- Reduction of interest rate by 3% would result in more working capital.
- School education content could be open for private publishers at all grades, thus adding variety and diversity.
- Government could consider increasing the research funds.
Even if the Government lifts the lockdown, non-essential goods will not pick up right away as the economy continues to reel under the effects of the pandemic. The FMCG category will remain the major spender on print media, but it is unlikely that it will raise advertising budgets when consumer sentiment is far from bullish. With limited advertising budgets, only print media players who maintain a robust circulation could garner a major chunk of the ad spends.
In a letter addressed to Finance Minister Nirmala Sitharaman, Shailesh Gupta, promoter of Dainik Jagran and President of Indian Newspaper Society (INS), stated that relief measures suggested by INS are critical to the survival of domestic newspapers in India, especially local papers.