WESTERN cash is pouring into India’s newspaper sector as the country’s print media industry looks to fuel ambitious growth forced by the "economics of compulsion".
What began as a trickle two years ago is turning into a flood as some of the biggest names in publishing, including Pearson - owner of the Financial Times - and Dow Jones look to get a foothold.
The situation is in sharp contrast to other major n
ewspaper markets, such as Europe and the United States, where sales have been in decline over the last few years.
The wave of cash pouring into the sector in one of the world’s most populous countries was sparked by the scrapping in 2002 of a 50-year-old rule that banned overseas ownership of India’s newspapers.
Under the new guideline, foreign firms can buy up to a 26 per cent stake in news publications and 74 per cent in non-news titles.
And experts feel that the flow of cash could grow greater as India considers allowing institutional investors based abroad to buy shares in Indian newspaper businesses.
Henderson Private Capital’s Asia Fund was the first western-backed private investment in India’s print media, with its £13.6m buying a 15 per cent stake in the Hindustan Times.
"When we first made our investment in Hindustan Times in 2003, there were no foreign investors in the sector," says Sanjiv Kapur, head of Asia Pacific at Henderson. "The floodgates have opened since then, as everyone can see the opportunity."
And last year, Pearson spent almost £1.6m to secure a 14 per cent stake in Business Standard, India’s second biggest business daily.
For the first time in many years, advertising income for the print media industry is outstripping television ad revenues. Readership is also increasing.
During 2004, print advertising grew 15 per cent to £631m and commanded 46 per cent of the media ad spend. In contrast, television’s ad spend increased by 13 per cent rise and accounted for 41 per cent of the market.
Atul Phadnis, vice president of TAM Media Research, a unit of the giant AC Nielsen group, said: "There’s been a revival in print, which had been losing ground to TV from the mid-90s when the satellite boom began, but TV’s penetration may be peaking now. Print has got smarter, so it’s likely to sustain growth."
According to the Indian Readership Survey, there are about 161 million newspaper readers, which equates to just a fraction of the 1.1 billion population who speak 19 officially-recognised languages.
Analysts say that investors are attracted to the double-digit ad revenue growth being seen, as well as the readership growth potential and the increasing liberalisation of the media in general.
Also significant is the seeming willingness of the country’s press barons to look beyond their traditional markets.
"Investor interest was always there, but publishers were not willing to change their ways," says Vishal Nevatia, chief executive of private equity firm GW Capital.
"Now their dominance is threatened, they are being forced to consolidate, to enter new markets - it’s the economics of compulsion."
Among the other foreign companies turning their attention to India’s newspaper industry - which also benefited from the approval of a Freedom of Information Act in 2002 - is Wall Street Journal publisher Dow Jones.
It has linked up with Bennett Coleman to tap into the benefits stemming from sales of the Times of India - the world’s top-selling English-language broadsheet with a daily circulation of 2.4 million out of an Indian English-language base of 17 million.
