India’s newspapers shrug off industry woes

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Newspaper executives in the US or Europe can only fantasize about the problems confronting their Indian peers: how to source the extra newsprint for rising circulations and catch the eye of the millions of new readers each year.

Chennai and Kolkata are a long way from Boston and Washington, where two of the best-known US titles were sold this month – the Boston Globe for only $70 million, less than a tenth of the price the paper fetched a decade ago.

In India, first-year students still peruse the monsoon-damp pages of The (Calcutta) Telegraph and proprietors wage newspaper wars from Hyderabad to Lucknow to snatch their share of a growing cohort of readers. Last year was seen in the industry as exceptionally tough – because newspaper and magazine revenues rose only 7 percent as the country's economy slowed.

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"Yes, but we are used to 15 percent growth," says DD Purkayastha, chief executive of ABP, one of India's largest media groups. "Advertising growth has also been fairly handsome in the past decade."

This is a country with hundreds of profitable daily newspapers in a plethora of languages. Dainik Jagran (Daily Awakening), a Hindi newspaper that is the top-selling daily, boasts a readership of more than 16 million.

"Profits even in slower times like these seem to be holding up," says Jehil Thakkar, head of media and entertainment at KPMG in India. "They are down from the boom years, but they are still within 8-14 percent [for after-tax profit margins]."

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In the US, newspaper advertisement revenues have fallen every year since 2005 and at $22.3 billion last year are now less than half what they were then, according to the Newspaper Association of America.

India's population of 1.3 billion is not only growing but also becoming more literate. Print continues to take the lion's share of media advertising – 46 percent or Rs150 billion ($2.4 billion) of the total advertising pie of Rs327 billion, according to a report published by the Federation of Indian Chambers of Commerce and Industry and KPMG. Over the next five years, Indian print advertising revenues are forecast to grow at more than 10 percent annually.

The latest driver of newspaper circulation is a push by media groups into vernacular languages and hitherto neglected towns and villages. Average newspaper penetration in India is low at 14-15 percent, says Mr Purkayastha, but while in cities, penetration exceeds 70 percent, in the countryside it is as low as 5 percent. "Those people are getting literate and they have started reading newspapers."

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Manas Ghosh, editor of the 10-year-old Bengali-language edition of The Statesman, a Kolkata daily dating back to 1875, says Indian papers have begun championing local causes and reporting local affairs to attract new readers. His paper backed the vociferous (and successful) campaign against the building of a Tata Motors car factory on Bengali farmland to make the Nano, a small car now assembled in Gujarat on the other side of the country.

"The strength of vernacular dailies in India is the strength of the coverage given to districts, which is not done by the English dailies," he says.

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All good things, however, must come to an end. Although forthcoming elections will make the next 12 months another "boom time" for the Indian print media, says PN Vasanti, director of research group CMS, India's economic slowdown has forced proprietors to recognize the vulnerability of their business model.

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"It's not as hunky-dory as it looks from the outside," she says. "The business is not so rosy. The cost of printing has gone up."

The cover prices of Indian newspapers are among the lowest in the world. Even premium English-language titles such as The Times of India sell for the equivalent of less than 10 US cents a copy. That makes profits excessively dependent on volatile advertising income.

One surprise, including for newspaper groups that invested in them, is that the country's 100 or more television news channels – many of them sensational and argumentative – have not done more damage to readership or advertising revenues.

"The more television channels we have, the more people are going back to reading," says Ms Vasanti, who calls it the "appetizer effect" of TV. "People who go and watch television more go back to check facts in print. That's a very unusual phenomenon that doesn't happen anywhere else in the world."

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As in Washington, Boston or London, it will be the internet and mobile devices that finally kill the old-fashioned newspaper, although India's dailies should continue to thrive until accessible broadband internet reaches the parts of the country where newspaper circulation is currently rising.

"The web is more of a threat to the English-language newspapers," says Mr Thakkar, noting that internet penetration in vernacular languages is still very low. "The English-language reader tends to behave much more like the western counterpart."

Mr Purkayastha of ABP says: "The order will be first the big metros, followed by the smaller towns, then the rural areas. That process may take 15 years.

"We keep on innovating. We know the tsunami is coming."