The buoyant economy and foreign investment are shaking up the newspaper and magazine industry. New newspapers and magazines are creating an equity market for print media that is focussed on creating large circulations of full colour products using the latest technology, writes Naresh Khanna.

The Indian government liberalised foreign direct investment in print media in 2004. This has led to only a few investments in the news segment in which foreign investment is restricted to 26 per cent. Primarily, as in HT Media, the Dainik Bhaskar group, and the Ushodya group, these have been financial investors, namely Henderson, Warburg and Pincus, and Blackstone. However, Jagran Prakashan in the Independent group, and Business Standard in the Financial Times, have found publishing investors.

The Indian government liberalised foreign direct investment in print media in 2004. This has led to only a few investments in the news segment in which foreign investment is restricted to 26 per cent. Primarily, as in HT Media, the Dainik Bhaskar group, and the Ushodya group, these have been financial investors, namely Henderson, Warburg and Pincus, and Blackstone. However, Jagran Prakashan in the Independent group, and Business Standard in the Financial Times, have found publishing investors.

Thus really no new titles of dailies (unlike the magazine segment) have come out of FDI. There are two new collaborative dailies, which seem to have taken advantage of the new rules and restriction for using imported content in the news segment. These are, Mint the new Berliner format financial daily from HT Media that has an editorial collaboration with Dow Jones’ Wall Street Journal (this happened before Murdoch bought Dow Jones), and the tabloid morninger Mail Today from the Living Media group that has, on the face of it, an editorial collaboration with the Daily Mail of London.

Nevertheless both the growing economy of the world’s largest democracy and the new rules have led to a huge boom in periodical publishing. With the possibility of raising funds from equity investors and initial public offerings to stockholders, somewhat real balance sheets have materialised. In the case of cash rich Bennett Coleman with a turnover of around Rs 4000 crore (US$ 1 billion) there is not only investment for newspaper takeovers such as Vijay Karnataka but also for minority stakes in dailies such as Mid-Day and Sandesh. There is also some mutual cross holding of equity shares between Mid-Day and Indian Express. Ironically, in spite of holding each other’s hand both seem to be sinking in the new competitive environment of the most lucrative print media market in the country, Mumbai.
 
Even without the torrent of FDI in news publishing, there is plenty of investment flowing into the country and the general liquidity and overall buoyancy has made it possible to raise capital from a variety of publishing industry and market sources including of course the traditional political sources. Sons and relatives of Indian politicians always seem to be able to find money to take over newspapers or start new ones.

A 26 per cent equity holding by a foreign investor allows for significant participation in management board and prevents the passing of significant resolutions without the minority investor’s consent. Some of the closely held family newspaper groups’ valuations and ambitions are not yet reconciled to parting with even this stake. Nevertheless these are interesting times in the newspaper industry. Although it is likely that the expansion and investment phase in daily newspapers will continue, it is likely that it will be followed by a shakeout and consolidation phase as well.

Magazines
Foreign direct investment and involvement has had a different trajectory in magazine publishing. The major news magazine groups, Living Media and Outlook have brought in a number of non-news titles where there are no restrictions on foreign authorship, editorial control, and even ownership. A host of niche magazines such as Marie Claire, Mademoiselle, Elle, Seventeen, Golf Digest, Scientific American, Autocar, and Time Out have come on the market either with licensed titles, collaborations or joint ventures. Of course they have Indian editors.

In fact sophisticated publishers such as Maheshwar Peri of the Outlook group have stringent criteria for what they think a foreign publisher can bring to the table. Based on their understanding of the market they can have strong ideas about product content and mix and what can fly. For instance at the Ifra conference in 2006, Peri said that Indians would not buy a localised version of Newsweek and so he planned to distribute an International edition with some Indian advertising at a more affordable news stand price.

Similarly as the Indian publishing environment and the infrastructure for production and distribution become more transparent, publishers with very strong brands are evaluating what an Indian partner can bring to the table. The law allows international entities full ownership of niche, technical and non-news magazines. Thus Conde Nast started the Indian edition of Vogue in September 2007, as a fully owned venture. 

The traditional big newspaper machine is the double-width double-circumference press and in this realm the Geomans from MAN Roland came in and subsequently the large orders of Bennett Coleman and HT Media were of MAN Roland Colormans. Although these two rivals are still adding Colorman presses and towers, the only large Greenfield order for 2 x 2 presses has been for the ABP group’s new project in Kolkata that is based on the Wifag xxxxx towers. This project should take shape with a new plant built by the end of 2008.

The shift to double wide single circumference presses (4 X 1) is more profound than we have hitherto indicated. In the first wave Bennett Coleman bought MAN Regioman 4 x 1 presses for Bangalore and Kolkata. Deccan Chronicle Holidings bought five Goss UnilinerS 4 x1 presses for Hyderabad and Chennai. And Kasturi and Sons bought four Mitsubishi DiamondSpirit presses for Hyderabad and the Maraimalainager plant near Chennai. The DiamondSpirits are configured as semi-commercial presses where each full colour web has an oven and chill rolls for heat set production. In addition at the Chennai plant the presses have stitchers mounted on the folder drums so that full colour tabloid products come out of the press stitched and trimmed.

The 4 x 1 wave
Thus the 4 x 1 configuration allows for the economical change of a single CtP plate for edition changes that are a feature of Indian dailies and essential for competitive colour quality. In most cases, the new plants for 4 x 1 presses can be smaller and less expensive to build with the splicers in the pressroom instead of being in a basement below the units.

In the second wave of 4 x 1 newspaper presses is that Bennett Coleman has ordered another fifty Regioman towers (that’s right fifty)! These will come up in new plants including the under construction “PrintCity” plant on the way to Aeroli in Navi Mumbai. And the other important deal is the one that we have been writing about in our last two issues, the 25 KBA Prisma towers that have been purchased by Diligent Media and the Dainik Bhaskar group. Diligent Media is the joint venture of the Dainik Bhaskar group and Zee Television for publishing the English daily DNA. The DB group are publishers of  Hindi daily Dainik Bhaskar and the Gujarati daily Divya Bhaskar.

Apart from the increasing need for high quality colour supplements for dailies, the wave of new magazine start-ups especially of international titles continues in India. And the trend of purchasing new automated full commercial heatset web presses continues. Komori has had good success with two presses at Raj Hans in Bangalore and then Kala Jyothi in Hyderabad and Manipal Power Press in Manipal. They have followed this up with another new press at International Print-Pac at Noida that is already in installation and commissioning trials.

After dominating the market in the last century and a hiatus of second presses coming in, Goss has had a great breakthrough at Thomson Press’ new Aeroli plant in Navi Mumbai. A Goss M600D 70,000 copies an hour and a high level of automation including QTI automated register systems was installed and commissioned in early 2007. Thomson Press is expected to bring in their second and third Goss M600D presses. Quite likely these will come in one after the other in next two years into their Faridabad and Chennai plants.

One more Goss M600 should be installed in the coming months at a yet undisclosed location. In addition, Goss has sold two M500 presses full commercial heatset presses with the 578 cut-off that magazines require. These presses with Duotrol dampening, long ovens, and 5-roll chill stations are also expected to be running in the coming months.

Man Roland which has essentially dominated the coldset web market with its two very large customers Bennet Coleman and HT Media has also made a breakthrough in the heatset web market. The Dainik Jagran group has purchased a single width double circumference full commercial 546 mm cutoff Euroman press. According to Sandeep Gupta, Director of Jagran Prakashan Ltd, the Euroman installation is likely to begin in October 2008 at the new Sector 63 plant in Noida. Jagran’s existing MAN Roland Illuman will also be moved to this plant, which already has a battery of Manugraph cold set webs producing newspaper products including Living Media’s tabloid Mail Today.

Sandeep Gupta says that the full commercial Euroman will be used for Dainik Jagran broadsheet supplements, magazines and for job work from the market. The Euroman is a new technology press and Jagran will be among the first few installations in the world. Gupta went to see a demonstration of the press at a commercial printing establishment in Rio de Janeiro in Brazil.

The Euroman installation is a part of Jagran Prakashan’s massive expansion and technical upgradation over the last three or four years. Sandeep Gupta in fact describes the current period as one of consolidation in which approximately 150 Manugraph 4-Hi towers have been purchased – and 80 already installed. Mostly these have been Cityline Xpress machines but there are also some faster 45,000 cph machines especially in high volume centres such as the Sector 63 plant in Noida where 5 presses that include 30 4-Hi towers.

To our own thinking, this has been one of the largest technical expansion projects ever undertaken by any newspaper group in the world – full of new editions and new plants in fairly small cities or towns. The pagination has increased to 20 or 24 pages and so has full process colour capacity in something like 34 centres. Quality upgradation has meant QTI register controls and CtPs from Screen and Krause. Something like 44 CtPs are already installed with just a few more of the Krause CtPs with Bluefin processors still to be installed. The Jagran group has shown more than 18 per cent growth over the last year and is currently adding one more edition in Rae Bareli.

DiamondSpirit MitsubishiHeavy Industries’ DiamondSpirit 4 x1 press is capable of printing 80,000 impressions an hour. The DiamondSpirit were first installed in India at Kasturi and Sons’ Hyderabad plant and then in the new plant at Maraimalainagar near Chennai. Kasturi and Sons has configured all of its presses as semi commercial presses using oven driers and chill roll sets.