By Sevanti Ninan
These days foreign media companies have one thing in common - they are all eyeing India as the place to invest in.
IN early December a tall, strapping, white-haired Irishman a dias with the Indian Prime Minister as part owner of the Dainik Jagran, India's most widely read newspaper. For Sir Antony O' Reilly, owner of the Independent of London, it was a significant moment in his five year long effort to gain a foothold in the Indian market. When he spoke at the Jagran Forum, it was to tell people what Indians these days want to hear: that this country's progress is unstoppable, that its democracy is what puts India ahead of China for potential media investors, and that while the latter enjoyed some of the temporary virtues of a command economy, for his group, China was out on ideological grounds. Despite the fact that advertising in China is growing at a faster pace than India.
These days media companies from South Africa, Qatar, Australia, and Ireland have one thing in common-they are all eyeing India as the place to invest in. The reason is fairly simple: if money in this business comes from subscriptions and advertising, India delivers numbers in both categories.Newspaper growth is stagnating in the developed world, whereas with literacy growing circulations here continue to grow. And as for advertising, as O' Reilly put it, it is growing by less than 2 per cent a year in the European market. It has declined by five per cent in both France and Germany. And India? Year end figures put advertising growth in this country in 2005 at 14.1 per cent, double digit, for the second year running. What's more, newspaper advertising grew faster, at 16.1 per cent to TV advertising's 11.4 per cent. (Adex figures from TAM media research). With China and Indonesia, India tops advertising growth in the global market. Are you surprised then that you get such a flood of advertising every time you watch television or open the more popular newspapers? As more international media seeks Indian partners media will continue to grow, and so will the volume of advertising because the economy is growing. Business Standard and Hindustan Times got foreign partners after government policy changed to permit foreign direct investment.(FDI) Independent News and Media PLC took a 26 per stake in Jagran Prakashan, which is poised to go in for an initial public offering (IPO) early this year. When it does so, the value of the stake that the foreign partner has in the Indian paper will grow. And meanwhile with policy changing to permit facsimilie editions of foreign papers, it has applied for a license to bring the Independent here.Eventually it will make money in India and up its stake in the Indian company, as policy changes. When it bought into a New Zealand newspaper it had 28 per cent FDI. Now that has grown to 100 per cent. Seventy five per cent of the money this company makes is from its newspapers abroad. In television CNN has just invested in IBN, and Reuters in Times Television. l Jazeera International is seeking a partner here to tie up with,. Jagran's TV venture Channel 7 has foreign partner separate from the Independent. The trend that began in 2005 will grow in 2006. Media companies from across the world will head here to position themselves for future profits. IANS reports that the South African media giant Naspers is keen on investing in India having established itself in China. It has opened an office in New Delhi and is exploring options.
All of this spells a lucrative future for India's advertising industry. With investment will come expansion, with expansion even more advertising. Some rather fanciful figures are being tossed around about what DNA invested in 2005 to enter Mumbai. The Times of India's recent rather laboured series of TV ads show that the market leader feels the need to advertise to maintain its leadership position. And what sort of future will growth spell for Indian journalism? More dumbing down? Or more investment in quality with which to fight the competition? The Times of India deepened its journalism last year with competition from DNA and Hindustan Times imminent. The Hindustan, the Dainik Jagran's competition in U.P. and Bihar relaunched itself in December in a more market friendly avatar with colour on every page. There are no pat answers, but the reader can hardly suffer when she or he has more choice.