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Excerpts from IIFL’s interview
with Shobhana Bhartia, Chairperson, HT Media
We met the chairperson of HT Media, Shobhana Bhartia in
Delhi. She discussed the transition of Hindustan Times from a
paper was started to promote the freedom struggle to being a
more consumer-led business. She argues for a strong
business case for English newspapers with a strong franchise,
while expecting growth in regional print to outpace Hindi. In
a decade she expects the education business to contribute
equally.
It has been a very rich and interesting journey for HT. How
has the company evolved since its inception to its current
stature?
Hindustan Times was started to promote the freedom struggle, at
the behest of Gandhiji, and was not meant to be a profit-driven
enterprise. HT was started for a cause, and its change to a profitdriven
enterprise started in the 1990s, when liberalisation started
throwing up new opportunities. Everything started changing—we
adopted a more reader-friendly format and better-quality presses for
printing, and put in a real effort connect with the readers. We also
started some of our Hindi offerings—Lucknow and Bhopal. Our
English paper for Mumbai also came on the drawing board for the
first time in the mid 1990s, as there was a greater focus on growing
the business.
What is your outlook for the Indian print media space?
I think Indian print industry is in a far better position vis-à-vis the
rest. Although English papers should see healthy growth, Indian
language papers should see much stronger growth. Growth may not
be at the galloping double-digit rates that we saw in the 80s or the
90s, as increasing penetration of broadband causes a shift in the
younger generation’s reading habits. Furthermore, in India, linguistic
variations have acted as a driver for print media, and will continue to
do so. Another driver is the rising literacy rate, which offers enough
headroom. Newspapers are still the first point of conversion for an
illiterate person who moves to the literate pool, which is why I
foresee enormous growth in the Indian languages space.
HT launched its Mumbai edition five years ago. What is your
assessment of the performance of the Mumbai edition and
how soon do you expect it to break even?
We are satisfied with our growth in Mumbai, not just in terms of
circulation, but also in terms of readership—we are now the Number
2 paper in the city. We are happy about our progress so far. I
constantly ask people for feedback, which I think is the best way to
assess how we are doing—and I gather that HT Mumbai is creating a
buzz and has now been accepted as a Mumbai newspaper. It has
taken up a number of local causes and initiated some great
campaigns, and the paper is now making headway in Mumbai.
Revenues are also increasing, and we hope to break even within two
years. Regardless of what people plan or say, the gestation period
for a new paper is typically four to five years; it may even take
seven to eight years. Even if there is brand recognition, it takes a
while for that to translate into increased profitability. I see the
Mumbai edition breaking even in less than two years—and that
remains our primary focus for the English business for the mediumterm.
How serious and urgent is the threat of migration to digital
media?
The migration has started, but I do not see it assuming a significant
proportion in the near future. It’s a relatively small proportion of
consumers that is migrating, and ad spend on digital media is also
increasing. At present, digital media is still a small niche; majority of
the population still prefers the hard-copy. In the long term, the
migration will become widespread, so we are also building up our
presence in digital media. In English, I think the number 1 and
number 2 players have a strong business case in this country. But
over the long term, the trend of declining circulation—as has been
seen in other parts of the world—will affect India too. So the scope
for a #3 player becomes even smaller going forward, but for the #1
and #2 players, I think opportunities will remain.
Competition has been intensifying. Going forward, how do
you see this playing out?
It is always difficult to comment on competition, but yes, given how
attractive the print space is now, the major players might not be
content with merely occupying their current territories, and will try
and expand into newer geographies. In the English-language market,
I don’t see any signs of predatory pricing, as the existing players
have found a pricing level at which value is no longer being
destroyed. On the other hand, competition in the Hindi market has
increased, but it has done so in quite a predictable manner. In a
sense, Hindustan has also been a challenger in Uttar Pradesh. Going
forward, I think competition will increase, but I don’t think that the
pricing bloodbath of the 1990s is likely to happen again.
What are the group’s plans for businesses other than print
and radio, in which you already have a presence?
We are very excited about education; it will be a good fit for the
group. In fact, when I met Ms Graham in the 1980s, even at that
stage, 30% of her group’s revenues came from Kaplan (a
Washington Post subsidiary which provides higher education
programmes). I remember asking her why a newspaper company
would be in the education business. What she said still rings true:
the greatest strength of a newspaper company is credibility, and that
is the first inherent quality you look for when you put your child
through education. So I think the field of education offers the best
possible leverage for a print media company. In the 1980s and
1990s, media itself had such a long way to go and we also had a lot
on our hands. But now education is one area which we are looking at
very closely.
So what is your vision for the Group five or ten years down
the road?
First of all, businesses which would have crossed their gestation
periods will generate immense value for shareholders. The digital
business would have established itself in a much bigger market and
would no longer be a fringe business. I also see education being a
big part of our business; we have just started off with tutorials, but
in ten years, I hope to be sitting and discussing both the education
and media businesses on equal terms.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Excerpts from IIFL’s interview
with Shobhana Bhartia, Chairperson, HT Media
We met the chairperson of HT Media, Shobhana Bhartia in
Delhi. She discussed the transition of Hindustan Times from a
paper was started to promote the freedom struggle to being a
more consumer-led business. She argues for a strong
business case for English newspapers with a strong franchise,
while expecting growth in regional print to outpace Hindi. In
a decade she expects the education business to contribute
equally.
It has been a very rich and interesting journey for HT. How
has the company evolved since its inception to its current
stature?
Hindustan Times was started to promote the freedom struggle, at
the behest of Gandhiji, and was not meant to be a profit-driven
enterprise. HT was started for a cause, and its change to a profitdriven
enterprise started in the 1990s, when liberalisation started
throwing up new opportunities. Everything started changing—we
adopted a more reader-friendly format and better-quality presses for
printing, and put in a real effort connect with the readers. We also
started some of our Hindi offerings—Lucknow and Bhopal. Our
English paper for Mumbai also came on the drawing board for the
first time in the mid 1990s, as there was a greater focus on growing
the business.
What is your outlook for the Indian print media space?
I think Indian print industry is in a far better position vis-à-vis the
rest. Although English papers should see healthy growth, Indian
language papers should see much stronger growth. Growth may not
be at the galloping double-digit rates that we saw in the 80s or the
90s, as increasing penetration of broadband causes a shift in the
younger generation’s reading habits. Furthermore, in India, linguistic
variations have acted as a driver for print media, and will continue to
do so. Another driver is the rising literacy rate, which offers enough
headroom. Newspapers are still the first point of conversion for an
illiterate person who moves to the literate pool, which is why I
foresee enormous growth in the Indian languages space.
HT launched its Mumbai edition five years ago. What is your
assessment of the performance of the Mumbai edition and
how soon do you expect it to break even?
We are satisfied with our growth in Mumbai, not just in terms of
circulation, but also in terms of readership—we are now the Number
2 paper in the city. We are happy about our progress so far. I
constantly ask people for feedback, which I think is the best way to
assess how we are doing—and I gather that HT Mumbai is creating a
buzz and has now been accepted as a Mumbai newspaper. It has
taken up a number of local causes and initiated some great
campaigns, and the paper is now making headway in Mumbai.
Revenues are also increasing, and we hope to break even within two
years. Regardless of what people plan or say, the gestation period
for a new paper is typically four to five years; it may even take
seven to eight years. Even if there is brand recognition, it takes a
while for that to translate into increased profitability. I see the
Mumbai edition breaking even in less than two years—and that
remains our primary focus for the English business for the mediumterm.
How serious and urgent is the threat of migration to digital
media?
The migration has started, but I do not see it assuming a significant
proportion in the near future. It’s a relatively small proportion of
consumers that is migrating, and ad spend on digital media is also
increasing. At present, digital media is still a small niche; majority of
the population still prefers the hard-copy. In the long term, the
migration will become widespread, so we are also building up our
presence in digital media. In English, I think the number 1 and
number 2 players have a strong business case in this country. But
over the long term, the trend of declining circulation—as has been
seen in other parts of the world—will affect India too. So the scope
for a #3 player becomes even smaller going forward, but for the #1
and #2 players, I think opportunities will remain.
Competition has been intensifying. Going forward, how do
you see this playing out?
It is always difficult to comment on competition, but yes, given how
attractive the print space is now, the major players might not be
content with merely occupying their current territories, and will try
and expand into newer geographies. In the English-language market,
I don’t see any signs of predatory pricing, as the existing players
have found a pricing level at which value is no longer being
destroyed. On the other hand, competition in the Hindi market has
increased, but it has done so in quite a predictable manner. In a
sense, Hindustan has also been a challenger in Uttar Pradesh. Going
forward, I think competition will increase, but I don’t think that the
pricing bloodbath of the 1990s is likely to happen again.
What are the group’s plans for businesses other than print
and radio, in which you already have a presence?
We are very excited about education; it will be a good fit for the
group. In fact, when I met Ms Graham in the 1980s, even at that
stage, 30% of her group’s revenues came from Kaplan (a
Washington Post subsidiary which provides higher education
programmes). I remember asking her why a newspaper company
would be in the education business. What she said still rings true:
the greatest strength of a newspaper company is credibility, and that
is the first inherent quality you look for when you put your child
through education. So I think the field of education offers the best
possible leverage for a print media company. In the 1980s and
1990s, media itself had such a long way to go and we also had a lot
on our hands. But now education is one area which we are looking at
very closely.
So what is your vision for the Group five or ten years down
the road?
First of all, businesses which would have crossed their gestation
periods will generate immense value for shareholders. The digital
business would have established itself in a much bigger market and
would no longer be a fringe business. I also see education being a
big part of our business; we have just started off with tutorials, but
in ten years, I hope to be sitting and discussing both the education
and media businesses on equal terms.
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