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Media
India
Demystifying IRS 3Q2011: DBCL opens its account in Jharkhand. Our analysis of
the IRS 3Q2011 (survey period July 2010 – June 2011) reveals: (1) continued growth in
readership of the Indian print media, (2) DBCL opening its account in Ranchi/Jharkhand,
along expected lines, (3) all Hindi/regional print media consolidating their positions in
core, legacy markets and (4) HTML consolidating its runner-up position in Mumbai.
Reiterate our positive view on regional print media given (1) better advertising
dynamics, (2) reasonable valuations factoring in (3) competitive dynamics. We focus on
yoy changes in readership from a trend perspective; we highlight qoq changes which
could signal a potential change in trend.
Robust growth in Indian print media continues
Exhibits 1-2 present growth in average issue readership (AIR) of English and Hindi dailies. The AIR
of English dailies increased 4% yoy (3Q2011 over 3Q2010) to reach 17.8 mn, with Times of India
(Bennett Coleman-BCCL) leading the pack with 7.5 mn. The AIR of Hindi dailies increased 5% yoy
to reach 63.5 mn, with Dainik Jagran (Jagran Prakashan-JAGP) leading the pack with 16.5 mn.
However, DBCL consolidated its position as the largest regional print media company with AIR of
18.8 mn. The key highlight of the print media (versus the Indian media industry in general) remains
stable, with greater consolidation; the top-five Hindi, English or regional publications outpaced or
matched AIR growth in their respective segments and the industry.
Dainik Bhaskar opens its account in Jharkhand
Dainik Bhaskar’s readership data for Ranchi/Jharkhand were reported for the first time. DBCL has
reportedly captured the second runner-up position in Ranchi behind Hindi Hindustan. This does
not corroborate with the key takeaways during our market visit (see ‘DB executes in Ranchi but
strategic direction risky’ dated April 05, 2011); we note that the 3Q2011 survey captures 10
months of operation of DB in Ranchi (August 2010 launch). Adjusted for this, DB has likely
captured the runner-up position, marginally ahead of Hindi Hindustan. For similar reasons, it
makes little sense to compare the readership data for the overall Jharkhand market since DBCL’s
expansion over August 2010-April 2011 does not get completely captured.
Exhibit 3 also presents other operating metrics of the market. Print penetration increased to 60%
from 53% in 3Q2010 while dual readership also increased to 51% from 26% in the market.
Increased readership and penetration will result in market advertising growth but it will happen
with a time lag. High dual readership represents high circulation investments in the market (high
cost), which will also likely correct in time. Print media operating margins in Jharkhand are under
pressure given upfront costs and lagged revenues; however, operating margins have likely hit
bottom as witnessed in the case of HMVL. More important, depressed valuations already factor-in
competitive intensity much beyond the current on-ground situation.
Hindi print consolidates position in core legacy markets
The challenging macro-environment has resulted in weak financial performance of print media in
FY2012E. However, print companies also invested in consolidating their position in core legacy
markets, which will likely provide support in FY2013. The AIR of DBCL increased 8% yoy to reach
18.8 mn in 3Q2011; excluding the Jharkhand expansion, the AIR of DBCL still increased a robust
5% yoy to reach 18.1 mn, led by Madhya Pradesh, Chhattisgarh and Rajasthan. DBCL faced rising
competition from new entrants (NaiDunia, Patrika) by launching hyper-local editions in smaller
cities and towns. The qoq trends in NaiDunia readership suggest a breather from competition but
Patrika’s Chhattisgarh readership is yet to be counted.
The AIR of JAGP increased 3% yoy to 17.1 mn in 3Q2011, led by robust performance in
Bihar, Jharkhand and Uttaranchal. JAGP’s AIR in the core UP market was flat, and being
behind the re-investment curve, it continued to concede modest market share to Amar Ujala.
However, we highlight (1) qoq trends in Amar Ujala indicated stabilizing market share while
JAGP’s re-investment is yet to bear fruit and (2) JAGP continues to lead in key city markets
by a reasonable margin. Finally, Mid-Day also witnessed improving qoq trends in readership
implying the turnaround plan in Mumbai market is working; however, FY2012-13 will be
investment years given the brand has been inactive for some time.
Strong gains for HTML but macro concerns persist
Hindustan Times (HT), HTML’s flagship English daily, continued its robust growth trend with
its AIR increasing 6% yoy to reach 3.7 mn in 3Q2011. HT maintained its joint leadership
position with TOI in the Delhi market but more important, consolidated its runner-up
position in Mumbai with 27% yoy increase in its AIR. The AIR of HTML’s business daily, Mint,
also increased 41% yoy to reach 253K, further consolidating its runner-up position and
providing strategic support to HT Mumbai. However, DNA also reported 18% yoy growth in
AIR, implying robust competitive intensity. Further, a challenging macro-environment (metro
advertising, Rupee depreciation) precludes a more positive view.
Hindi Hindustan (HH), HTML/HMVL’s flagship Hindi daily, also continued its robust growth
trend with its AIR increasing 11% yoy to reach 12 mn in 3Q2011. The robust growth was
led by core legacy markets of Bihar and Jharkhand as well as expansion in UP and
Uttaranchal. The qoq trends in AIR in the UP market indicate a growth peak; however, we
believe this is largely due to renewed focus on Bihar; HMVL’s launches in Gorakhpur, Hapur,
Aligarh and Moradabad (4QFY12E) will likely result in renewed growth. Going forward, the
key for HMVL would be to not only sustain the growth trends but also monetize current AIR
better and bridge the large gap versus peers DBCL and JAGP.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Media
India
Demystifying IRS 3Q2011: DBCL opens its account in Jharkhand. Our analysis of
the IRS 3Q2011 (survey period July 2010 – June 2011) reveals: (1) continued growth in
readership of the Indian print media, (2) DBCL opening its account in Ranchi/Jharkhand,
along expected lines, (3) all Hindi/regional print media consolidating their positions in
core, legacy markets and (4) HTML consolidating its runner-up position in Mumbai.
Reiterate our positive view on regional print media given (1) better advertising
dynamics, (2) reasonable valuations factoring in (3) competitive dynamics. We focus on
yoy changes in readership from a trend perspective; we highlight qoq changes which
could signal a potential change in trend.
Robust growth in Indian print media continues
Exhibits 1-2 present growth in average issue readership (AIR) of English and Hindi dailies. The AIR
of English dailies increased 4% yoy (3Q2011 over 3Q2010) to reach 17.8 mn, with Times of India
(Bennett Coleman-BCCL) leading the pack with 7.5 mn. The AIR of Hindi dailies increased 5% yoy
to reach 63.5 mn, with Dainik Jagran (Jagran Prakashan-JAGP) leading the pack with 16.5 mn.
However, DBCL consolidated its position as the largest regional print media company with AIR of
18.8 mn. The key highlight of the print media (versus the Indian media industry in general) remains
stable, with greater consolidation; the top-five Hindi, English or regional publications outpaced or
matched AIR growth in their respective segments and the industry.
Dainik Bhaskar opens its account in Jharkhand
Dainik Bhaskar’s readership data for Ranchi/Jharkhand were reported for the first time. DBCL has
reportedly captured the second runner-up position in Ranchi behind Hindi Hindustan. This does
not corroborate with the key takeaways during our market visit (see ‘DB executes in Ranchi but
strategic direction risky’ dated April 05, 2011); we note that the 3Q2011 survey captures 10
months of operation of DB in Ranchi (August 2010 launch). Adjusted for this, DB has likely
captured the runner-up position, marginally ahead of Hindi Hindustan. For similar reasons, it
makes little sense to compare the readership data for the overall Jharkhand market since DBCL’s
expansion over August 2010-April 2011 does not get completely captured.
Exhibit 3 also presents other operating metrics of the market. Print penetration increased to 60%
from 53% in 3Q2010 while dual readership also increased to 51% from 26% in the market.
Increased readership and penetration will result in market advertising growth but it will happen
with a time lag. High dual readership represents high circulation investments in the market (high
cost), which will also likely correct in time. Print media operating margins in Jharkhand are under
pressure given upfront costs and lagged revenues; however, operating margins have likely hit
bottom as witnessed in the case of HMVL. More important, depressed valuations already factor-in
competitive intensity much beyond the current on-ground situation.
Hindi print consolidates position in core legacy markets
The challenging macro-environment has resulted in weak financial performance of print media in
FY2012E. However, print companies also invested in consolidating their position in core legacy
markets, which will likely provide support in FY2013. The AIR of DBCL increased 8% yoy to reach
18.8 mn in 3Q2011; excluding the Jharkhand expansion, the AIR of DBCL still increased a robust
5% yoy to reach 18.1 mn, led by Madhya Pradesh, Chhattisgarh and Rajasthan. DBCL faced rising
competition from new entrants (NaiDunia, Patrika) by launching hyper-local editions in smaller
cities and towns. The qoq trends in NaiDunia readership suggest a breather from competition but
Patrika’s Chhattisgarh readership is yet to be counted.
The AIR of JAGP increased 3% yoy to 17.1 mn in 3Q2011, led by robust performance in
Bihar, Jharkhand and Uttaranchal. JAGP’s AIR in the core UP market was flat, and being
behind the re-investment curve, it continued to concede modest market share to Amar Ujala.
However, we highlight (1) qoq trends in Amar Ujala indicated stabilizing market share while
JAGP’s re-investment is yet to bear fruit and (2) JAGP continues to lead in key city markets
by a reasonable margin. Finally, Mid-Day also witnessed improving qoq trends in readership
implying the turnaround plan in Mumbai market is working; however, FY2012-13 will be
investment years given the brand has been inactive for some time.
Strong gains for HTML but macro concerns persist
Hindustan Times (HT), HTML’s flagship English daily, continued its robust growth trend with
its AIR increasing 6% yoy to reach 3.7 mn in 3Q2011. HT maintained its joint leadership
position with TOI in the Delhi market but more important, consolidated its runner-up
position in Mumbai with 27% yoy increase in its AIR. The AIR of HTML’s business daily, Mint,
also increased 41% yoy to reach 253K, further consolidating its runner-up position and
providing strategic support to HT Mumbai. However, DNA also reported 18% yoy growth in
AIR, implying robust competitive intensity. Further, a challenging macro-environment (metro
advertising, Rupee depreciation) precludes a more positive view.
Hindi Hindustan (HH), HTML/HMVL’s flagship Hindi daily, also continued its robust growth
trend with its AIR increasing 11% yoy to reach 12 mn in 3Q2011. The robust growth was
led by core legacy markets of Bihar and Jharkhand as well as expansion in UP and
Uttaranchal. The qoq trends in AIR in the UP market indicate a growth peak; however, we
believe this is largely due to renewed focus on Bihar; HMVL’s launches in Gorakhpur, Hapur,
Aligarh and Moradabad (4QFY12E) will likely result in renewed growth. Going forward, the
key for HMVL would be to not only sustain the growth trends but also monetize current AIR
better and bridge the large gap versus peers DBCL and JAGP.
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