Jagran prakashan

Value research article. covers Jagran Prakashan & MPS.

Why print is here to stay
In spite of the advent of digital and online technologies, print hasn’t turned obsolete yet. On the contrary, it has been growing steadily

By Vikas Vardhan | Nov 10, 2015

Why print is here to stay

The rise of e-commerce and the growth in the use of the internet and smartphones are considered to be a big threat to the print media and book-publishing companies in India. So, what is the impact like? If we talk about the listed companies in India in the publishing industry, we didn’t find any adverse effect on them. On the contrary, they have been growing at a decent pace and have given exceptional returns on equity. We think that the edge in terms of return on equity will still stay for a long time.

Who will survive?
In print media it is the leader in the respective market that survives in the long term. It is the scenario where the winner takes it all. The four listed print-media companies – DB Corp, Jagran Prakashan, HT Media and Hindustan Media Venture – are the leaders in their respective regions. They have swept away the majority market share and thus command higher prices for advertising revenues. Since the revenue from advertising accounts for almost 70 per cent of the total revenue, their dependency on subscription revenue is low.

Advertising will keep the bells ringing
The advertising revenue will keep on rising for print-media companies, despite rising online digital marketing. This is so because, first, there is still a huge population which has access to newspapers only. Second, many ads and notices, like government tender notices and quarterly financial results, etc., go in print due to regulatory compulsions. These regulations are not going away any time soon, given the current scenario. Third, despite a rise in the literacy rate there is still a huge population that cannot read. In the case of the internet, not only does a person need to be literate but he should also be computer literate. On the other hand, in the case of print advertisements, even an illiterate person can connect to the visuals in newspapers.

Printing money
Company name Average 5Y RoE (%) Revenue (Rcr) 3Y sales CAGR (%) 3Y operating profit (Rcr) 3Y EBITDA CAGR (%)
Print media
DB Corp 24.99 1964 12.41 573 19.04
HMV 18.7 820 11.21 234 26.34
HT Media 12.51 2306 5.44 420 6.87
Jagran Prakashan 27.02 1644 10.18 488 14.33
Book publishing
MPS 35.25 210 9.76 90 46.63
Navneet Education 25.44 981 13.74 243 14.09
Data as of October 5, 2015

Subscriptions revenue will stay afloat
Despite a rise in online readership, subscription volumes will stay afloat in India. Newspaper readers are used to the printed version despite reading online. It will take time to change the lifestyle. In India there is a door-to-door delivery system. Therefore, the consumer may not easily do away with newspapers. In developed countries, like the United States, newspaper volumes have been falling because majority of sales come from newsstands, where people pick newspapers themselves.

India will keep witnessing a lot of population taking to newspaper readership with more people becoming literate. Television and newspapers will still remain the preferred path to accessing information in small towns, where still majority of Indians reside.

What will propel growth?
Domestic consumption in India is the biggest driving force behind economic growth. With this, consumer-product companies, like FMCG and automotive companies, will keep shelling out a lot of money on advertising. Newspapers will remain the preferred media channel to connect to the masses in India. In fact rising e-commerce has come as a blessing in disguise as they are using print media heavily to gain more market share. Amid rising digitisation, print-media companies are letting no stone unturned to take benefit of smartphones and online reading by focusing on websites, mobile-based applications and online content.

Why print is here to stay

Book publishing will benefit from digitisation
In the long term reading is expected to transform from physical-book reading to digital and online reading. This is beneficial for publishing companies. First, the delivery system will be faster and, second, companies will see logistics and printing costs come down heavily. This is a win-win situation for both readers and publishing companies. Access to e-books is convenient, fast and relatively cheap. Therefore, they will boost volume growth. The companies in the listed space, like Navneet Education and MPS, will continue with their high return on equity for the long term.

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