"Media is a sunrise sector"

First things first. There is the news of Aditya Birla Group picking up 27.5% stake in Living Media. The main thing is, as Kumar Mangalam Birla, chairman, Aditya Birla Group, says, “The media sector is a sunrise sector from an investment point of view. I believe that Living Media offers one of the best opportunities for growth and value creation.”

Our team contacted Ashish Bagga of Living Media (India Today Group) about the valuation of the project; but received no comment. However, what is interesting is, a release which was sent to the Bombay Stock Exchange on 18 May, states that the Aditya Birla Group has agreed to make a financial investment of 27.5 per cent in Living Media.

In the same press note, Aroon Poorie, the chairman of India Today Group, said, “I am delighted to partner the Aditya Birla Group to aggressively address the current and future potential of the Indian media business which is at a tipping point.”

Living Media owns the India Today Group of publications and has a 57.11% stake in TV Today Network, which is listed on the stock exchanges. TV Today runs the Aaj Tak and Headlines Today news channels. Plus there is Thomson Press which is listed as a fellow subsidiary company within the group.

Readers of PrintWeek India and media-watchers will recall that in 2003, the Aditya Birla Group had explored the media and entertainment business with Applause Entertainment which was engaged in television and film production, and made films like Black and Dev, both of which featured Amitabh Bachchan. However, the operations were shut down in 2009.

Jagran: Acquisitions of NaiDunia and Mid-day 
In the first quarter of this month, Jagran Prakashan acquired Suvi Info Management (Indore) at the close of business hours on March 31, 2012. Naidunia Media, which publishes the NaiDunia daily, is a subsidiary of Suvi.

When I was in Indore, I met Vinay Chhajlani who acquired the shares owned by the Sethias (NaiDunia was owned by three families—the Tiwaris, Sethias and Chhajlanis—in 1947) to become the largest shareholder of the paper in Indore.

In neighbouring Bhopal, the Nai Dunia title is owned by the Tiwaris and Chhajlani and the newspaper brand is known as NavDunia.

Even today, NaiDunia is a leading Hindi daily published from Madhya Pradesh and Chhattisgarh has attained a pre-eminent status as a Hindi daily in the print media in these two states. NaiDunia, launched in 1947, has multiple editions published from Indore, Gwalior, Jabalpur and Bhopal in Madhya Pradesh and Raipur and Bilaspur in Chhattisgarh.

NaiDunia’s current circulation base is five lakh copies per day. Placed among the top 10 Hindi newspapers in India, it has been one of the fastest growing newspapers in the market with a readership growth of 2.6 times over the last five years.

According to media watchers, the NaiDunia acquisition will strengthen Jagran’s presence in central India where notching up “5,00,000 copies would have been a very capital-intensive exercise".

This is the second “non-organic” investment for the Jagran Group since the acquisition of Mid-Day (in 2010).

In 2010, Jagran Prakashan, the publisher of the Hindi daily Dainik Jagran, acquired Mid-Day Multimedia print business, which runs the daily tabloid Mid-Day, in a share-swap deal. According to analysts, the company was valued at Rs 175 crore.

It’s clear the group is achieving sizeable scale at a lower investment and shorter gestation period than is typical of the print industry, Mahendra Mohan Gupta, chairman and managing director of the Jagran group in a press statement. “The acquisition will help us to leverage our existing network and we will have significant operating synergies,” he added.

Meanwhile, Jagran Prakashan, has reported standalone operating revenues of Rs 1,244.41-crore for the financial year 2012, an increase of 11.57 % over the previous year.

However, the net profit for the year slid to Rs 179.64-crore from Rs 205.83 crore in FY11. The net profit was impacted by steep increase in newsprint prices (Rs 57-crore), initial loss from new brand Punjabi Jagran (Rs 12-crore), higher depreciation (Rs 9-crore) and interest cost (Rs 7-crore) during FY12.

EBIDTA margin (excluding other income) for FY12 was 25.12%, as against 30.68% for the previous year.

Jagran Prakashan’s standalone ad revenues beat overall industry growth, growing by 10.90% in FY12 at Rs 850.01-crore from Rs 766.48-crore in the previous fiscal. Circulation revenues were up by 9.63% at Rs 244.47-crore from Rs 222.93-crore, while digital revenues (excluding ad revenues) stood at Rs 8.24-crore, up by 23.17% from Rs 6.69-crore.

Event and outdoor revenues were up by 20.49% at Rs 113.20 crore from Rs 93.95 crore.

RIL: TV 18 and Eanadu
Meanwhile the movement continues on the Mukesh Ambani driven RIL. The oil and gas major, through group companies, announced investments worth Rs 2,600-crore in the Hyderabad-based Eenadu Group. At the beginning of this year, a RIL company spokesman announced that a part of its investment in ETV channels (Eenadu Group) was being divested to Raghav Bahl-promoted TV18 Broadcast, which in turn means, RIL’s subsidiary Infotel Broadband Services entered into an agreement with TV18 and Network18 Media and Investments. The printing plant and land at Nerul, Infomedia (erstwhile Tata Press), is part of this group holding.

In January 2012, Mukesh Ambani’s RIL said it was divesting a part of its Rs 2,600-crore investment in the ETV channels owned by Hyderabad-based Eenadu Group to the Raghav Bahl-promoted TV18 Broadcast.

In turn, RIL’s subsidiary Infotel Broadband Services entered into an agreement with TV18 and Network18 Media and Investments for preferential access to all their content for distribution through the fourth-generation broadband network Infotel is setting up.

RIL said it will help Bahl’s companies finance the acquisition by subscribing to a rights issue for equity shares of TV18 and Network18. The entire transaction was valued at Rs 4,000-crore.

As readers are aware, there’s a low-key development on the side-lines with Anil Ambani’s Reliance Group being a key stakeholder in the company that runs the Bloomberg UTV news channel and its group companies operate other entertainment channels and radio stations as well.

Regional is growth for DB Corp
Regional publications have been generating strategic and strong PE funding interest. This was how DB Corp entered Maharashtra by launching Dainik Divya Marathi. Only recently, it completed its first anniversary with its fifth edition from Solapur.

Solapur with an urban population of more than 14.7 lakh and a high per-capita income of Rs 61,700 is one of the major cities of South-western Maharashtra. The first edition of Divya Marathi from Aurangabad started in May 2011 and soon other editions from Nashik, Jalgaon and Ahmednagar were launched. With five editions of Divya Marathi, it now covers complete central Maharashtra. Divya Marathi, Solapur is also the 65th edition of the group.

“Through the Solapur launch of Divya Marathi, we continue to steadily enhance our footprint in Maharashtra and we now have five strong Marathi editions along with Aurangabad, Nashik, Jalgaon and Ahmednagar, said Sudhir Agarwal, managing director, DB Corp, commenting on the successful launch.

DB Corp runs publications like Dainik Bhaskar, Divya Bhaskar, Saurashtra Samachar, Business Bhaskar, Dainik Divya Marathi, DB Gold, DB Star and DNA. It has a presence in 17 states including Madhya Pradesh, Chhattisgarh, Rajasthan, Haryana, Punjab, Chandigarh, Himachal Pradesh, Uttarakhand, Delhi, Gujarat, Maharashtra, Jharkhand and Jammu.

Meanwhile there is a strong indication that Subhash Chandra’s Essel Group is close to have sole stake in Diligent Media Corp, the publisher of the English daily DNA, or Daily News and Analysis.

This means, the promoters of Diligent Media have agreed to Essel Group buying out DB Group’s entire stake in the JV. Although, the official announcement will take a few weeks; no one from the Essel Group or DB group either confirmed or denied the news.

Diligent Media was formed in 2005 and the DNA newspaper was first published in Mumbai, when its team headed by the mercurial Pradeep Guha took on the might of the Times of India on its home turf. Since then, DNA has had editions in Pune, Ahmedabad, Jaipur and Indore.

At the time of the launch, DB Group had management and editorial control on the newspaper. In 2009, Essel Group took over editorial and management control.

One to watch out for …

Punjab Kesari to raise Rs 150 crore from private equity
The Punjab Kesari Group is planning to raise up to Rs 150-crore from a private equity (PE) firm to help enter new markets.

According to Amit Chopra, director of Punjab Kesari, “The firm will not offload more than 10% stake to the firm from which it raises the money – and will issue fresh equity for stake dilution.”

Besides strengthen the position in existing markets, the plan is to roll out new editions in Uttar Pradesh, Rajasthan and Delhi.

Presently, Punjab Kesari (the group’s Hindi newspaper) has presence in Punjab, Haryana, Jammu and Kashmir, Himachal Pradesh and Chandigarh. It has a daily circulation of 1.1 million, and a turnover of over Rs 350-crore in 2012. The firm is seeking a valuation of Rs1,200 to Rs 1,500-crore, according to Chopra.

The Punjab Kesari Group was established in 1948 with Hind Samachar in Urdu language. It publishes Punjab Kesari in Hindi and Jagbani in Punjabi as well.

Nearly six months ago, the firm had borrowed about Rs 40-50-crore for expansion. The money was used to buy raft of web offset presses and upgrade facilities, Chopra said.

Conclusion: the print industry is expected to grow 9%

The Indian newspaper industry is “guesstimated” at Rs 19,700-crore; and the print magazine vertical at Rs 13,000-crore, according to Federation of Indian Chambers of Commerce and Industry (FICCI) and a KPMG joint-report.

Hindi continues to dominate, what with five out of the top 10 dailies being published in Hindi.

According to KPMG, “Hindi plus key regional languages have a combined readership of eight times that of English newspapers. These two segments contribute approximately 60% to the industry’s revenue and cater to 89% of the readership. Together, they are expected to grow at a compounded annual growth rate (CAGR) of 10.9% over the period 2011-16, outpacing the English language market’s growth of 6.3%.”

Overall, the print industry is expected to grow 9% year-on-year, said Jehil Thakkar, partner and head of media and entertainment sector at KPMG in India, when he interacted with our team during the budget season in 2012.

Thakker seemed to suggest, “Media spending will follow where the reader; and investors will head in the direction of lucrative businesses.”

The other research agency Ernst & Young (E&Y) estimates the print media’s growth nationally to remain unchanged at 3-4% in the past nine months, while growing at 10-12% in the regional markets.

This is perhaps the reason Anand Bazaar Patrika (ABP) has been re-branded. The ABP, which publishes the Bengali newspaper Anand Bazaar Patrika and The Telegraph announced that they would buy the 26% stake Star owns in the joint venture, Media Content and Communications Services India (MCCS), for a value that is to be determined. According to them, Star News, the Hindi news channel operated by the venture, will make a profit this year on revenue of around Rs 250-crore.

Majha Star and the Ananda and ABP Kolkata-based media group formed MCCS to jointly operate three channels—Star News, Star Ananda (Bengali) and Star Majha (Marathi). The three will be taken over by ABP and renamed ABP News, ABP.

Anandabazar Patrika first appeared on March 13, 1922 — the day of Holi, as an evening daily, printed in red ink. It was a four-pager, priced at two paise and had a first-day circulation of a thousand copies. Today, the media-major in East India is on a massive plan expansion project with Ferag mailroom technology. This includes, an auxiliary contract which has three LineMaster control systems and six top-sheet printers which it is ready to unveil soon.

The key factors to look out for in the Q4FY12 results are:

Advertising growth for the sector.

Advertising yield of print media players in English and Hindi Sector