Good growth for newspapers, but cost remains a challenge

How is the industry doing now? Short answer: the overall growth is good, but the cost is killing the profit.

The newsprint prices below USD 300 a tonne in 2020 have been going upwards since December 2020. It is currently in the range of USD 700-750 a tonne. This rise has impacted the balance sheet, as for most publishers, newsprint amounts to 50-60% of the cost.

According to a source, the industry faced an additional impact of Rs 40-crore compared to the last quarter of 2020-21, wiping out the revenue gains completely. The next quarter will have more challenges, as revenues will continue to dip as spirals.

Circulation numbers
Meanwhile, the circulation numbers were on track to almost 80-90% of pre-Covid levels by the first quarter of the financial year 2022. According to the quarterly report released by HT Media on 1 February 2021, the company’s net sales at Rs 244.29 crore in December 2021 were up 48.02% from Rs 165.04 crore December 2020. The quarterly net profit at Rs 28.35 crore in December 2021 was up 270.89% from Rs 16.59-crore.

According to its financial results for the quarter and nine months ended December 31, DB Corp’s advertising revenue grew by 24.2% at Rs 8,693 million as against Rs 7,001 million; circulation revenue increased by 11.9% at Rs 3,406 million as against Rs 3,043 million total revenue grew by 23.2% at Rs 13,087 million as against Rs 10,621 million.

Ad revenues up
In a report published in December 2021, the Indian Newspaper Society (INS) members had reported a 41.29% drop in ad revenue at Rs 10,458.28 crore in 2020 from Rs 17,815.88 crore in 2019 due to the pandemic. The distribution of business from accredited agencies was dominated by language dailies, which accounted for 58.04% of the total business, with English dailies accounting for 40.94%.

The INS has 716 members, including print media houses such as The Times of India Group, HT Media, DB Corp, Jagran Prakashan, Lokmat, ABP Group, and Malayala Manorama, among others.

Things improved significantly in 2021. According to a report by TAM Media Research, the print industry already recovered 82% of the pre-Covid levels and posted an 18% drop in ad volumes in 2021, as opposed to 2019. The situation has significantly improved in Q3 FY22.

Sudhir Agarwal, managing director, DB Corp, said, “We are seeing renewed vigour in advertising revenues, with new categories starting to look towards print for their ad spend, coupled with select traditional categories like real estate, education, jewellery that have bounced back to pre-Covid levels. The other large traditional sectors are beginning to show signs of revival, which underscores further growth potential. As the market leader in Indian language print, backed with strong editorial integrity, we are a natural choice for advertisers, both new age as well as the traditional as they look to create localised and targeted ad campaigns.”

Yet, the rising newsprint cost remains a challenge. For one thing, the waste collection of newsprint in India was disrupted due to the falling circulation during the peak pandemic period. As a result, the local newsprint mills are unable to get sufficient recycled fibre, and thus, their capacity is down.

Add to the increased cost of pulp and freight, plus delays. The rising newsprint prices are here to stay.