At The Crossroads

Oct 01 2013, 21:40 IST
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SummaryTwo of the biggest advertising mediums—print and television—are caught in a quagmire of issues ranging from a slowing ad market to pricing and regulatory hurdles. The media meltdown is no longer just a fable. It is stark and real and here to consume companies and jobs

Media slowdown that was restricted to the distant shores of the west, has now spilled into India, causing print and broadcast companies to crimp operations and introspect over editorial and business practices.

The country’s largest media buying company GroupM India, part of the Martin Sorrell owned WPP Plc, has slashed ad expenditure estimates for year 2013 to R44,755 crore from its earlier projection of R45,334 crore. Ad expenditure for year 2012 was pegged at R41,264 crore, GroupM said. The second half of the year is usually harvest season for media companies. But this time around, ad expenditure for the second half of the year (July-December 2013 period) will grow by 4.7% from the earlier projection of 7.3%. The two big advertising mediums—print and television—see a sharp fall.  Television will grow at 5.9%, from the earlier 7.6%. Print will see growth of 0.7% in ad expenditure from the earlier estimated 4.8%.

CVL Srinivas, chief executive officer of GroupM South Asia, said that the advertiser sentiment was fairly negative. “Advertisers are shying away from media channels with inflated costs. They are broad-basing themselves and are looking at other media options such as digital and activation that are under-utilised in this country. Digital, for instance, is a 150-200 million highly influential target group.”

Srinivas said that it is tough to say when the market is likely to recover, considering that economic troubles come and go in phases. The troubles that print and broadcast were seeing were not typical of this sector. All companies across the board were facing economic difficulties.

Advertising is just one part of the problem. Both print and broadcast companies are up against excessive competition which has led to unviable business models. For print, the situation is particularly dire because newsprint costs are increasing while subscription revenues are barely existent. The price for 1 metric ton of newsprint is R37,000 currently, up from R31,000 a year back. It is also unclear as to what kind of business models can sustain newspapers in a digital era. Consumers in India are still getting used to paying for content online.

Ravindra Kumar, editor and managing director of The Statesman says, “Our dependence on advertising is because we refuse to increase the cover prices. The first thing that newspaper publishers ought to do is to stop subsidising what they produce. What the reader pays should at least cover the cost of the newsprint. Countries such as

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