What has been the actual experience with ad revenue growth?
Chart 4 captures the trend in absolute newspaper ad-spend and its share in total ad-spend points in two directions. First, the share in ad-spend of the print media, which declined marginally between 1990 and 1993 (73 to 69 per cent), fell sharply subsequently to touch a low of 53.5 per cent in 1999. However, between 1999 and 2002, the print media was able to stop this erosion partly through raising advertising rates. Thus, at present, the threat to newspaper ad revenues in terms of a reducing share of the advertising pie has been stalled. Second, despite the decline in revenue share, between 1990 and 2000, absolute newspaper advertising revenues rose continuously because of a massive expansion in total ad-spend (Chart 5). It is only during the years in which newspapers were able to stall the erosion in revenue shares that aggregate ad-spend, and therefore newspaper advertising revenues, stagnated.

Chart 4 >> Click to Enlarge

Chart 5 >> Click to Enlarge

Chart 6, providing figures of advertising revenue shares of television is an exact mirror image of Chart 4, with revenue shares rising sharply between 1993 and 1999 and stagnating thereafter. On the other hand, as the same chart shows, since aggregate ad-spend rose till 2000 and stagnated thereafter, absolute advertising revenues in the TV business rose quite sharply up to 1999, and the stagnated. It is true that during the early years of expansion of private satellite television in India, net revenues and profits were completely driven by advertising revenues, since the challenge of generating a viewership and competition for eyeballs had encouraged a strategy of providing their channels ‘free-to-air’. Revenues from consumers, however limited, were monopolized by the distributors via cable.

Chart 6 >> Click to Enlarge

The sharp increase in television’s revenues and revenue shares from advertising during the 1990s made this a viable strategy. However, the stagnation of aggregate ad-spend and of television’s share of that ad-spend during 1999-2000, could lead to a shift in the competitive game in the industry. Some observers argue that this is unlikely to occur, since international trends suggest that even now the share of ad revenues garnered by the print media is high. Over time, print media shares could go down to as low as 35 per cent if international trends are replicated here.

But there are a number of specificities of the Indian marketplace that could make the recent stagnation of relative ad revenue shares of newspapers and television persist, or make the expected decline in newspaper shares extremely gradual. To start with, given the fact that literacy and basic education in India are far from universal and that there is a strong relationship between education, and income and spending power, newspaper readers are a self-selected market for manufactures and services of different kinds that are consumed at income levels above a certain threshold. On the other hand, given the nature of the medium, television offers infotainment of a kind that is easily ‘consumed’ by those with lower levels of education and reach. This does mean that beyond a point the expansion of television’s reach in the Indian context need not be into segments with the same levels of purchasing power as the viewership at the pre-existing margin. This could have implications for the media choice of advertisers.

Second, it is known that different media are variously suited to the advertising of different products. Advertisers of so-called ‘fast-moving-consumer-goods’ or FMCG products, who outlay huge budgets, are known to prefer television for their products. But any advertising that requires making a more elaborate case or offering opportunities for recall are bound to choose the print medium. It is possible that given the fact that the Indian market is generated by a combination of a low average per capita income and a highly skewed distribution of that income, the structure of demand is such that both newspapers and television have found their levels of saturation in terms of advertising revenue shares.

Till further research provides more details, any judgement on what is likely to happen to advertising revenue shares must necessarily be speculative. All that can be said is that if the recent trend of stagnation in shares persists, an increase in the competition among television channels for viewership, to which advertising is linked, is inevitable. But competition for viewership increases costs, leaving unresolved the problem of sustaining net revenues or profits. The fall-out of this could be two-fold. First, in each market segment, created by the pluralism and diversity inherent to India’s socio-cultural context, only a few channel providers can survive in the long run. Second, wherever possible, channel providers will seek to exploit the option of turning into pay channels, to directly obtain revenues from consumer. The danger in the latter strategy is that even as it would be facilitated by the conditional access system (CAS), which resolves the ‘informational opaqueness’ and ‘conflict of interest’ problems associated with the current distribution mechanism, a shift to CAS would reveal the actual viewership of the channel concerned, with obvious implications for advertising revenues. This makes the choice of ‘turning pay’ one that is open only to those channels that are obviously successful in their niche and face no major competitive threat. Overall, the tendency would be for an increase in concentration in each market segment, which, as in the case of print, is aggravated by the ‘winner-takes-all’ tendency resulting from the ‘herd instinct’ of advertisers.

In sum, the principal issue in the media business, dominated by print and television, is not one of inter-media competition but of the likelihood that in each market segment within each kind of media business there is a real threat of a kind of domination that dilutes the basic tendency towards diversity and pluralism characteristic of the Indian media marketplace.

This trend towards dilution is likely to be aggravated by one other tendency specific to the two languages which, for completely different reasons, command a relatively large newspaper circulation: English and Hindi. While these are individual languages, they have been relatively insulated from the tendency towards intra-language concentration because the circulation in these languages is spread across large, sometimes non-contiguous regions with varied socio-cultural characteristics. Thus, the total circulation of these dailies does not relate to one market but to a number of market segments created by specific expectations and habits of populations with diverse socio-cultural characteristics. Not surprisingly, the number of newspapers in these languages tends to be large, and different market segments are dominated by different newspapers.

However, recent developments resulting from factors captured by inadequately defined categories such as ‘globalization’ and ‘liberalization’, and the ‘dumbing down’ driven by the more truly ‘mass’ medium of television, are resulting in a homogenization of tastes in sections of these segmented markets. In the event, a homogenized, ‘national’ market niche is emerging in these languages that were earlier characterized by sharply segmented markets.

In this context the drive to dominance takes two forms. One is to tailor editorial styles to target the space created by these homogenizing influences, with adverse implications for serious and good journalism. The second is to use aggressive competitive practices, such as sharp reductions in the cover price, to ‘win’ a circulation share in the market currently dominated by niche players and wean away a share of the advertising. The latter strategy, it should be obvious, can be pursued only by those with deep pockets. Smaller newspapers with small advertising revenues would be unable to sustain their editorial spending and their bottomlines if they are to match the price reduction forced by such practices. The tendency to use such practices to increase dominance is thus disastrous for both good journalism and for pluralism and diversity in the print media, which has served Indian democracy well.

All of this suggests that media policy in India must take account of two needs. First, the need to preserve the pluralism and diversity crucial to truly democratic functioning, which may require finding ways to set limits to the uncontested reach that media channels (print or television) owned and controlled by a single decision-making authority can have in any individual language market segment. Larger reach of any single entity must be accompanied by greater pluralism. Second, since the real issue is not inter-media competition but concentration in each market segment within each medium, haphazard and uncontrolled growth in cross-media control and ownership needs to be checked, because that implies a degree of dominance and dilution of pluralism and diversity that is doubly damaging.

References:
Bagdikian, Ben H. (1997), The Media Monopoly, Fifth Edition, Boston: Beacon Press.

Herman, Edward S and Robert W. McChesney (1997), The Global Media: The New Missionaries of Corporate Capitalism, London: Cassell.

Kumar, Sashi (2003), "The news according to Star", The Hindu, Monday, July 28.

Ram, N. (2000), "The Great Indian Media Bazaar: Emerging Trends and Issues for the Future", in Romila Thapar (ed.), India: Another Millenium?, New Delhi: Viking.

Rao, N. Bhaskara (2001), "Of content and control", Frontline, Vol. 18 Issues 18, September 1-14.