Expect more mergers and acquisitions in the Hindi press: Amit Chopra

In an exclusive chat with afaqs! Chopra talks about the late bloomer - Hindustan and what lies ahead for the Hindi press.

Amit Chopra, the 41-year-old chief executive officer (CEO) of India's fastest growing Hindi daily Hindustan of HMVL, believes that the Hindi press has a long way to go and the exciting times have just begun.

Chopra holds a Bachelor's degree in Technology from the Indian Institute of Technology, Kharagpur, and a post-graduate diploma in Management from the Indian Institute of Management, Ahmedabad. Armed with over 13 years of experience, he was appointed the CEO of HMVL (Hindustan Media Ventures) on January 1, 2010. He has previously worked with HT Media, Hindustan Lever and EXL India.

In an exclusive chat with afaqs! Chopra talks about the late bloomer - Hindustan and what lies ahead for the Hindi press.

1. Hindustan has had a great innings in the last few rounds of IRS. What actually has contributed toward this growth?

First and foremost, the entire Hindi print industry grew extremely well between 1995 and 2005. Unfortunately, at that time we were busy getting the Delhi HT back on track. It was only from 2005 onwards that we started paying attention to Hindustan. So, a lot of growth that you see is basically catching up with the rest.

Apart from this, even in the present geographies, our presence was sub-optimal. We therefore, took a call to expand our presence in these markets.

Thirdly, Hindustan still continues to be a credible, neutral and progressive paper. It was something we got as a legacy when the paper was born as part of the India freedom movement. We continue to hold these attributes very dear to our heart and cherish them and execute them on a day-to-day basis.

The growth in the readership has shown results in the ad revenues, as well. Until four years back, we were a loss-making business, but in the last fiscal, our profit was Rs 87 crore, which was double of what we achieved in the previous fiscal.

However, since we are a growing brand, we still feel that we have to monetise our audience completely. We are yet to get the price we should get. Unfortunately, the problem with the IRS is that it is trailing 12 months behind, so for an expanding brand, it always takes 12 months for your real market situation to get reflected.

2. Most Hindi speaking states have two-three players dominating the market, which is the reason for the belief that the Hindi press has reached its pinnacle. In such a scenario, how does Hindustan plan to grow?

I wouldn't agree with this. It will be unfair to say that the market is saturated because there are already two-three dominating players in each market.

I would argue that the penetration of newspapers is far lower in the Hindi belt than in Kerala and Gujarat. Among Hindi speaking states, the penetration is highest (little more than 35 per cent), while in other states, it's below 25 per cent. Besides, the latest census report (2011) shows a quantum leap in the literacy, especially in the Hindi belt. This confirms my belief that there is a fair deal of opportunity to grow.

Besides, we have some great examples from regional markets such as Gujarat, a market which has developed in the last five-year period, supports three profitable publications at the same time -- Gujarat Samachar, Sandesh and Divya Bhaskar.

Having said that I do agree that until five-to-ten years back, the advertising revenues for the Hindi dailies was not very large as it was under-monetised and under-utilised. However, of late, the Hindi-speaking states have seen an improved economic condition with the growing GDP, and advertisers are showing interest in these markets. These factors are making the existing and new players take a look at these markets with renewed interest.

From our perspective, at this point of time, we do not feel that there is any need for us to look beyond our existing markets - Uttar Pradesh, Bihar, Jharkhand and Delhi -- where we are strong. We believe we still have some work to do in these markets. However, we are a public-listed company and we have got cash, so if any opportunity comes our way, in terms of inorganic growth, we might be interested.

3. Any plans to revamp the two magazines - Nandan and Kadambini?

We feel that magazine opportunity is very low in Hindi, the advertising revenues are very less. Not many advertisers are interested in advertising in a children's magazine. They are strong assets we have, but as of now, they are on maintenance mode. We will continue to focus on the news (Hindustan), where we believe, there is a huge opportunity lying untapped.

4. Many of the language papers which were traditional family-run companies have gone public. How has this helped the industry grow?

Until some years back, there weren't many opportunities in this business. Most publications were happy in their own fiefdom and satisfied with the little money or no-money they were making. Only those publications with strong brands, armed with the experience of running big businesses, were enterprising and have expanded.

However, as the opportunities unfolded, there was this need to raise money and public offering was one of the many ways to raise funds.

But, it isn't that the print companies weren't growing before launching IPOs. Hindustan Media launched IPO about a year back, but has been on a growth spree since the last three-four years. It's the same with Bhaskar Group, which launched its IPO a year back, but has been growing for the last ten years.

I think it's a chicken-and-egg situation, both things have happened in tandem. The industry has become attractive, which has made people go for IPOs (the cheapest source of fund) and then they have invested further.

5. Now that the money is flowing into the Hindi press through IPOs and FDIs, do we see more consolidation in this sector?

Yes, we should. Every state has a few small players, which enjoy an important loyalty in a zone. Until a few years ago, these small publications survived largely on the subscription revenue, mainly for the loyalty it enjoyed amongst its niche audience. However, as the industry has now moved from a circulation/subscription model to advertising revenue-based model, the subscription prices have gone down. In such a scenario, these small players are increasingly struggling to monetise the national ad revenue and for that they need to have a sales presence in cities such as Delhi, Mumbai, or even Chennai and Bengaluru, but that's not economically viable. The truth is that the small players are often not entertained by the agency or the advertiser as these small newspapers are very small in their scheme of things.

The inability of small publishers to monetise good audiences and advertisers will lead to alliances, acquisitions and mergers in the future. We will definitely see a lot of consolidation happening.

6. The Hindi press is constantly fighting the English press for the revenue pie, as well the readership pie -- the affinity towards English press in small towns is increasing. How does one cope up with such situations?

While there will be a few people migrating from Hindi to English, there will be many more who will enter the Hindi fold in the future. This will be fuelled by growth in literacy and newspaper penetration.

From the advertisers' perspective, I do agree that English papers offered far better quality audiences. For brands, both national and international, metros are the key distribution markets, where the purchasing power is very high. For them, the English press has always been the first choice.

But now, the metros have got saturated and brands have shifted their distribution focus to the interiors of the country. So, the advertisers are forced to put money in media vehicles that deliver in those markets. In the interiors, it is the regional or Hindi press that sells.

7. Many regional dailies enjoy the leadership status in their respective markets and command a premium from advertisers. The situation is not the same for the Hindi dailies. Do you agree?

The regional press enjoys a stronger affinity, as the language spoken in every state, be it down South or West Bengal, is totally different from each other. Moving from one language to the other is not an easy process for publishers. Most of them try to confine themselves to the market where they are already present.

We need to look at the entire Hindi belt in continuity; like all national channels have one feed for the entire Hindi belt, the press, too, does the same. However, we still continue to have clear leaders in each zone across the Hindi belt.

8. Do you agree that affinity towards the mother tongue is less among the Hindi speaking belt? How does a paper like yours cope with such a situation? Do you see that changing?

Your point is valid. It is very unfortunate that in the Hindi belt, Hindi is considered a downmarket language. That is why we don't have any more great literature in Hindi language. It is upon many of us, the newspapers, to start correcting some part of it by improving the quality of the content we dish out to the overall product we distribute. It's a long haul, will it change will it not change -- it is very difficult to predict at the moment.