Monday Note

Talk with India media executives is always instructive and fascinating. Few weeks ago at the INMA Congress in Beverly Hills, I sat down with Bhaskar Das executive president of the Times of India in charge of marketing.

The Times of India is the largest English language newspaper in the world: 4m copies for 16 editions. Revenue of Times Group is about $1bn, 85% from print, mostly the TOI. The company is extremely profitable with a net margin above 30%. The Times of India serves a huge market: 1.2 billion people, approximately 220m literate in Hindi, and only 28m English readers. Of the latter fast growing segment, the TOI manages to capture 4m readers. Combined with the vitality of the Indian economy (around 8% GDP growth), the Times Group is adding a nice 25% to its core business each year. Times Group is also the publishers of the main business broadsheet, the Economic Times.

Unsurprisingly, advertising provides most of the revenue. In fact, the price of the Times of India is set just above the value of scrap paper, it ranges from 1 to 3 rupees (1.2 to 4 cents). Therefore, increasing the revenue by raising street price doesn’t make sense. Instead, the real upside lies in expanding the pool of advertisers. A few years ago, the executives of the family-controlled TOI came up with an original idea: “the private treaties”.

The principle is simple and clear: the TOI spots good and growing businesses, and delivers the following pitch: “You need to grow your business, to impose your brand, to expand your reach. Here we are, the Times Group, with our huge newspaper, TV and radio stations, internet sites, outdoors display. Here is the deal: we take a 1% to 15% equity stake in your company, in exchange, we sign an advertising deal at a discounted rate, and you have access to our media system”. As we say in French, it is “fromage et dessert” for Bennett Coleman & Company Ltd, the family owned mothership of the Times Group. Not only it increases its advertising revenue with a predictable stream of money (competitors of enrolled advertisers are also prompt to react), but also it is building quite a portfolio of roughly 200 small to medium size companies. The amount invested and the current values are not exactly known. The Indian business paper Mint (a JV with the Wall Street Journal) is estimating the value of BCCL’s private treaties assets to about $1bn for an initial investment of about $300m. That would make the Times of India one of the largest private investor of the country. As if this was not enough, Times Group announced this Saturday the acquisition of Virgin Radio UK for GBP 53m. In a way, the revenge of the former colony.

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