Friday, June 09, 2006

Chennai`s paper war

Business Standard Search Results - S Bridget Leena / New Delhi June 07, 2006: "Chennai's newspaper war escalates, with Kalanithi Maran's Dinakaran claiming to have edged past the leader in circulation.

Three months after slashing its weekday price to Re 1 from Rs 3, the Tamil daily Dinakaran, bought by Kalanithi Maran’s Sun Network group in June last year, is feeling confident enough of its readership to raise its price to Rs 2.

The daily claims a jump in circulation to 10 lakh copies during these three months, up from an estimate of under 3 lakh copies prior to February 27, the day the price was cut.

According to an executive at an advertising agency in Chennai, it has always been a Maran strategy to offer freebies or price-offs.

It started with Sun group publication Kugumum, which offered freebies in the form of sachets of shampoo, oil and powder among other things. This was followed by its evening daily Tamizh Murasu cutting its price from Rs 3 to Rs 2.

But it’s Dinakaran that Maran seems most proud of. For years, it has trailed far behind the Tamil leader Daily Thanthi, which, according to the Audit Bureau of Circulation (ABC), circulates 8.17 lakh copies recorded for the July-December 2005 period (a growth of 1.9 per cent over the previous period) — with 13 editions in Tamil Nadu and an edition in Bangalore.

In second place, by ABC figures, is Dinamalar, at 5.9 lakh copies with 10 editions in the state (growth of 3.5 per cent). Given the sedate state of ABC affairs, could Dinakaran really have tripled numbers in three months?

Sceptics think not, and with Maran’s daily not part of ABC’s audit, it’s impossible to get an independent confirmation of the claim.

As an observer says, it is significant that neither Daily Thanthi nor Dinamalar (priced at Rs 3 on weekdays and slightly higher on weekends) have bothered to respond to the price aggressor by lowering prices.

R Krishnamurthy, editor of Dinamalar, puts this down to the loyalty of its readers, who he says are different from those targeted by Dinakaran, a circumstance that would make a price cut a pointless exercise.

Meanwhile, industry observers say that Dinakaran needed to stem losses arising from its bold price gamble.

The total cost of producing a Tamil newspaper is estimated at about Rs 10 per copy (with newsprint, printing, distribution and staff costs not getting any lower). Advertising must pay the difference, and that means getting lots of it if the price is as low as Re 1.

Another reason may well be that advertisers look for credible circulation, and rock-bottom prices could suggest either frivolous pick-up (or even direct paper-bag industry pickup).

Whatever the case may be, Maran’s family party, Dravida Munnetra Kuzhagam (DMK), has recently won power in the state, and government ads have started occupying increased ad space in the paper.

The English market has seen some signs of change too. Deccan Chronicle, which entered Chennai last year at Re 1, has raised its price to Rs 1.50 recently, while market leader The Hindu kept its price firm even as New Indian Express halved its price by Rs 1.50.

Is pricing so critical? The jury is still out. "

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