Diligent Media that publishes the English daily DNA in Mumbai is launching its Bangalore edition on Friday.
The company's CEO K U Rao says that the newspaper, priced at Rs 2.50, will enter a market with entrenched players like The Times of India and Deccan Herald.
The move has surprised the print media industry which is reeling under recession with most newspaper publishers having put their expansion plans on hold.
Rao admits that 'these are difficult times for the print media sector. But we decided to launch during recession so that when the good times are here, we would have established the paper.'
But the fact that establishing the paper will be an uphill task isn't lost on Rao.
He knows that newsprint prices have shot up by at least 50 per cent in the last six months and are eating into the profits of newspaper companies.
Besides, advertising for the category has tanked. Says Ravi Dhariwal, CEO (publishing) at Bennett, Coleman & Co. Ltd, India's biggest and richest media company: "The print media industry is going through a rough patch."
Latest figures from AdEX, the TAM unit that tracks advertising volumes of different media, show that in the last two months (November 2008 over October 2008), print media ad volume dropped sharply by 45 per cent.
In November it registered a 20 per cent decline in volume over the same period last year.
While newsprint, that constitutes 60 per cent of the cost of a newspaper, continues to be expensive, depreciating rupee has added to the newspaper companies' woes.
"The newsprint prices did soften in the last one month but the 25 per cent rupee depreciation has again added to its cost," comments Rao even as he gears up for the 1.75 lakh print order for DNA in Bangalore.
Needless to say newspapers are looking at stimulating revenue and cutting costs.
Most companies are already using cheaper grade paper, diversifying their newsprint supplier base and cutting down on the number of pages.The country's largest financial daily, The Economic Times is down to 18 pages.
Dhariwal says that the pagination varies depending on the volume of advertising.
Both The Economic Times and The Times of India from the Bennett, Coleman stable have increased their cover prices in different markets.
The Times of India
now costs Rs 4.50 in Mumbai opposed to Rs 4 earlier.Even DNA has hiked its cover price from Rs 2 to Rs 2.50.
Newspapers have shelved their expansion plans as well.
Mail Today from the India Today group is no longer eyeing a 20-city roll out at least for now.
Business Standard shut down its Gujarati edition. The proposed Hindi business newspaper from the Dainik Jagran-Network 18 group was also shelved for which it had already hired over 50 people.
More recently, Sakal Times, English daily from the Sakal Group postponed launching the paper in other cities.
It shut down the Delhi office which employed over 60 people.
The buzz is that even the Times group is evaluating rationalising its manpower by about a 1,000 people from its Internet and print media divisions.
"It's absolute rubbish. If at all, the number will be way lower than our attrition rate which is about 15 per cent."
Bennett, Coleman has nearly 8,000 people on its rolls.
Dhariwal says that manpower is the least of his problems as it accounts for only about 10 per cent of the total cost of operations.
However, he admits that Bennett is reviewing its businesses. Periodicity of some supplements may be decreased while some may need to close down.
"So, some people may be re-deployed or may find avenues outside the company, he says, adding "we are wondering if this is the right time to launch new products like the financial paper. In fact, we are doing what any prudent management would do," says Dhariwal.
There is talk of job cuts to the tune of 400 people at Infomedia, too. Infomedia, the business directories and special interest magazine company was bought over by Network 18 last year."The numbers may seem large as it is mostly the sales force that we are rationalising - it's a mix of temporary and outsourced staff," says Haresh Chawla, CEO, TV 18.
"No, we are not shutting down Yellow Pages but only restructuring the business in tune with today's realities," he says.
Since the media sector was booming most companies had added capacities and were
planning to launch new products.
"We were looking at the world from a prism of growth. So we need to right-size now," concludes Dhariwal.