Why can't media companies diversify?

Most media firms still get a bulk of their revenues and profits from one media - sometimes from one brand


Vanita Kohli-Khandekar / New Delhi July 20, 2010, 0:22 IST


http://www.business-standard.com/india/news/vanita-kohli-khandekarcan/t-media-companies-diversify/401849/



The Indian media and entertainment space is booming. There are lots of growth opportunities in print, TV, films, mobile, the Net, et al. And Indian media companies are diversifying into other areas successfully
That is what the first few pages of most investor documents, strategy presentations or business plans in this space say.


It is not quite true.

Look at the table that goes with this column today. It lists, arguably, India’s top-10 media companies by their revenues. Each of them is ostensibly diversified into various other media. (Click here for table http://www.business-standard.com/general/pdf/072010_01.pdf)


But a closer look reveals that most of them still get a bulk of their revenues and profits from one media — sometimes from one brand. The Times Group, for example, is still largely about print and The Times of India. It has interests in TV, the Internet and radio, but together these bring in less than one-fifth of its revenues. The Zee Group is largely about television, either the broadcast or distribution of it. HT Media is still largely about the Hindustan Times and print and so on.

There is nothing wrong about this. Globally, most large media companies find it very difficult to have a go at another media successfully. Metro (a hugely successful free newspaper), Google, Facebook, YouTube, Twitter, all came out of the blue.

This is not about old or new media, youth or age, ability or the lack of it. It is about focus. The rule, it seems, is this — every media creates its own pioneers and leaders and more often than not they are unknowns.

In the early 90s, Subhash Chandra and Kalanithi Maran came out of nowhere to create two of the largest broadcasting companies in India — Zee and Sun — even while the opportunity was staring at every major publishing baron in the country. Rediff, Naukri and others have become the biggest companies on the Internet when big media was ignoring it.

However, it is this very success which becomes a limiting factor. Not only because it may inhibit risk-taking, but also because the heart, mind and soul of a company are coded in one media. Any senior manager at The Times Group will tell you that the heart of its owners is in the newspaper business. Zee may invest in a whole lot of things — radio, newspapers, the Internet — but its focus will be its TV business. So, the context from which many of these companies view growth is the context in which they were successful. Nothing then seems as exciting.

Imagine that you are Samir Jain, the vice chairman and chief strategist of The Times Group. When the top line from your flagship brand is more than the whole Internet advertising pie in India, why would it interest you? That makes it difficult to give money, time and resources to a business.

Eventually though, most companies do it, as international examples show. Even now, News Corporation is better known for tabloids such as the Sun and the News of the World. The fact is that its television business brings in 45 per cent of its revenues and the rest comes from films and publishing.

However, this kind of robust diversification happens when new minds come to the helm or the market conditions change dramatically — something we are seeing in the newspaper and television industries in India. In both these businesses even as the environment has changed dramatically — more competition, consumers migrating to other media, etc. — a whole new generation of owners/managers has taken over. They may well take the diversification game to the next level.

The Times prepares for 20 more job cuts after 40 take voluntary redundancy

Staff told they will know within 48 hours if their posts are at risk, as paper seeks to cut 10% from editorial budget

News International's Wapping offices

Forty editorial staff have taken voluntary redundancy at The Times, with the remaining staff waiting to hear where a further 20 compulsory redundancies will be made.

Staff at the paper have been told that they will know within 48 hours if their posts are at risk. There will then be a 30-day review process.

About 10 new staff will also be hired to fill posts vacated by some of those taking voluntary redundancy.

The Times editor, James Harding, recently declared that the paper is making "unsustainable" losses. Losses at the Times and the Sunday Times are in the region of £240,000 a day and the two papers are looking to cut around 80 staff between them to reduce editorial budgets by 10%.

The Times confirmed it had completed its voluntary redundancy process and will be making approximately 20 compulsory redundancies.

Harding said in an email to staff: "We have now completed the voluntary redundancy process. People have come forward, but, I am afraid, not enough to meet our target of a 10% reduction in annual editorial spending. As a result, we are going to have to make further cost savings including compulsory redundancies."

Both News International titles last week launched new websites, which are in a free trial period before a subscription paywall is introduced.

Courtesy : guardian.co.uk

Guardian unveils readers' club and plans for API monetization

Posted by Maria Conde on May 20, 2010 at 4:50 PM

Unlike Murdoch, Guardian's editor-in-chief, Alan Rusbridger, has ruled out the idea of erecting a paywall around the newspaper's website. Since paid online content is not going to be a source of revenue anytime soon, Guardian News & Media is launching two new strategies to complement the paper's revenue stream, according to Paid Content.

First up, Guardian will be launching a membership club scheme it announced last year, one that will resemble the Times+ initiative.

According to Guardian, the Guardian Extra scheme will provide readers of the Guardian and Observer a wide range of discounts and offers on live debates, films, festivals, and performances.

Although it sounds very much like the readers club the Times launched last year, the program will set iself aside from other membership schemes by linking the program with the newspaper tightly. For one, members will be given special access to the Guardian/Observer's offices in Kings Place, with newsroom visits as well as interviews with journalists.

Richard J. Thompson, head of membership at Guardian, said that another reason why Extra will be different is because it will reflect editorial coverage.

"It will provide us with a unique opportunity to explore many areas of mutual interest. It is about strengthening our most important relationship, our readership, and in turn providing a range of benefits that they wouldn't get elsewhere."

The Extra membership costs £25 per year or comes free with an annual print subscription to the newspaper (this costs £22.43 a month). For those who still are not sure they want the membership, there's a free trial until the end of August.

Paid Content reports that Guardian is also looking for ways to monetize its Open Platform feature. Today, Guardian News Media's commercial director, Adam Freeman, unveiled the idea in front of ad agencies and a number of commercial partners. Guardian's API could help strengthen other brands as part of a cross-media sell.

Open Platform offers a range of services for developing digital products and applications with the Guardian. The newspaper allows application developers to reach and engage audiences to develop advertising campaigns with the software. Recently, Open Platform powered the Enjoy England campaign with a series of interactive maps.

Ad agencies that sign on to participate with Open Platform will receive £50,000 worth of advertising space across GNM. The cost to sign on is a lofty £100,000.

Newspapers can unlock the financial potential of their strong brands through projects like membership clubs. Last September, the Times of London launched Times+, a membership club with free gifts and money-saving opportunities for members. This January, the WSJ created a luxury travel service website aimed at its top-shelf readers.

The Guardian's membership scheme seems to be more about giving value to the subscription than creating a stand-alone item. However, at only £25 per year, Guardian may be attracting more readers to its club. Although it is unclear whether these types of membership clubs represent a substantial amount of profit or revenue, these schemes present the possibility of monetizing a newspaper's readers without turning them away with a paywall.

SOURCED from editorsweblog.org