India's Press Braces for a Rewrite

Rules allowing foreign stakes could invigorate the industry

No time was wasted by T.N. Ninan. For a decade, Ninan's newspaper, the Business Standard, had lobbied India's government to ease a 47-year-old ban on foreign investment in print media. On June 25, New Delhi finally ruled foreigners will be able to own stakes in newspapers. By 1:30 that afternoon, Ninan was on the phone to London, agreeing with the Financial Times to begin "substantive talks" on future investment, he says.

Whether the rest of the world's media giants are ready to beat a path to India's door remains to be seen. After all, foreigners still will be able to buy only 26% of news publications such as the Business Standard--and Indians must have managerial and editorial control. There's likely to be more action with trade publications, where foreigners can buy up to 74%.

Companies such as Pearson, Haymarket, Time India, News Corp., and Dow Jones have eyed India's big, English-reading market. So the day the new policy was announced, stocks of five newspaper companies shot up 10%. Bankers in Bombay began asking other media concerns if they want to go public. "This will take the industry to a new level," says Renuka Ramnath, managing director of ICICI Ventures, which holds stakes in three media companies.

The desire for foreign help is palpable. India has 49,000 publications, but annual revenues total just $1.1 billion. While they can be vibrant and gutsy, most are starved for technology, marketing, and capital to expand. So, a handful of publications dominate. Chief among them is the Times of India Group, which long used its political clout to block foreign entrants by claiming news media are a "strategic" industry. Its seven newspapers (total circulation: 2.2 million) use strong marketing and distribution to overpower rivals. The group earned $40 million in 2001, more than the rest of India's print media combined. One affiliate, The Economic Times, has 467,000 subscribers. With backing from the Financial Times, Ninan thinks he could give The Economic Times a serious run.

There's little doubt about India's market potential. According to a national survey, 248 million literate adults still don't read any publication. But readership of newspapers and magazines is up 15% since 1998, to 180 million. "It's a reflection of a younger, more educated population, especially in small-town India," says Anurag Batra, publisher of New Delhi-based online media industry magazine exchange4media.

Trade books offer the best openings. Britain's Haymarket Publishing Group already has ties to Autocar India, with 80,000 subscribers. Haymarket doesn't own a stake, but helps with research and management. Now, it can invest. "We can provide funds to print more copies and market more strongly," says Haymarket Managing Director Eric Verdon-Roe. "We can use Autocar as a platform to bring our other brands." Bombay's Tata Infomedia, a $30 million publisher of yellow pages and trade magazines, also has "already started to solicit business" with foreigners, says Managing Director Hoshang Billimoria.

India needs to do more to draw big bucks. Policy details are fuzzy. Its record of half-reforms has bedeviled multinationals in sectors from telecom to cars. Dow Jones & Co. wants a local Wall Street Journal edition but prefers full control. Still, it's not ruling India out. "We're very happy the logjam has been broken," says Dow Jones India manager Suman Dubey.

A reason to invest now is to snag the best partners. Indian media moguls will push for more liberalization. And the experience of TV broadcasting, where foreigners can buy 49% stakes, suggests takeover fears are overblown. Rupert Murdoch's Star TV has the top entertainment channel, but its news station trails all-Hindi channel Aaj Tak. Three similar channels are on the way. In print media as well, India likely will find that opening to foreigners will strengthen local players.

By Manjeet Kripalani in Bombay

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