The newspaper boom in internet-deficient India

The print newspaper business has been a favourite of Warren Buffett. But demand for newspapers in developed economies has been slowly dwindling in the face of tough competition from the digital avalanche. In India though, the story is different. The newspaper business is flourishing as more people from smaller towns and rural areas have added to the reader base due to growing literacy levels and higher disposable incomes. As per the recent census data, the percentage of population that can read and write has increased to 74% in 2011 from 64% a decade back. The literacy rates have gone up sharply in poor agricultural states of Bihar and Jharkhand. And this new emerging consumer class outside megacities prefers to read newspapers in its native language rather than in English. Therefore it is no surprise that English publications that dominated the newspaper market have now been overtaken by local language publications. In FY14, Hindi publications accounted for half of the total circulations in India as compared to 14% share for English publications (Source: Ministry of Information and Broadcasting).

Therefore Indian newspaper publishing companies are increasingly coming out with regional publications to reach out to the growing vernacular markets. Moreover, with advertisements still contributing more than 40% to overall revenues as compared to less than 15% in US, UK and Japan, the Indian newspapers are able to price their publications low and grow volumes (Source: World Association of Newspapers and News Publishers). Therefore, the circulation of Indian newspapers has been growing at a fast clip. Since 2010, the total daily newspaper circulation grew at compounded annual growth rate of 25% to reach 270 m in 2014.

Source: EquityMaster Newsletter