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Sambhar Mafia - Cooked To Kill!

Tuesday, May 09, 2006

Chennai Circulation Wars

The Hindu is involved in a legal battle with Deccan Chronicle regarding issuance of the circulation figures by ABC (Audit Bureau of Circulation). The Hindu’s main complaint is that DC pays hefty trade commissions (much above industry norms) to boost their sales.

The Hindu had sought to restrain the ABC from issuing a certificate for the Chennai edition of the Deccan Chronicle, for the period July-December 2005, and thereafter. The Hindu had also claimed interim relief and costs.

The core issue is the commissions paid by Deccan Chronicle in Chennai to the trade. As per ABC norms, the total trade commission ceiling is reportedly at 40 per cent of the cover price. Deccan Chronicle’s cover price was at Re 1 till very recently (applies to the July-December period; it now sells at Rs 1.50). While Deccan Chronicle claims that the commission is 35 paisa, industry players, including The Hindu, contest this.

After a careful consideration of claims by both parties, the Bombay HC has rejected The Hindu’s plea.

The Bombay High Court has rejected the plea by The Hindu to restrain the Audit Bureau of Circulation (ABC) from issuing an "ABC Certificate" for the circulation of the Chennai edition of the Deccan Chronicle for the period JulyDecember 2005. The plea was made by Ms Kasturi and Sons, publishers of The Hindu, and was rejected by an order dated April 25, 2006, signed by Justice (Ms) Nishita Mhatre.

In a revealing comment, the publishers of The Hindu admitted in their plea that such a certificate issued to the Deccan Chronicle "would adversely affect the circulation and advertising revenues of The Hindu" and would "also adversely affect the business interests of The Hindu, which has a dominant market share in Chennai." The statements implicitly recognised the fact that the Deccan Chronicle, which started printing in Chennai on March 28, 2005, had effectively eroded the claimed monopoly of The Hindu in Chennai.

Kasturi & Sons added that "there is every possibility that their advertising market would be hampered" and claimed damages "on account of losses and hardships they suffered."

With such high trade commissions, I wonder how Deccan Chronicle makes money.

12 Comments:

  • I think this is DC's strategy to to lure Hindu readers to it's fold.It will raise the cost of its paper on par with Hindu later. So, its a pure marketing ploy, nothing else

    By Anonymous Murthi, at 2:53 PM  

  • DC is to chennai & Hyderabad what TOI is to India.
    Not upto the journalistic standards of Hindu.

    By Blogger Vamsi, at 4:15 PM  

  • way to go dc . down with the hindu

    By Anonymous Anonymous, at 4:29 PM  

  • @Murthi,
    I don't think people would be willing to pay Rs. 3 / 3.50 for DC.

    @Vamsi,
    rightly said

    By Blogger Kaps, at 6:56 PM  

  • I guess it is time for Hindu to reinvent itselves. No doubt, it is a good news paper to have and to read. But it should also be smart enough to understand that any organisation which does not reinvent itselves will die in the longer run, will die to competition. Is it wrong for Deccan Chronicle to sell its news paper at lower cost? No. absoutely not. If they can afford it, they can do it. Is there any mistake on the part of the customer to buy the lower cost news paper. Another absolutely not. If they can see value in their purchase why shouldn't they. It will not be long before the other news papers in the country like Times of India and Hindustan Times sets up shop in Chennai and in general southern India and sell their news papers at still lower price. Unless and until Hindu reinvents itselves, it is going to be hard for the behemoth organisation to keep up with the changing pace of the world.

    By Blogger Balaji, at 7:00 PM  

  • When ToI entered the Bangalore market, they offered an 'invitation price' of one rupee! This actually went on for quite several years, during which ToI became the No.1 newspaper in the city, unseating Deccan Herald from the throne. It's the same strategy ToI used in Delhi as well (but with somewhat less success).

    DC is trying the same thing in Chennai. It's probably burning its IPO money, in its effort to sell more. I'm sure it will use the circulation figures to attract more advertising money.

    DC's strategy not particularly different from the dot com era valuation metrics using 'eye-balls', or the Web 2.0 era valuation metric using 'community size'. The key, of course, is to **not become bankrupt** before the (expected) good times arrive ...

    By Blogger Abi, at 7:32 PM  

  • Aggressive pricing is one facet of their(DC) marketing strategy to get a foothold in the market where the venerable Hindu is an entrenched player. We can expect to see the DC raise its price after it has managed to accomplish its objectives in the short-run.

    There are quite a few instances of such predatory pricing by newspapers keen to make inroads into a market with established competitors.

    The Business World, ET,The TOI and Outlook have attempted this tactical move in the past

    By Anonymous Anand Srini, at 8:23 PM  

  • The Hindu is the worst newspaper in the country and is probably in the league of some of the state run newspapers in China exhibiting comunist ideology.

    The paper never had any ethics to start with, resorts to partisan reporting(especially on BJP) and smudge that by being subtle and politically incorrect.

    The only thing I liked about the paper is their use of 1980s style of English but now even that is changing. Their recruitment of young journalists in the name of inducing youthful exuberance to their journalism gives way ti immature reporting which is evident especially in their supplements.

    Their online edition is by far the worst website I have come across from India. The site looks terrible, hard to read, unberable pop-ups and of late some "video" ads that just eat away the user's bandwith. Some school children with amateur web experience and with ownership of a copy of "HTML for Dummies" can come up with better output than that.

    It just goes to show how the word "enterprise" means nothing to the hindu empire. They are probably trying to save money on getting decent site up and banking on some Idiots to continue reading their third rate journalism on the current extremely inadequate online HTML garbage of a website.

    One positive thing is the photographers they hire. The photos are very good and capyure some moments with elan

    By Anonymous economist, at 3:35 AM  

  • The Hindu is the worst newspaper in the country and is probably in the league of some of the state run newspapers in China exhibiting comunist ideology.

    The paper never had any ethics to start with, resorts to partisan reporting(especially on BJP) and smudge that by being subtle and politically incorrect.

    The only thing I liked about the paper is their use of 1980s style of English but now even that is changing. Their recruitment of young journalists in the name of inducing youthful exuberance to their journalism gives way ti immature reporting which is evident especially in their supplements.

    Their online edition is by far the worst website I have come across from India. The site looks terrible, hard to read, unberable pop-ups and of late some "video" ads that just eat away the user's bandwith. Some school children with amateur web experience and with ownership of a copy of "HTML for Dummies" can come up with better output than that.

    It just goes to show how the word "enterprise" means nothing to the hindu empire. They are probably trying to save money on getting decent site up and banking on some Idiots to continue reading their third rate journalism on the current extremely inadequate online HTML garbage of a website.

    One positive thing is the photographers they hire. The photos are very good and capyure some moments with elan

    By Anonymous economist, at 3:44 AM  

  • I for one am happy with this serious competition to Hindu, if not in quality at least in circulation. Monopoly is never good for the consumer.

    As for viability, neither is pricing the paper at 3.50 viable. The cost is subsidised by advt. and circulation is the key figure for that.New upstarts like DC have to necessarily use predative pricing in markets like Chennai.

    The holier than thou Hindu is selling their paper in Bangalore for 1.50 bcos of competition.

    By Blogger SLN, at 4:33 AM  

  • @Balaji,
    I still feel that Deccan Chronicle is no competition to The Hindu. I'm surprised how DC managed to notch up such a huge subscription number. I have heard stories saying that the paper is distributed through petrol stations etc.

    @Abi,
    Very valid points there. I don't think advertisers would be willing to pay a huge price for advertising in DC (even though it claims to have a decent print run). Advertisers would also be concerned about the quality of the readership (educated, decision makers, professionals etc).

    @Anand Srini,
    DC has played the game well so far. But they might need to improve the quality of content before they think of increase the price any further.

    @Economist,
    The Hindu site is not all that bad. it is pretty well arranged. it may not be as appealing as the ToI site :-) Their RSS feeds are pretty neat (amongst the best for an Indian MSM site).

    @SLN,
    As u rightly said, the competition seems to be more on the circulation rather than the content. Let's see how this spans out.

    By Blogger Kaps, at 11:48 AM  

  • i don't think DC will increase price in a significant manner. dc sells at Re 1 in Hyd for quite a few years. In fact, more circulation and advertising revenue will offset for the low cost. DC is the middlepath between anna nagar times and hindu.

    By Blogger view from the fareast, at 1:00 PM  

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