A Distress Sale

THE rumours finally ended on January 5. On that day, Business Standard (BS) carried on its front page an announcement about the new board of directors in charge of the daily. The Ananda Bazar Pat-rika (ABP) group had sold Business Standard Ltd (BSL) to Kotak Mahindra Finance (KMF).

ABP had created history for itself. For the first time, a publication changed hands from the Calcutta-based group. That too BS, the product on which ABP, in the last five years, had lavished enormous money and attention. "It was a business decision," was the cryptic reason Shobha Subrahmaniam, executive director, ABP, gave Outlook for the sale. "Perhaps the ABP bosses saw good business sense in the dictum 'if you cannot run it, sell it'," says the media chief of a leading ad agency, "while your product is still alive." Though unquestionably a huge editorial success, BS failed to click in the market. In hometown Calcutta, it lost out to The Economic Times (ET). Its Delhi foray did not pay off, and its new Mumbai edition may have made things worse. Though circulation rose, losses mounted, possibly to above Rs 50 crore, when ABP could not support it any more. Market sources say that ABP had lived in the hope that the Government would allow the London-based Financial Times (FT) to take an equity stake in BSL and bring in the much-needed funds. That did not happen. BSL Managing Director Nabendu Gupta, however, thinks the sale is no big deal. "The real change took place when the paper was hived off as a separate company—BSL—in April last year. KMF was already a major shareholder at that time. Now only the majority shareholding and ownership pattern has changed," says he. The day following the changeover, the newspaper's employees were assured in a special briefing that there was no reason to worry.

This could be less than true. BS' ad revenue, say media planners, fell by over 40 per cent in 1996 despite the offer of a combined rate with ABP's other publications. But Gupta refuses to be pessimistic. "We are not doing too badly," he says. "We are number two everywhere. We'd like to be number two in circulation and number one in the minds of readers." Affirms editor and publisher T.N. Ninan: "BS has a specific niche market for which it is being made. A change in the board will not make any difference as long as there is editorial independence. If at all, it will only improve." But what about the principal reason market analysts cite for BS' circulation lagging far behind leader ET's—the price factor? ET comes for Rs 2 on weekdays, BS for Rs 4. "There are no free lunches," says Gupta. "BS is a premium product and has to name its price. People who want quality will have to pay for it." However, Consulting Editor and FT representative in India, Alexander Nicoll, is rueful. "FT is very sad to be losing ABP as its potential partner as we worked hard to develop this joint venture," he says. "One of the reasons for FT's coming to BS was ABP and now that link isn't there." Surprisingly, FT was not kept abreast of the happenings. "FT was informed of the change in ownership only shortly before it actually occurred," says Nicoll. "Our opinion was not sought. We have no stake and thus, no say." But FT will continue with the current set up, he says.

Even though BS' problems had been common knowledge for some time now, says Arya Bandopadhyay, media director, Maad-hyam Advertising, and once an ABP employee: "It is surprising that ABP has let go of a publication which was not only close to its heart but also considered its pride, prestige and a gateway to the corporate world. " One reason could be that increasing competition over the past few years has eroded the profitability of several products from the ABP group, forcing CEO Aveek Sarkar to finally jettison his heaviest millstone. Though no official figures are available—ABP is a closely-held private company—only two of its many products may be making significant profits. Ananda Bazar Patrika the flagship Bengali daily continues to be the main bread earner, bringing in more than 65 per cent of the group's profits. Women's magazine Sananda, edited by Aparna Sen, is the other success. The Telegraph has been hit by the launch of The Asian Age's Calcutta edition, and Sunday, which created a bold new school of journalism, appears to have left its halcyon days far behind. Sports World loses money and Business World is third in a market of three business fortnightlies. Two other magazines—the literary Desh and the children's Anandamela—are loss-making but are being kept alive, since they are prestige publications for the group. Sunday and Business World both carried ads on their front covers last fortnight, unprecedented in English magazines. The group entered the television software business but inexplicably did nothing at all. Today, this division has for all purposes been closed down. 

"BS is a classic case of marketing failure," says Gopinath Menon, media director, Chaitra Leo-Burnett. "It did all the wrong things and refused to react to the changing situation. The product has a very high salience but there are other products priced much lower. This works like magic in a competitive market as even people who can afford to, don't pick up expensive products when a good cheaper alternative is available." 

But this has been the common thread running through the ABP group in the last few years. Its products have very often offered editorial excellence, but its belief that this alone will bring readers and advertisers flocking has not worked in the cut-throat national media market. Hopefully, under the new management, BS will finally achieve the success it fully deserves, and the ABP group will also devote far more energy into marketing its products.