The Dainik Bhaskar Group's Fight in Maharashtra

The streets of Aurangabad are awash with activity. At the centre of attention are its residents. And they are being courted with giant hoardings, banners, pamphlets, painted city buses and mobile phone text messages. Hundreds of smartly attired young men have fanned out across the length and breadth of the city. They move from house to house conducting feedback surveys, telling residents what the banners and buses already say: We’re here to listen to your views, because they should matter.

No, it is not election time. Rather, this is a battle for influence over the minds of the citizens of Aurangabad. It’s the battle of the newspapers. The ads, the surveys, the feedback forms all belong to the two warring sides.

The Cast
The Challengers: The Agarwal family of DB Corp.

The feisty family ventured out from its home state Madhya Pradesh in 1996 under the Hindi newspaper brand Dainik Bhaskar. Since then, it has built a record of cracking open almost every market where it has launched: Rajasthan in 1996, Chandigarh and Haryana in 2000, Gujarat in 2003, Punjab in 2006 and Jharkhand last year. Its newspapers have either displaced or severely hurt incumbent leaders in circulation numbers. They now plan to enter Maharashtra by launching Divya Marathi in May 2011.

The Defenders: The Dardas of Lokmat Media This politically powerful family that owns Lokmat traces its history to India’s freedom struggle. Lokmat is Maharashtra’s largest circulated Marathi daily. Aurangabad is where the newspaper enjoys its widest lead over the competition (Sakal) and it is also the Dardas’ home.

The Stage Is Set
Aurangabad, an up and coming city situated roughly in the centre of Maharashtra, is the epicentre of the state’s Marathi newspaper battle. Since the Agarwals kicked off their high decibel campaign two months ago, the city’s residents have been witness to daily attacks and counter-attacks involving subterfuge, ambushes and blanket marketing by both DB Corp and Lokmat Media. “They are entering the heart of our territory, so we shall not take it lightly. We’ve tabulated all permutations and combinations of their plans, and thereby readied our counter-plans. The moment they start playing their cards, we shall play ours,” says Devendra Darda, 36, managing director at Lokmat Media.

And sure enough, first, as the 350-strong Bhaskar ground team fanned out across the city for their survey, they came face to face with an almost equal sized Lokmat team carrying out a parallel reader feedback survey of their own. “Surveys and the feedback forms that they get filled is second nature to us. We’ve been doing it all along. It’s just that somebody is making more noise about it,” asserts Darda.

Next, as the Agarwals rolled out their trademark ad banners, featuring a smartly dressed man with a rising sun in the background, promising readers their opinions would finally be heard, the Dardas rolled out a copycat campaign using the same colour scheme, messages and even the rising sun.  
The Dardas’ objective in both cases was to probably confuse the reader.

The Agarwals have instituted a fully trained ‘commando’ team to sign up readers for an annual subscription fee of Rs. 740. The buyer gets a ‘free gift’ worth Rs. 200, and a coupon worth Rs. 540 to advertise in the new newspaper. In effect, the newspaper is free.  

The Agarwals have also hired Kumar Ketkar, the widely-respected former editor of Loksatta to edit Divya Marathi. Ketkar and some senior executives from the Bhaskar group are conducting meetings with Aurangabad residents, including politicians, artists, businessmen, bureaucrats, advertisers and advertising agencies. There is no hard sell yet; just a presentation on the Bhaskar group, and a calculated tug at emotions: We chose this city because it is one of the most promising ones in the state, because of people like you, and we need your support. “We will be spending Rs. 60-75 crore as capex on Divya Marathi, and obviously there will be losses for three to five years,” says Sudhir Agarwal, 44, managing director of DB Corp.

On the War Path
The Dardas, long accustomed to being the unchallenged leaders, are rolling up their sleeves and loosening their purse strings to counter the Agarwal attack. “When you are fighting a war, the choice of weapon to be used is based on what kind of weapon is being used against you, and who the enemy in front of you is. So we keep all options for our strategies,” adds Darda.

Meanwhile, most Lokmat staff is being given a salary hike ranging from 15 to 25 percent. This is to prevent poaching by the Agarwals, known for luring away top talent from competition with massive pay hikes.

They shouldn’t have bothered.

In 2005, when the Agarwals launched the English language newspaper DNA in Mumbai with Subhash Chandra of the Zee Group, they literally burnt money poaching high-profile talent from competitors. However, the superstar team was neither able to overthrow The Times of India’s leadership in Mumbai nor work together as a cohesive whole. Wiser and poorer from that experience, the Agarwals are staying clear of hiring any Lokmat staff. Instead they’ve hired the majority of their staff from Sakal newspaper.

The Dardas are also retaliating against Divya Marathi’s launch by using The Times of India’s successful strategy against DNA of sucking up reader’s free time by offering an additional newspaper free of cost. “Around nine months ago, we launched City Line, an eight-page tabloid that is free with the Aurangabad city edition. We’re also giving a supplement called Hello Aurangabad,” says Darda.

The Bhaskar Juggernaut
If one were to deconstruct the rapid rise of Dainik Bhaskar — India’s second largest regional language newspaper group — then three factors stand out: The DB Corp’s chutzpah, their competitor’s inertia and demographics.

Ramesh Agarwal took the newspaper started by his father in 1958 from just another Hindi newspaper in Madhya Pradesh to being the largest in the state by 1995. Then, finding India’s largest state too small for his ambitions, he decided to enter Rajasthan in 1996 (the Agarwals cannot use the Dainik Bhaskar brand in all of Maharashtra and many other states due to legal issues with the extended family).

Under the guidance of Ramesh and his three sons — Sudhir, Girish, and Pawan — a team of nearly 700 people went door to door in Jaipur asking residents what they wanted from their newspaper and later went back to sell subscriptions to the same residents.

The incumbent leader Rajasthan Patrika was too big, slow and arrogant to pay much attention to this upstart. It was a mistake they would regret. The Agarwals launched with a circulation of more than 170,000 copies compared to Rajasthan Patrika’s roughly 150,000 copies. It was a feat never before witnessed in the regional newspaper industry.

Leadership achieved, the group started spreading out into cities that formed the next rung on a state’s economic map, producing local editions from new printing presses that it put up. The newspapers were better designed, printed on higher quality paper, peppered with many colour photographs while presenting stories in a peppier and layman-friendly style.

Ravi Kiran, former CEO of media agency Starcom MediaVest, says, “I think they are trying to be too big too soon. The Times of India didn’t become what it is in 5-10 years, but by the Bhaskar standards they will be seen as very conservative.”

The growth of the Bhaskar empire also coincided with a series of very fortunate demographic dividends for regional newspapers. They became the primary medium for advertisers to reach customers in fast-prospering tier two and three cities because English newspapers had restricted themselves mostly to India’s largest cities. And these markets had a potential readership of millions.

The Agarwals also forged strong relationships with the ‘long tail’ of thousands of local advertisers like electronics and automobile showrooms, tuition centres and real estate companies. Over the years they became the primary fuel for the Bhaskar newspapers, making up over 60 percent of their revenue. As a result, today, even though it is second to the Dainik Jagran group in overall Hindi readership, DB Corp’s revenues and market capitalisation are both significantly higher. Its market cap was Rs. 4,574 crore compared to Dainik Jagran’s Rs. 3,921 crore on March 31, 2011. Its revenue in the year ending March 31, 2010 was Rs. 1,026 crore with a net profit of Rs. 199 crore.

Turning Point, Maharashtra? 

Infographic: Sameer Pawar

Maharashtra boasts of all the statistics that would make the Agarwals, or any other newspaper group, salivate: It has amongst the highest GDP growth rates in the country, a 77 percent literate population of which 71 percent don’t read a newspaper currently and a Marathi paper advertising market worth about Rs. 800 crore annually.

“It has higher revenue potential than Gujarat and Rajasthan, so Maharashtra [could] be our biggest market in the future,” says Sudhir Agarwal. Even better, there is no clear pan-state leader among Marathi newspapers even though Lokmat has the largest overall leadership. For instance, while Times of India’s Marathi newspaper Maharashtra Times is the leader in Mumbai, Sakal leads in Pune. Lokmat leads in cities like Aurangabad and Nagpur and other tier two and three towns.

“There has been stagnation in the Marathi newspaper growth because papers are mirror images of each other by and large. Everybody is expanding incrementally in their markets but not discovering or exploring new markets. And the ones that exist are either writer-centric or political establishment centric,” says Ketkar.

With the launch of Divya Marathi from Aurangabad, the Agarwals are displaying two of their core characteristics — a canny understanding of competition plus the desire to ‘shock and awe’ rivals into submission.

Aurangabad is among the top five newspaper markets in Maharashtra, but unlike larger markets like Mumbai and Pune, it has a lopsided competitive scenario. With a circulation of 2.73 lakh for the entire district, including around 70,000 copies within the city, Lokmat is the leader by a clear margin. As recently as June 2009, Sakal — which was at second place — had a city circulation that was about 21 percent of Lokmat’s. Since then they have managed to bring that number up to nearly 90 percent on the back of a bleeding Re. 1 pricing: A strategy allegedly being gamed by newspaper vendors in order to divert copies directly to the scrap market for a 30 to 40 percent profit.

The Agarwals thrive on attacking markets with no strong number two player so that even if they don’t dethrone the leader, they become number two from day one. Because serious advertisers prefer only the largest two newspapers in a market, being number two immediately gets ad revenue flowing into the Bhaskar coffers.

But if they can dethrone Lokmat from its leadership perch, it has a significant psychological effect on not just the rest of the competition in the state but on advertisers and readers too.

“Maharashtra will be an acid test for Dainik Bhaskar as the Lokmat franchise is very strong. Before now, they were picking markets with weak incumbents, like Rajasthan or Gujarat, where the incumbents were fighting each other and losing focus,” says Meenakshi Madhvani, founder and head of media audit firm Spatial Access.

The Dardas will be no pushover. They are well-funded, politically connected (Vijay Darda is a Congress member of Parliament from the Rajya Sabha while brother Rajendra is the Maharashtra minister for education) and well versed in modern marketing techniques. Lokmat’s marketing initiatives: A cricket tournament — the Aurangabad Premier League — or Sakhi Manch and Yuva Next, women and youth connect initiatives, have allowed it to form deep relationships with readers and advertisers than incumbents in most markets that Bhaskar has ventured into. Also, as the Agarwals look to expand Divya Marathi into other Maharashtra cities, they will come up against much fiercer competition.

“Maharashtra’s total advertising revenue is Rs. 800 crore, of which around Rs. 225 crore comes from Mumbai. So, any Maharashtra player will have to eventually come to Mumbai and fight the biggies. You cannot conquer the state without Mumbai,” says Darda.

Stakes even in other cities are fairly high, judging from the recent Pune launch of the Maharashtra Times at the ridiculous subscription offer of Rs. 11 for four months. If they are sucked into a price war, this could well be a long, bruising battle for the Agarwals.

Family Circle
The Agarwal family is somewhat understaffed for the Maharashtra launch. As the family’s business interests have expanded, so have the demands on the brothers’ time. Sudhir Agarwal is the only one actively looking after the newspaper business today. Given their penchant for being hands-on, it is nearly impossible for him alone to manage a group that is now much more widespread and facing fiercer competition than a decade ago. “When Divya Bhaskar launched in Gujarat, the Agarwal family almost camped in Gujarat. Between the father and the sons, they looked into every detail of the launch,” says Bharat Kapadia, a director with Lokmat and former executive director at Divya Bhaskar. Agarwal says DB Corp has an 18-20 member “national leadership team” of senior executives who handle “75 percent” of operations and strategy. In many ways, this will be the first major launch where the family has given professionals more of a free hand in devising and executing strategy.