Ad environment continues to be sluggish: HT Media

Rajiv Verma, chief executive officer, HT Media told CNBC-TV18 that the company grew 16-17% for the whole year aided by the Hindi business. "Hindi continues to grow at roughly about 17-18%," he added.

He further pointed out that the overall the advertisement environment continues to be very sluggish. "For the quarter, on a consolidated basis, we saw ad revenue growing by barely 3% as a full company, but Hindi grew for the quarter about 11%," he said. Overall the advertising environment including pricing continues to be under serious pressure, he cautioned. Below is the edited transcript of Verma’s interview with CNBC-TV18. Also watch the accompanying video. Q: Could you just start off by detailing what exactly happened on the ad revenue front on a consolidated basis in terms of how much Hindi contributed and English did and what kind of growth you expect to see from ad revenues over the next few quarters? A: Our business for the full year grew almost 16-17% and the real growth was contributed by Hindi. Hindi continues to grow at roughly about 17-18%. Overall the ad environment as we all know continues to be very sluggish during the second half of last year. The first half was much better but the second half has seen a massive amount of decline in ad revenues. For the quarter, on a consolidated basis, we saw ad revenue growing by barely 3% as a full company, but Hindi grew for the quarter about 11%. Overall the advertising environment including pricing continues to be under serious pressure. Q: Hindi has indeed done well but had it not been for that your numbers may not have looked good at all because English has done quite poorly both in terms of margins and in terms of revenues for the current quarter, can you just detail what kind of pressures you are witnessing in the English side of the business particularly? A: For English, the underpinnings there are the sectors on which English is highly dependent as far as advertising revenues are concerned are not performing very well. As we all know the financial sector, real estate sector and the delayed kicking in of the education season has all kind of combined to suppress the advertising revenue growth that we would have liked to see. Also when we are looking at year-on-year (YoY) what we have to keep in mind is same time last year we were seeing economy on a roll, real estate sector was doing very well, but during last six months all the headwinds have caught up and you are seeing a serious slowdown in advertising revenue. Hindi has to some extent been helped also by Uttar Pradesh (UP) elections. We have to bear that in mind that UP elections did lead to a certain amount of windfall, which did help the Hindi business. Q: Once you take out this lumpiness because of the UP elections, what kind of average runrate do you see for the Hindi business because if that slows down to 12-13% then you will struggle to stay with margins above in double digits even because the margins are already down to 10%? A: It is like this that our Hindi business has been in an investment mode. The readerships have been climbing up. It is a great value by for any advertisers specially when the price pressures are there on all media buys in such an environment people look for what is a value buy. Our Hindi portfolio has a readership of nearly 12 million to 13 million total average issue readership relative to market leader who is at about 15-16 million average issue readership each day. The pricing at which we operate being somewhat discounted relative to the market leader makes it a great value buy. So, I see share shifting to us and our growth is continuing to do well in Hindi because we are in an investment mode. Q: Some of the growth in Hindi has come through from circulation revenue as well so two part question in terms of what you are now penciling in on circulation revenues? When you talk about further pressure on ad revenues how much of a slippage do you expect to see? A: A year ago, Hindi publication in the market of Jharkhand saw somewhat of a price war emerging. Therefore those were the times when media markets were doing very well. Most of the publications were in a position to take a significant drop in their cover prices. Given the way commodity prices have gone up and the way dollar has been factored in into commodity buys, publications do not have a choice, but to take pricing up. Therefore, across the board, you are seeing pricing going up. Also ability of media sellers to pass on some of these costs to the advertising buyers is somewhat restricted. Therefore, it is inevitable that you will see cover prices continuing to go up and these revenues are going to increase as we progress during the year. Q: Have ad rates also started coming off because of the pressure on the market? Do you see the situation improving at all in FY13? A: On the contrary what we are seeing is that there is an effort on part of most of the media sellers to try and inch up pricing because the commodity pressure is very real. The dollar pricing is very real. The ability of companies to extract internal efficiencies, while it is being exploited to the hilt, but at the same time there is no choice but to pass part of the price inflation on the commodity side and various other costs to the pricing. Given that volumes are coming down, it is imperative to people to come up with different innovations and innovations, which are more and more market facing, customer facing, which would lead to different and better outcome for the customers. So as far as pricing is concerned, there is going to be an effort to try to take up pricing rather than see pricing sliding down.