The media is feeding off a crisis that will soon hit it

Happy diwala

Pradyuman Maheshwari | Mumbai | 27 October 2008 |

The media is having a field day reporting on the mess in financial markets, little realizing that there will soon be a slump in retail advertising that will hit home hard

Kaise Diwali manaayein hum Lala, apna to bara mahine diwaala. In the good ol’ days when Doordarshan was the only television channel in existence, this Johnie Walker number from Paigham (1959) would play every Diwali on song-and-dance show Chitrahaar. More than ever, the lyrics are very appropriate for the festive season of 2008.

The sensex tanked a day before the busiest shopping weekend of the year, the mood’s downbeat and a lot of people are crying. Except the media, which has had a field day reporting on the mess. Doom in the world outside surely is music to the newsperson’s ears. While all of us are reporting on the recession, little do we realise that our own businesses could also be in huge disorder.

Dhanda is manda, as they say on Dalal Street. Retail advertising may be high because of the Diwali, but I see the volumes hitting rockbottom by the time Christmas sets in. Corporates and banks are reeling any way, but the biggest casualty is likely to be the real estate sector.

And since realty fuelled the great media boom – especially outdoor- expect some dramatic shakeouts in the coming weeks.

The NDTV quarterly results recently clearly spoke of a meltdown and hence the need to rationalise costs. Obviously, this would mean retrenchment. Some publications are already doing it – and even if they are not sacking staff, they are hesitating to fill in vacancies.

Media entities that have been adding on staff indiscriminately, setting up newer editions, growing the number of pages and add-ons etc will face the heat. Some of this may have helped in shoring up valuation, but the only recipe for success in any recession is to be lean.

Regrettably, we in the media work on emotions, and not what is logical. There’s no method in the madness. The business plan projections have creative accounting crafted mostly by fresh-out-of-B-School graduates who have no real world experience. That’s one of the reasons why the dotcom bubble burst in 2001. And this is why some media companies could go down in the next six months.

Only the fittest can survive a recession-hit market. Those with healthy cash reserves have systems in place and are managed well will thrive. Cutting the flab is painful but can be done. But putting systems in place post a meltdown is tough because it’s often expensive doing so.

For companies, since revenues are at a premium, marketing spends cannot be reduced. It’s proven with time that if you increase your spending in recessionary times, the long-term gains are huge. As for individuals, it’s important to upgrade skills and network. Even if you can’t do anything to buck the current downturn, spending energies on these will help in the long-term.

The problem with most media operations – whether or not afflicted with downsizing – is that the pruning of costs is in newsgathering, content acquisition and travel. All of these concern the editorial departments which are traditionally considered cost centres. However, if this is done by majorly diluting context mix, then the readership numbers could go down. Given that the market is crowded, only the fitter, more cash-rich players will be able to stay afloat.

The market went below 9000 last Friday.

I won’t be surprised if it kisses 8k soon. Happy Diwala, er, Diwali!

Pradyuman Maheshwari is a Mumbai-based editor, trainer and media commentator. He is currently consulting editor with the Indiantelevision.com group. The views expressed are his own and not necessarily those of the organisations he is associated with. Email: pradyumanm@gmail.com