KU Rao, CEO, Dilegent Media Corporation Ltd

KU Rao’s association with DNA began in 2006. He has 24 years'experience in conceptualising customised sale-and-marketing action strategies for global corporations in India, Middle East, Asia Pacific, and other markets. He is an authority on general management and bottom-line accountabilities in different businesses, and across functions.

Rao began his career after securing an MBA degree from Andhra University with Phillips India as management trainee. Thereafter, he honed his skills in crafting nimble customer-responsive approach at Onida, Royal Dutch, Shell (India, Africa, Saudi Arabia, Singapore, London), before joining DNA.

His style of operation is management by walking, and he is a great team leader in extracting the best even in adverse circumstances. His expertise lies in strengthening the start-up organisations and turning around loss making businesses. His key to success is to turn organisations into customer-oriented enterprises that can anticipate change, rather than merely responding it.

In a conversation with exchange4media' Swapna Rahul Shah, Rao talks about DNA' growth since its inception, the way ahead in 2009 and the economic slowdown.

Q. What steps has DNA taken to remain in line with the changing face of the industry?

At DNA, I think we have changed the way we have been running the business. Over the last three years since I have been here, cost management has been a critical factor. The cost producing each newspaper was Rs 20 three years ago, and today that cost has came down to Rs 12. And this is despite the newsprint price going up by 50 per cent and rupee depreciating against the dollar by 25 per cent. Over the last three years, we have really tightened the cost side of the business. Each and every part of the business is examined on a daily basis for its cost efficiency and is benchmarked with the best companies. So, we do know that we don’t run a company that is caught in any cost that is not hitting back on the businesses. We have built that over the last three years. We have six editions today and have started strengthening those. DNA has remained constant even after launching these editions.

I think, both will complement each other. So far, everybody is saying that new media will replace print. I don’t think any one sector replaces other sector, all sectors will grow. You see a lot of companies getting converted from broadcast business to print business and vice versa, that will continue to happen and, therefore, all these sectors will continue to grow in their own style. The print industry will remain robust for the next 20 years. There is no way the print industry will come under pressure. Newspaper reading is a habit in this country and fundamentally the culture of Indian lifestyle is quite different. We go to work only at 9 am in the morning unlike in the West, where they go to work at 7 am.

A newspaper in India is delivered at your doorstep and so you are used to your paper with your morning cup of tea. Unlike the West, where the newspaper is not delivered to your doorstep, you have to go out to pick up your copy. And that really does not happen because you have no time early in the morning. I think in the West, the possible newspaper decline has been due to the fact that they gave the control over the circulation and distribution of the paper. In India, the distribution of newspapers is very much controlled by print organisations. We make sure that the product gets delivered to your doorstep.

My vision is very simple – to be the most profitable print media company in this country. That’s what we are after.

Since its inception in 2005, DNA has expanded to six editions across India – Mumbai, Ahmedabad, Surat, Pune, Jaipur and its latest edition in Bangalore, which was launched on December 14. In 2009, the intention is to stabilise and strengthen the current editions before we expand in any other cities. I think we have achieved what we call critical mass.

The Times of India is not in the position where it was three years ago. Today various players entered the business. From virtual monopoly, today the market has expanded with various players, whether in Mumbai, Pune, Jaipur or Bangalore. If you see the IRS data, now DNA has emerged as amongst the top 10 newspapers in this country in less than three years. And I believe that in the next two years’ time, we will be among the top four brands in this country.

Well, they can talk about decrease. But you must see from a different perspective altogether, that you are comparing a situation where we had only one or two newspapers versus now where we have several newspapers. So, obviously when we have several newspapers, the per readership copy declines. Earlier, when there were only one or two newspapers to read, people used to go through only those, but the situation has changed, there are several newspapers now. Every home receives 4-5 newspapers and, therefore, per readership of copy declines, but the number of copies has increased dramatically in the country. Therefore, the market has expanded tremendously. Per readership will come down because we have so many newspapers to read, but this really doesn’t mean that people are not reading newspapers. Many so-called experts talk about IRS, but I don’t think they talk about it in the right context, which is very important. Print industry is a robust and well growing industry today.

There is a lot of hype about new media, but it’s got a long, long way to go.

It’s been pretty exciting to work in the newspaper industry. It is very different from the oil industry where I had last worked. But the results, the rewards and return on capital are pretty good for both the industries. And I think both are exciting places to work.

It depends upon what the business wants to deliver to its audience.

Nothing as yet so far, we are coming well on plans and budgets are being delivered. It is not something that DNA has not been prepared for. We don’t want slowdown to happen, but as long as you are managing your costs efficiently and you benchmark the best, then there is no reason to worry. I think today, DNA is the single most cost efficient player in the market in the print industry. I don’t think there is a single newspaper, which is more cost efficient than DNA.

You will be surprised that according to the IRS results, DNA shows growth in the youth sector. So, it’s about making sure that your product is designed to deliver to the youth. You need to give value preposition to your customer to catch their eyeballs.

A major challenge for the print industry is to recover the cost of the product from the consumers. For too long newspaper cost has been subsidised and it is simply surviving on advertising revenue. Time has come for the print companies to come together and work towards recovering the cost of product from the consumer who reads the product. I think this will put the industry in a far better financial health than it is. As far as the concern about whether people will buy your newspaper, I think as long as your content is strong enough to attract the consumer, people will definitely buy your product.

I think the print industry will continue to grow. It is backed by a robust industry and has got growth all over it. 2008 saw English newspapers launching several new editions. DNA itself launched in Mumbai, Ahmedabad, Surat, Pune, Jaipur, and now recently we launched our Bangalore edition. There has not been another newspaper which has put so many editions in market over the last one year. And this is in spite of people saying all kinds of things about us. We have continued to grow and we believe that growth will remain with us. There is a lot of competition in this industry, which allows the industry to grow. The growth and future of the print industry is really bright and that is why we see print companies expanding and investing.

Well, I know this business, I have been here for three years, I enjoy this business and I want to work at DNA until I personally hang up questions. In my previous company, I had spent 15 years and I see myself being in DNA for the next 12 years, building the company into the most successful print company.

There is plenty of scope for Indian media to grow. Indian entrepreneurs must be given opportunities to expand in every possible way. Foreign media is already available in India in terms of magazine. They have already entered India several years ago.

The so-called slowdown or recession has just started. If you go back, the print industry did very well for the period April to October. The print businesses in this period were excellent. DNA itself grew by 45 per cent in terms of revenues. It is only from November that the slowdown has actually commenced and has impacted the print industry. The published results of all companies, whether it is Hindustan Times or Deccan Chronicle or The Times of India, have been good, and similarly, DNA has also done quite well.

The slowdown is only being experienced since November and December, and this could be largely due to our panic situation on a corpus stock market. But I don’t think this is something that is going to last for too long. I think once the market begins to stabilise, the sentiment would be more positive and the industry will return to its growth phase. Even now, the economy is still growing by 7 per cent as per Government estimates. Therefore, there are no reasons to worry. I still don’t think that the growth story is disappearing. It is not a time to panic at all, but it is a time for the media industry to be very cost conscious. The media industry must learn from other sectors, like FMCG, oil industry, and the consumer durables industry, which are always run as very tight businesses. The media industry tends to get over-excited and thus, build the cost into the system. It is a time to take care of all these costs.

Normally, this kind of slowdown comes once in seven years. This is a cycle that hits every industry once in seven years and lasts for about 18 months. We have been through this kind cycle in 2002 as well, and we had come out of it. But this time, what is more important is that this cycle has nothing to do with India, it is a global cycle that is impacting India in a big way. I think if growth continues, we should be alright, but if it does not happen, then it will last for another one year. And hopefully by April 2010, we should be back to positive environment.

There would be four buzzwords for the print industry in 2009. These are – you have to deliver impeccable edit quality, you’ve got to be a cost efficient organisation, you have to ensure critical mass circulation, and you have to try and recover the cost of circulation. With so many newspapers now available, the quality of edit could be the key driver for readers to pick up your paper. And at this point of time, even the mightiest organisation cannot think that it would be able to build the extra cost and carry on with the business, you have to be the most cost effective business. As far as cost of circulation is concerned, so far the newspaper industry has subsidised the cost of the paper by not picking up the cost through circulation. I think it’s about time the circulation side is very carefully evaluated by respective print companies and at least the cost of newspapers is recovered. This is a must. You just cannot depend on advertising as the only source of revenue. It is important for print companies to come together to make sure that we recover the cost of newsprint from customers rather than trying to recover this only from advertisers.