4.

1 The Economics of Newspaper

The economics of a newspaper, as it stands today, are primarily focused on a few key things:
Income
1 - Advertising Revenue (60%)
2 - Subscription or Circulation Revenue (30%)
3 - Classified Revenue (10%)
Expense
1 - Printing and Distribution
2 - Operations
3 - Content
The challenge with the current model is that advertising revenue is shrinking rapidly for print
publication while digital ad revenue is not catching up enough to offset it. So, the biggest
source of income in the current business model is shrinking far too rapidly while little is being
done to replace that income.
Few papers are investing in R&D so they aren't inventing new revenue streams. They are
cutting costs as much as possible by leaning out organizations and outsourcing when they can.
When there's nothing left to cut, and their revenues have declined to such a point when they
can't sustain profitability, they have to sell or close the doors as many are doing today.

4.2 Electronic and Print Media Organization – Cost and Revenue Relationship

Circulation is the number of paid subscribers that magazines and newspapers have. Broadcast
media -- television and radio -- do not use the term circulation; instead, they measure their
audiences in terms of viewers and listeners. Advertising revenue is how much money media
earn from selling advertising space or time. This is applicable to all forms of media: print,
broadcast and digital, such as Internet and mobile. Small business owners need to pay attention
to both numbers to calculate how many people they can reach through public relations and
advertising efforts.
Circulation
Circulation is a revenue source for publications and a gauge as to their ability to generate
advertising revenue. As a business person, consider circulation figures when deciding whether
to buy advertising in a publication. Typically, the higher the circulation figures, the more
advertising costs, but you may decide it’s worth it due to high circulation figures. That’s why
circulation figures are audited to ensure credible calculations. The Alliance for Audited Media
– formerly the Audit Bureau of Circulations – sets circulation rules and performs audits of print
and digital media. This includes online publications that charge each time you access them,
known as paywalls.
Readership
Don’t confuse circulation with readership, which is a calculation of people who read a
publication. Readership is almost always higher than circulation. Readership is measured by
the Media Rating Council. It’s important to you as a small business advertiser, because it breaks
down readers by demographics. If you want to reach homemakers of a certain age or income
level, look at readership levels. Readership also attempts to calculate “pass along” readers; for
example, a woman waiting in a pediatrician’s office will read a magazine but she did not pay
for it.
Print Advertising Revenue
Print advertising revenue has declined overall as of 2012, even for magazines where circulation
and readership have still been high. Newspaper print circulation and advertising have both been
low, as readers and advertisers have moved to online editions. It is mostly large companies who
make up print advertising revenue, while smaller businesses have gone to online ads. This is
important as you decide to spend limited advertising dollars; with online ads, your customers
can “click through” an ad to go directly to your website or product information.
Digital and Broadcast Revenue
Online advertising revenue has risen as digital media becomes more popular. There are also
many websites that aren’t news publishers selling online advertising. As of 2012, television
advertising revenues declined; in general, TV advertising is cost-prohibitive for small
businesses. Radio or audio advertising revenue is also changing as digital radio advertising,
both online and mobile, increases in popularity. As a small business owner looking to advertise,
following ad revenue trends to digital media can lead you to a bigger audience and a better
value for your advertising budget
Advertising industry and Indian Media
The Indian advertising industry has evolved from being a small-scaled business to a full-
fledged industry. The advertising industry is projected to be the second fastest growing
advertising market in Asia after China. It is estimated that by 2018, the share of ad spend in
India’s Gross Domestic Product (GDP) will be around 0.45 per cent.
The Indian government has given tremendous support to the advertising and marketing
industry. Advertising expenditure is likely to increase in the financial sector, driven by Reserve
Bank of India (RBI) policies which could result in a more favourable business environment.
Also, proposed licences for new banks and better market sentiments render the advertising and
marketing industry in India a fertile space.
Print contributes a significant portion to the total advertising revenue, accounting for almost
41.2 per cent, whereas TV contributes 38.2 per cent, and digital contributes 11 per cent of the
total revenue. Outdoor, Radio and Cinema make up the balance 10 per cent.
India’s digital advertisement market is expected to grow at a compound annual growth rate
(CAGR) of 33.5 per cent to cross the Rs 25,500 crore (US$ 3.8 billion) mark by 2020.*
The Internet's share in total advertising revenue is anticipated to grow twofold from eight per
cent in 2013 to 16 per cent in 2018. Online advertising, which was estimated at Rs 2,900 crore
(US$ 435 million) in 2013, could jump threefold to Rs 10,000 crore (US$ 1.5 billion) in five
years, increasing at a compound annual rate of 28 per cent.
4.3 Foreign Direct Investment in Indian Media & Entertainment Industries
Entertainment and media industry is gaining lot of importance in India. India's media and
entertainment industry is projected to grow by 18 per cent over the next five years and is
expected to become a 1.157 trillion industry by 2012. Further, online entertainment is the next
big thing for studios and broadcasters. The biggest changes are expected in the Internet,
television distribution, video games and casinos sectors.
Media and entertainment such as film, television, advertising, prints media and music industry
among others are growing rapidly in India. The media and entertainment industry in India is
likely to grow 12.5 per cent per annum over the next five years and touch US$ 20.09 billion by
2013. Foreign Direct Investment upto 100 percent is allowed in most of the sectors, more
specifically,
For Film Industry
– Upto 100%
For Radio Industry
– Upto 20%
For Print Media
- Upto 74% publishing scientific/technical and specialty magazines/periodicals/journals
- Upto 26% publishing newspapers and periodicals dealing in news
Investment Opportunities in Media Industry
Theatre/ Multiplex Infrastructure
Television Segment
Film Entertainment
Animation Segment
Print Media
Mobile Entertainment
Television Software Content
Advertising
Recent steps for the improvements of media & entertainment industry
1. Allowing 49 per cent foreign holding in cable TV and DTH.
2. The government has allowed 100 per cent FDI in fax editions of magazines and
newspapers.
3. Recently, the government has allowed companies with core business in news segment
but ved off non-news business, to raise funds from overseas beyond the stipulated FDI
limit of 26 per cent. Such companies can raise and route funds from overseas through
its non-news arm, which will not be calculated as foreign investment.
4. Permitting setting up of up linking hubs for satellite up linking by private TV
broadcasters from Indian soil.
5. Giving industry status to the films segment.
6. Opening FM Radio operations to the private sector.
7. The government has allotted US$ 50.13 million in the current Five-Year-Plan for
various development projects of the film industry. The funds will be utilized to set up
a centre for excellence in animation, gaming and visual effects among others.
Currently, the FDI policy permits 26% foreign direct investment in the publishing of
newspapers and periodicals. The government is considering a proposal to increase foreign
direct investment (FDI) limit in print media sector to 49 per cent from 26 per cent at present.
Currently, the FDI policy permits 26 per cent foreign direct investment in the publishing of
newspapers and periodicals dealing with news and current affairs through government approval
route. According to sources, the government has started a consultation process on the matter
with an aim to attract more foreign funds in the sector. Last year, the government relaxed FDI
norms in several sectors, including civil aviation, defence, private security agencies,
pharmaceuticals and food processing industry.
During 2015-16, foreign direct investment (FDI) in the country increased by 29 per cent to
USD 40 billion, from USD 30.93 billion in the previous fiscal. Foreign investments are
considered crucial for India, which needs around USD 1 trillion for overhauling its
infrastructure sector such as ports, airports and highways to boost growth. Foreign investments
will help improve the country’s balance of payments situation and strengthen the rupee value
against other global currencies, especially the US dollar.

Foreign investment and the Indian media and entertainment industry

With more than 600 television channels, 100 million pay TV households, 70,000 newspapers
and 1,000 films produced annually, India’s vibrant media and entertainment (M&E) industry
provides attractive growth opportunities for global corporations. In recent years, with near
double-digit annual growth and a fast-growing middle class, there has been a renewed surge in
investments into the country by multinational companies.
At present, India has probably one of the most liberal investment regimes amongst the
emerging economies with a conducive foreign direct investment (FDI) environment. The M&E
industry has significantly benefited from this liberal regime and most sectors of the M&E
industry today allow foreign investment. The government (GOI) has recently further liberalised
the FDI caps in key sectors (including Direct-To-Home (DTH), print media and radio) and
entry restrictions for foreign companies have been relaxed for most segments of the M&E
industry.
In the year 2001, the film industry was granted the status of an 'industry'1. Since then, the GOI
has taken several initiatives to liberalise the foreign policy regulations relating to films.
Through the liberalisation of the foreign exchange regulations, the GOI has allowed 100
percent FDI in the film sector. For the purposes of FDI, film sector broadly covers film
production, exhibition and distribution, including related services and products. FDI in the
sector is permitted without any prior approval (‘automatic route’). In addition, there are no
entry level conditions for FDI in the sector. However, investors must comply with certain post
filing requirements, including notifying the Reserve Bank of India within 30 days of receipt of
inward remittance in India and filing of certain documents within 30 days of allotment of
shares.
The GOI has also entered into film co-production treaties with several countries2 and is in the
process of entering into more bilateral pacts with countries like Australia, China and Canada.
4.4 Establishing a media organization steps involved

4.5 Importance of entrepreneurship and fund raising