If anyone doubts the ability – and determination – of Indian companies to block foreign investors when they sense unwanted competition, the experience of the Financial Times newspaper demonstrates the reality in what is still a partly-controlled economy.
Just over 20 years after first eyeing the Indian market, the FT has failed to obtain permission to print the newspaper in India and has, in the past few weeks, walked away from a joint venture that had gone sour with the Business Standard, one of the countries leading business dailies.
The FT is now looking at a new venture with Network 18, a television-based group that has successful joint tv channels with CNN and CNBC and is partnering with Forbes to produce a business magazine in India.
Network 18 is expected to launch a new business newspaper which would have pages devoted to FT syndicated stories and would probably have an FT equity stake – though the FT is also focused on developing its online audience with Network 18, and is primarily interested in printing its international edition in the country.
It is just over 20 years since the FT started trying to get a toehold in India’s newspaper market after it was approached (while I was its Delhi-based South Asia correspondent) by two Indian business families – the Delhi-based Modis and the London-based Hindujas– to print the paper in India.
Those approaches did not lead to a deal, nor did talks with the Bennett Coleman group, which owns the Times of India (circulation 2.8 million) and Economic Times (over 750,000), India’s leading general and business titles. Bennett Coleman has, since then, been blocking the FT’s entry, fearing the competition mainly in terms of staff salaries and quality. It registered Financial Times as a Bennett Coleman title, started protective legal cases around the country, and publishes a weekly inconsequential-looking four sheet supplement called “Financial Times” to underpin its rights.
About 15 years ago the FT joined up with the Business Standard, then owned by ABP, a Calcutta-based publishing house run by Aveek Sarkar, who has a successful and happy 50-50 publishing joint venture with Penguin Books and is talking to Time Warner, which owns Fortune, about launching a monthly business title. In the early 1990s the FT posted an associate editor into the Business Standard for three years, who helped raise editorial standards. Five years ago it bought a 13.85% stake in the paper, which it expected to raise to 26%, the maximum foreign direct investment (FDI) allowed in newspapers.
The FT quickly found it had run into more opposition. The Business Standard had by then sold by Sarkar to a group of Mumbai financiers, led by Uday Kotak, a leading banker, and the FT’s bid to boost its equity stake was turned down by the government because FDI in Kotak’s businesses allegedly pushed the total in the paper above 26%. Later the FT found its views were not listened to by people running the paper, and that it was receiving no help arguing with the government over the equity stake.
Sensing that it had found another opponent rather than a partner, it eventually decided to pull out – which it has now done, selling its stake to Kotak interests. T.N. Ninan, editor and publisher of the Business Standard, would not comment on these developments when I telephoned him, though he did say his newspaper was doing well with daily circulation rising near 200,000, and he seemed unconcerned that he will not be able to use FT syndicated articles from the end of this year.
Over the years the FT has secured the support of some government ministers but not enough for a majority in the cabinet, and no prime minister or finance minister has felt it a big enough issue to make it worth challenging their colleagues.
Meanwhile the Wall Street Journal has a partial presence through a (non financial) partnership with the Hindustan Times group in Mint, a one-year old business newspaper. Mint is raising the standards of accuracy, in-depth reporting, and quality in a branch of the media where such standards are rare.
Rupert Murdoch has talked since he bought the Journal of starting a paper in India, and could invest in Mint. There are also two other local companies entering a booming but crowded market that already has six English language business dailies, some of which, including the Economic Times and Business Standard, are launching Hindi and local language editions.
And the moral of the story? Someone once said (about joint ventures in China, I think) that “your worst enemies are your partners” – to which one could add “and allies in their industry.” Only two foreign newspapers are currently published in India. One is the International Herald Tribune, which has successfully defied a government ban on foreign papers printing a special Indian edition. The other is the Daily Mail, whose UK publishers, Associated Newspapers, have a 26% stake in a look-alike semi-tabloid Mail Today which is also raising standards and seems to have escaped opposition from vested Indian interests because none of them saw it as competition.