By John Larkin
The Wall Street Journal
Friday, May 5, 2006

NEW DELHI -- At a shopping-mall McDonald's here in India's capital, Isha Gupta, a 22-year-old MBA student, ignores a blaring television as she flips through a newspaper while munching a burger.

"TV news doesn't cover critical discussions," Gupta said. "If I'm online, I'd rather chat with friends than read the news."

In a nearby cafe, Sandeep Singh is engrossed in the Times of India, the country's biggest and oldest daily. Once staid and stodgy, the Times has recently sprouted an array of glossy supplements and magazines to lure younger readers such as Singh, 22, who finds the revamped paper "more user-friendly now and much more attractive to readers."

Propelled by a new generation of young consumers, widening literacy and a surging economy, India's print media industry is booming, even as newspapers and magazines in most developed countries struggle to maintain profit against mounting electronic competition from the Internet and television.

Indians have always been avid newspaper readers, partly because the almost 300 dailies published here generally cost less than 11 cents a copy. The past few years have seen buoyant readership growth and cutthroat competition among established titles and upstart challengers eager to get in on the action.

Newspaper and magazine readership hit 200 million across the country in 2005, an increase of 12 percent over 2003. Industry analysts expect the trend to continue at a similar clip for the next few years as more young Indians join the ranks of readers.

Almost a quarter of the 730 million Indians older than 15 read a newspaper last year, up from 21 percent in 1999, when only 620 million people were in that age group. Half of those readers live in rural India, where rising literacy rates and incomes are spurring more publications in Indian languages such as Hindi and Gujarati.

Literacy is increasing by a percentage point or two each year, though at an official national average of 65 percent, there are still millions of potential rural readers for newspapers to tap. Dainik Jagran, India's biggest non-English-language paper, has seen its circulation double to 2.4 million since 2001. And the number of towns and cities in which it prints has more than doubled, to 28, in the past five years. In June, Dublin-based Independent News & Media PLC paid $32.2 million for a 26 percent stake in Dainik Jagran's publisher, Jagran Prakashan Ltd.

In cities, meanwhile, challenges to decades-old publishing monopolies and the rise of cable TV are forcing the newspaper industry to shed an antiquated approach to the news and offer more eye-catching content to mainly younger readers.

This activity puts India at odds with a global shift away from newspapers and toward television and the Internet. In Europe and the United States, electronic news is eroding circulation and ad revenue at many newspapers and magazines, in some cases forcing mergers, closures and staff cuts.

India has bucked the global trend, mainly because print's main electronic rivals -- cable TV and online newspapers -- have largely failed to attract a critical mass of customers needed to steal away readers and ad revenue. While cable television is expanding briskly, the 100 or so channels available in large cities can't yet generate as much ad revenue as newspapers, which have the advantage of giving advertisers instant access to the growing rural market, as well.

Even so, the advent of cable TV in cities has spurred newspapers to broaden their appeal with more color and a more lively approach to news coverage, says AC Nielsen India's N.D. Badrinath, who points out that more publications are printing in color and launching supplements geared to consumers.

As a result, advertising revenue in print media is making a comeback, its growth outpacing that of television for the past two years. Print advertising revenue has grown 12 to 14 percent annually in the past few years, says Deepak Kapoor, an executive director at PricewaterhouseCoopers Ltd. in New Delhi.

Online publications aren't yet in the picture because only about 4 million Indians subscribe to an Internet service. In fact, the Internet Service Providers Association of India says subscription growth has slowed in the past few years because of overregulation and a lack of investment.

That leaves most of the media market to print publications, which are hustling to lock in a generation of new readers. Although there are no statistics to show how much of their recent growth has come from young readers, newspapers are betting that India's vibrant economy is enriching the young and making them attractive to advertisers.

India has one of the world's youngest populations, with half of its 1.1 billion residents under 25. The country's median age of 24 compares with 32 in China and nearly 37 in the United States. In India's cities, which still generate the bulk of print ad revenue, the battle for new readers is fierce.

In the commercial capital of Bombay, the venerable Times of India is battling two rivals that have encroached on its turf in the past year. One of them, the Hindustan Times, is soon to launch a business newspaper. The other, a brash start-up called Daily News & Analysis, or DNA, has plans to expand nationally.

Like the Times, DNA has crammed its pages with lifestyle supplements, glossy magazines and content on issues such as sexuality, which were taboo in India not so long ago.

"For these people, it's a relief just to have an option," says DNA Director Girish Agarwal. "The idea is not to give them something their grandfather would have read."

Binny Sabharwal contributed to this article.