DB Corp’s aggressive circulation moves damage Q4 margins

DB Corp, the publisher of newspapers such as Dainik Bhaskar, reported a sharp decline in its profits for the fourth quarter due to rising operating costs, particularly those related to raw materials.

The company, however, was able to report a 10% year-on-year increase in its total revenue due to its strategy of rapidly growing its circulation. The total circulation of its newspapers increased by 18% in just 9 months.

However, even as circulation increased by 18% in nine months, circulation revenue — collected from subscribers — increased only 8.5% in Jan-Mar quarter to Rs 132 cr, indicating that the average subscription charge paid by a subscriber has fallen.

Similarly, advertising revenue too has failed to keep up with the circulation expansion. Revenue from the sales of print advertisements on its pages increased by 8.8% on year to 337 cr in Jan-Mar.


While the sharp focus on increasing circulation boosted revenue, it had a deleterious impact on the company’s profits.

EBITDA in the mainstay print business — a measure of the cash profits generated by the unit — fell by Rs 40 cr (29%) to Rs 98.5 cr. In comparison, revenue in the print business rose by Rs 48 cr.

This was likely the result of higher newsprint prices as indicated by the company’s overall accounts.

For the company as a whole, raw material costs jumped by Rs 35 cr to Rs 195 cr, largely offsetting the Rs 50 cr increase seen in its operating revenue. “Other expenses” too increased by Rs 27 cr to Rs 166 cr during the quarter.

Not surprisingly, the company’s overall EBITDA fell by Rs 38 cr to Rs 105 cr. EBIT, a measure of profit that excludes tax and loan costs, fell by Rs 20 cr to Rs 76 cr.

The company’s profit before tax fell by Rs 16 cr to Rs 79 cr, while profit after tax fell by Rs 7 cr to Rs 57 cr.

“Our performance in the fourth quarter has reflected a culmination of all efforts we have been under taking over the last one year in implementing editorial and circulation expansion strategies,” said MD Sudhir Agarwal. “As evident, both have played out their complimentary roles and we have reported significant circulation-led growth.”

“Our focus markets remains the same in Gujarat, Bihar, and Rajasthan and we are working hard to further increase our circulation nos in markets we already enjoy a strong dominance, including MP , CG, Haryana and Chandigarh. \

“A key aspect of our circulation strategies have been the strong reader engagement initiatives that helped in expandin ur markets and attracting new readers. Through these efforts, we have been success attracting the right profile of audience in NCCS A and B categories also benefiting our advertisers.”

He also said the company has ensured that it is operating at its best efficiency and productivity level.

“The non-print businesses are also well synergised and strongly complement the overall package to advertisers and brands. At a broader level, all fundamental business growth drivers are in place which positions us well to capitalise on emerging industry opportunities. The positive outlook on India reflected by global institutions is providing a strong impetus to the positive sentiment on-ground that signals a better new fiscal ahead,” he added.

Compared to peer Hindustan Media Ventures, which reported sharp declines in both the top line and the bottom line, DB Corp has been able to report growth in its top line.