Why Sankeshwar wants to sell Vijaya Karnataka

PALINI R. SWAMY writes from Bangalore: The formal announcement has still not been made. The actual price has still not be revealed. The modalities of the sale have still not been firmed up. And, indeed, the actual buyer's name has also still not been officially divulged.

But the question on everybody's, or at least every mediaperson's (and reader's) lips across the State is: just why does Vijay Sankeshwar seem to be in such a tearing, even desperate, hurry to wash his hands off Vijaya Karnataka, Vijay Times and Usha Kirana?

Especially when Vijaya Karnataka is No. 1 and when Vijay Times is close to being No. 2?

Especially when as a transport operator from smalltown Hubli he has succeeded in doing what such top-notch business names as the Ambanis, the Thapars, the Singhanias have all majestically failed at?

The charitable view is that he is just being a good businessman. Insiders who know his mind say he entered the media business with no more noble an objective than to make his money grow. He had no great interest in promoting Kannada or journalism or both.

As a savvy businessman, he merely saw an opening in the kind of Kannada journalism it was getting through Praja Vani, Kannada Prabha and Samyuktha Karnataka, and got in—and got lucky.

Therefore, they say, with the media market red hot just now, especially in crowded Bangalore, with buyers willing to give him more than twice the money he has pumped into the three papers over the last five-plus years, he sees a golden opportunity to take his cash and leave.

Indeed, those who subscribe to this view say Sankeshwar had been preparing for a sale for at least two years. The consulting compay Ernst & Young was called in (briefly) to do the due diligence for making presentations to investors, Indian and foreign.

In other words, from day one, Sankeshwar had an exit policy. All he was waiting for was the right numbers to be dangled in front of him. That time is now.

The not-so-charitable view is that Sankeshwar, typically for a businessman unaware of how journalism works, has run out of patience.

Those who subscribe to this view say that the transport operator who is used to instant profits from his investments was getting increasingly frustrated at the long gestation periods of his papers.

The Sankeshwar camp says that he has pumped in Rs 60 crore so far, but media watchers say this is a conservative estimate. The figure could be in excess of Rs 100 crore.

The Sankeshwar camp says the papers, which they claim fetch around Rs 7 crore per month in ad revenue, would have turned in profits from May next, but media watchers say that date is too optimistic given the investments made and the costs it has taken to achieve what the papers have.

In the end, though, Sankeshwar may be itching to sell because he overreached himself and got too ambitious.

Vijaya Karnataka, whose marketing, circulation and editorial tactics (including to the extent of having the designation Executive Managing Editor) was modelled on The Times of India was a quick, unsurprising and maybe even deserving success.

But Sankeshwar, feel media watchers, bit off more than he could chew by launching Vijay Times even before Vijaya Karnataka had stabilised, and following it up with a second Kannada daily, Usha Kirana. Result: none of the three papers are in the pink of health, with one subsidising the other two.

Vijay Times today claims an ABC circulation of over 150,000 copies a day and a readership of nearly 450,000 readers. And is ostensibly snapping at the heels of Deccan Herald by being the No. 1 paper in 24 of the 26 districts outside Bangalore.

But it has come at a very heavy price. The cut-price paper is dumped heavily, has heavy overheads, and what little advertising it attracts is grossly subsided if not a trickle-down from advertisers who opt for a package deal with Vijaya Karnataka.

As the saying goes, circulation sells and advertising pays, and Sankeshwar was getting next to nothing from Vijay Times.

The Sankeshwar camp says Vijayanand Printers Limited is losing Rs one crore a month. Media watchers say the real figure could be double that, much of it coming courtesy Vijay Times.

But the last straw could have been Sankeshwar's ambition in launching Usha Kirana. Insiders say there were four reasons behind its launch:

1) To be the No. 1 and No. 2 Kannada paper in the State,

2) To prevent competitors from chipping into Vijaya Karnataka's circulation by using Usha Kirana as a buffer,

3) To provide a lower priced option to a new set of readers,

4) To provide a cheaper advertising option to advertisers wary of Vijaya Karnataka's reach and ad rates.

There may also have been a secret fifth reason. Sankeshwar wanted a paper in his stable when the time came to sell Vijaya Karnataka and Vijay Times.

But media watchers say Usha Kirana has failed in all its objectives. It is not taken off, it has in fact chipped into Vijaya Karnataka's circulation, it attracts next to no advertising and nobody buys it.

Shutting down Usha Kirana alone won't to do. Selling off Vijay Times alone isn't too attractive to any buyer and it won't fetch much anyway.

Result: Vijaya Karnataka has to be added to the platter.

Getting rid of his media diversion enables Sankeshwar to concentrate on his transport empire. Vijayanand Roadlines Limited has big plans of expansion, including a planned listing through an IPO. Getting rid of Vijayanand Printers Limited may have been strategic to that move.