Even at 5 am, it takes a while to locate a parking spot around Ashok Pillar in Chennai's Ashok Nagar. The place is choc-a-bloc with newsagents scrambling for newspapers at one of the city's biggest distribution "drop points."

In the wee hours of the morning, one newsagent stands out in the crowd as he fixes his newspapers' posters in front of his stand.

The posters are a good way of reminding the morning walkers that a new English newspaper has hit the city: Deccan Chronicle.

The Hyderabad-based paper, which launched its Chennai edition on March 28, is claiming a coup of sorts -- a circulation of 140,000. Deccan Chronicle Holdings' [Get Quote] executive director P K Iyer says that the average print order is 145,000 copies (some copies are sent to towns such as Vellore).

A part of the circulation, about 20,000 copies, comes from the paper's deal with ICICI Bank [Get Quote] -- its credit card customers can buy a year's subscription for Rs 99.

Deccan Chronicle's circulation is unaudited. But if its claims are true, in less than a month the paper has notched up a circulation, which is more than half The Hindu's Chennai city circulation.

The 127-year-old Kasturi & Sons newspaper leads the Chennai city market with a circulation of 2,67,349 copies (Audit Bureau of Circulation figure for July-December 2004).

Deccan Chronicle has stormed the city with a cover price of Re 1 versus the Rs 3.25 and Rs 4.50 that The Hindu continues to charge on week days and Sundays, respectively. But The Hindu's joint managing director N Murali says: "Deccan Chronicle has made no impact whatsoever."

The paper has not even responded to Deccan Chronicle's lower price. The New Indian Express, more vulnerable to DC's onslaught in popular perception, is priced at Rs 1.50 on weekdays, and Rs 5 on Sundays.

Says Express Publication (Madurai) chairman & managing director Manoj Kumar Sonthalia: "Express is bigger than Deccan Chronicle in Chennai." However, he declines to reveal the circulation of the Express as the paper does not seem to have been certified by the ABC.

Sonthalia insists that Deccan Chronicle has not taken away his newspaper's readers. He believes that Deccan Chronicle is probably expanding the market for English newspapers.

Also, not everyone accepts Deccan Chronicle's claims on circulation numbers. In the absence of audited figures, the media buying units of ad agencies do internal assessments of the reach of different papers.

They estimate that Deccan Chronicle may not be selling more than 40,000 copies. The New Indian Express is believed to be ahead of Deccan Chronicle by 10,000 to 15,000 copies.

While the number of copies sold by the dailies is not clear, what's agreed upon is Chennai's advertising potential. Chennai and Bangalore are said to be the biggest markets for advertisements after Mumbai and New Delhi.

Murali thinks Chennai generates about Rs 500 crore (Rs 5 billion) in advertising. "Of this, Rs 250 crore (Rs 2.5 billion) to Rs 300 crore (Rs 3 billion) comes to the print media and The Hindu's share is about 70 per cent."

A significant chunk of advertisements are local. Chennai's huge textiles and jewellery retail outlets are a significant sources of revenue.

Says K Satyanarayana, media director at RK Swamy BBDO's media unit: "This kind of retail advertising is one of the highest in India. I don't think Chennai residents contribute more than 50 per cent to retail sales."

Deccan Chronicle's Iyer, however, doesn't quite believe that Chennai can generate only Rs 500 crore (Rs 5 billion). "The Hindu's dominance has led to premium pricing. Once competition brings down advertising rates, the size of the market is bound to expand."

Even if it does, not everyone will get more advertising revenue. Murali says that when it comes to advertising, historically, the winner takes all.

Still, Deccan Chronicle might be able to piggyback on its strength in its home market, Hyderabad. "It might have an edge because of the add-on rate it offers to all its advertisers using the Hyderabad edition," says Satyanarayana.

For the moment, while circulation figures and the likely impact on the advertising flow are unclear, what does seem plausible is that Deccan Chronicle's rock bottom cover price has begun expanding the market for English newspapers.