Recent investments in the suddenly deal-happy media business present no clear picture, because of widely varying valuations.
Ireland's Independent News and Media, for instance, has applied to the Foreign Investment Promotion Board for permission to pay Rs 150 crore (Rs 1.5 billion) for a 26 per cent stake in Jagran Prakashan, which publishes the Dainik Jagran newspaper.
That gives the Kanpur-based media house a pre-transaction valuation of Rs 427 crore (Rs 4.27 billion).
This means each of Dainik Jagran's 1.8 million readers has been valued at Rs 2,372. This is much lower than the Rs 7,650 that each of Hindustan Times' one million customers got valued at when Citicorp acquired a 8.27 per cent stake in the newspaper for Rs 69 crore (Rs 690 million) last October, giving the KK Birla-controlled newspaper a pre-transaction value of Rs 765 crore (Rs 7.65 billion).
Observers argue that the different valuations per reader reflect the greater advertising attracted by an English language readership, in preference to a Hindi one.
But even Hindustan Times' valuation pales in comparison with that of the Mumbai title Mid-Day, which is quoted on the stock exchange.
At a current market capitalisation of Rs 309 crore (Rs 3.09 billion) and with its last audited circulation being 140,000, each Mid-Day reader in Mumbai is valued at a staggering Rs 22,071.
Could this reflect the greater value of readers in Mumbai--which Hindustan Times is planning to target with a new edition later in the year?
Another publicly quoted newspaper that has got a flattering value per reader is the Deccan Chronicle, the very profitable Hyderabad-based entity that has recently forayed into Tamil Nadu and taken on the entrenched Hindu.
Deccan Chronicle's market capitalization of Rs 615 crore (Rs 6.15 billion) puts the value of each of its 400,000 subscribers at Rs 15,375.
That newspaper valuations are going through the roof is evident from what Independent News and Media is willing to pay by way of share premium.
The premium per Jagran Prakashan share of Rs 456.93, is substantially higher than the net asset value per share of Rs 53.94, sources close to the development said.
The price is also several times what has been calculated as the 'fair value' of each share. To calculate the fair value of the share, the company's auditors, Kanpur-based chartered accountants have taken the average of the NAV of Rs 53.94 and the profit earning capacity value of Rs 103.00 and then discounted it by 15 per cent owing to the restricted mobility of the share.
Those familiar with the newspaper industry argue that these valuations in the market could also reflect the value of the franchise that the leading newspapers have built up.
Once established as a market leader, a newspaper is hard to dislodge--and the property then acquires some scarcity value for strategic buyers in the industry.
It is no wonder, then, that publishing companies are willing to offer newspapers for virtually nothing at all--and certainly at prices much lower than those prevailing in any other market in the world.
India's newspaper prices have either stayed constant or fallen over the past several years, and those engaged in circulation wars have dropped prices to as little as a rupee a copy, when the cost of just newsprint and printing ink is many multiples of that.
