MUMBAI (Reuters) - When Conde Nast launched its premium lifestyle magazine 'Vogue' in India last year, it carried a whopping 168 pages of advertisements of a total 400 pages.
Now, the publisher is preparing to launch its luxury men's magazine GQ and expects a similar rush of advertisers in Asia's third-largest economy, where rising incomes and growing literacy are boosting readership and revenues of magazines and newspapers.
From specialist magazines on whisky, golf and parenting, to regional-language newspapers and financial dailies, new titles are coming thick and fast in one of the few markets in the world where advertising and readership for print media are expanding.
"It's a fast growing economy and with consumption so robust and with incomes rising, it's a fertile ground for the print media," said Vivek Couto, executive director of Hong Kong-based research firm Media Partners Asia.
"There is also a buoyancy in print advertising that is encouraging new launches and niche publications in particular."
Print publication advertising revenues in India generated 94 billion rupees ($2.4 billion) in 2007, or 48 percent of all of the country's media advertising revenues, PriceWaterhouseCoopers (PWC) said in a recent report. TV ads generated 41 percent.
With the economy having grown at an average rate of 8.75 percent in the last four years, middle class incomes have risen, boosting demand for niche magazines on health, leisure and finances.
Growing prosperity in rural areas is also encouraging demand for publications in India's more than 20 official regional languages.
Revenue for newspapers and magazines in India, where reading at least one newspaper in the morning is sacrosanct, grew at an average rate of 15 percent in the last four years, higher than anywhere in the world, PWC said.
The growth is helped by a young demographic, more working women, rapid urbanization and smaller households, PWC added in its report.
The print publication boom in India contrasts sharply with more mature markets in the West where circulation figures and advertising revenues are down as readers move to the Internet.
India in 2005 allowed 100 percent foreign investment in non-news publications, keeping the cap for news at 26 percent.
Early investments included Independent News and Media's 26 percent stake in newspaper publisher Dainik Jagran, Pearson Plc's 14 percent in Business Standard newspaper, Henderson Ventures' investment in HT Media and BBC Worldwide's magazine venture with Bennett, Coleman & Co.
More recently, private equity firm Blackstone Group put $150 million in regional publisher Ushodaya Enterprises, Warburg Pincus moved $33 million into the Dainik Group and DE Shaw invested $39 million in Amar Ujala Publications, according to research firm Venture Intelligence.
News Corp, which has a content alliance for The Wall Journal with HT Media's business daily, is keen on more launches. Pearson, which has sold its Business Standard stake, is reported to be in talks for a new venture.
"There's huge investor interest in the growth potential, because the segment is still quite under-penetrated," said Atul Phadnis, chief executive of consultancy Media e2e.
Local firms are also seizing the opportunity: Business Standard and Bennett, Coleman's Economic Times have launched Hindi and Gujarati-language editions of their financial dailies.
Deccan Chronicle Holdings has launched a business daily to compete with five others, and new regional-language and city papers are hitting the stands nearly every day.
The boom in advertising revenue is not limited just to print. As new media grows and controls are eased in television, these will attract greater investments and advertising revenues.
Specialist publications have a better chance of scoring with advertisers and readers in the increasing clutter, Phadnis said.
"Niche publications are almost immediately profitable: Advertising more than makes up for lower subscriptions, and there are easy synergies with other verticals, like radio or Internet."
But it's not all good news. The large number of players jostling in the market place could lead to a drop off in advertising revenues in the coming years, analysts say.
"One of the worries is that publishers are taking ad revenues for granted," Phadnis said.
"Everyone thinks it will keep rising, but as early as 2009 we are going to see a glut in inventory in TV, print and the Internet because of so many players. We will see intense price competition, and smaller firms may be forced out," he said.
Investors are also chasing only a handful of large media firms, he said, nudging up already high valuations: Deccan Chronicle shares trade at 10.3 times forecast earnings, while Jagran Prakashan trades at 19.3 times and Mid-Day Multimedia quotes at 19.7 times forecast earnings.
Rising newsprint prices are also bumping up production costs.
Still, Conde Nast expects Vogue will break even in its first or second year of operation compared to an average break-even period of five or six years in more mature markets, said Alex Kuruvilla, managing director in India, referring to Europe and the United States.
"We are optimistic and bullish," he said of the potential. "But also cautious: In this market, you have to be smart."
Attracting the attention of vendors who hawk magazines at traffic lights and getting space on shelves in overcrowded news stands across Mumbai is not easy for new entrants.
"I am already running out of space," said K.B. Singh, pointing to a low wooden bench on a busy sidewalk piled high with dozens of glossy magazines and newspapers.
"Where will I put the new ones?"
Editing by Ranjit Gangadharan and Megan Goldin