|
 |
| Raghav Bahl Managing director TV 18 |
Raghav Bahl doesn’t pause to respond when asked about the turning point in the existence of the Television Eighteen Group (TV18). It was in 1999 when he got CNBC in as a partner. That gave TV18, a small production house, which Bahl had set up in 1993, the “gravitas to attract professional talent”. As a result, he hired CEO Haresh Chawla, earlier with Times Music and (the now defunct) ABCL. From then on Bahl, managing director of the group, distanced himself from operations.
“The singular commitment that holds me and Raghav together is the promise that I am free to run this company. This is a professionally run company,” says Chawla, now group CEO. It is a point that Chawla keeps emphasising throughout the hour Businessworld spends with him. “The core difference between us and the competition is that we are building a management team, a media conglomerate. We are an institution. If Prannoy Roy goes who will run NDTV?” he asks. Coming from the smallest of the three broadcasters that sounds, well, pompous. Roy’s New Delhi Television (NDTV) is the largest news broadcaster in India followed by Aroon Purie’s TV Today Network (see ‘The Contenders’). Both have been pioneers in the news broadcasting business.
The smallest among the three, however, has had the best year. Revenues for TV18 have grown at twice the rate of NDTV’s and four times that of TV Today’s in 2005-06 over the previous year. If it meets the targets, then Bahl’s company should touch Rs 220 crore by March 2007, close to NDTV’s current level. It has, in recent times, had two successful launches — CNN-IBN and CNBC Awaaz. Then, there is an array of acquisitions such as jobstreet.com, CRISIL MarketWire and Jagran Prakashan’s Channel 7 (now IBN 7) and a foray into film production with Studio 18. Analysts are in love with the stock that outperformed the BSE Sensex in a bull year. Little wonder then that Chawla feels like strutting.
Mention TV18’s aggression and its status as the current stockmarket darling, and Vikram Chandra, CEO, NDTV Networks, says, “What you are seeing is a company (NDTV) in the process of metamorphosis. We are getting into the international business, outsourcing, radio and other news channels. We would let our work speak for itself rather than making announcements to keep the markets happy,” he points out, tongue firmly in cheek. He says that NDTV has a target of $500 million in revenues in five years. Some of the businesses NDTV is getting into such as outsourcing, an estimated Rs 6,000-crore opportunity or general entertainment, a Rs 10,000 crore-12,000 crore opportunity, are huge bets. “Even if one of them clicks, it is a game changer,” says Chandra.
 |
Prannoy Roy
Chairman and director NDTV |
|
|
 |
That is the point. The game needs changing. News as a genre can grow only so much across a few more languages and genres (lifestyle, Telugu business or Tamil personal finance and so on). From Rs 700 crore in advertising revenues, it could go to, say, Rs 1,000 crore-1,200 crore, most of it split between more and more channels (see ‘It’s Getting Crowded In Here’, BW, 22 May 2006). Also, a significant chunk of news watching time and attention is going to the radio, Internet and even print — all of which are in resurgent mode. In the coming months, the battle among these three has to move beyond news if they have to avoid becoming minnows in the Rs 18,000-odd crore TV broadcasting market.
K.V.L. Narayan Rao, executive director, NDTV Group, says that the combined market cap of all the three (listed) news broadcasters is about $850 million. “Somebody can just write a cheque of $400 million and buy out all three of us,” he says. The privately held Star India was last valued at about $3 billion and Zee Telefilm’s market capitalisation at the end of September was over $2 billion. That means the combined worth of all news broadcasters is less than half that of the second largest broadcaster — Zee. “So, even if we (NDTV) become the second biggest general entertainment channel, we could hit a billion in valuation,” says Rao.
It is in this ability to scale up and take the business beyond its narrowly defined area that Chawla believes TV18 has made the best bets. It is investing in every growth area there is, the Internet, events, mobile services, wire services, films, print and TV, to make it to the big league. That explains one part of his confidence. The other part comes from history. “Our life has been full of adversity. We never knew where the next camera or next month’s salary would come from. Others have had a far more comfortable existence,” says Chawla. NDTV’s infrastructure had been paid for by Star India under an earlier agreement and TV Today had big brother Living Media. However, Chawla now feels confident as the good times have started rolling.
The Strategy
 |
Aroon Purie
Chairman and managing director
TV Today |
|
|
 |
In 2003-04, four years after the TV18-CNBC tie-up and after Chawla was recruited, TV18 went into an expansion mode. First came the launch of Awaaz (now CNBC-Awaaz), a Hindi personal finance channel in 2005. It then started looking around for growth opportunities. So, when Rajdeep Sardesai was planning to quit NDTV, TV18 was waiting for him with a joint venture agreement in place. Soon, Global Broadcast News (GBN), the company that TV18 formed with Sardesai, Sameer Manchanda (former NDTV CFO) and Haresh Chawla, acquired Channel 7.
The idea is to be in every ‘vertical’ and ‘horizontal’ media space that deals with spending, investing and saving. CNBC-TV18 tries to capture the investment needs of its viewers either through portals such as moneycontrol.com, commod itiescontrol.com, poweryourtrade.com or CNBC-Awaaz events (a bulk of the 145 were investor workshops across small Indian towns and cities). Similarly, Yatra.in or a home shopping network, among others, are now targeting spending needs. Says B. Sai Kumar, CEO, TV18 Media Networks (the commercial and business arm): “All of us have to get out of the viewership-readership trap. At the end, it is all about delivering communities and stickiness.” Combine the Internet, TV and events, and the TV18 Group reaches out to about 70 million people.
The job is to expand that. The missing pieces are print, mobile and radio. Work is on on a print and a mobile strategy. “We will enter radio when the pickings are right,” says Chawla. In many of these deals, the company is opting for a partner, say, Norwest Venture Partners and Reliance Capital for Yatra.in. That keeps risks and capital outlays low. Ditto in entertainment. While Studio 18 plans offices in London and New York, the fact is, TV18 is entering the relatively lower cost part of the entertainment business — production. Most films are usually co-financed with institutions, private equity investors or tourism boards. So, even if Studio 18 makes 10 films a year, its costs in the first year would remain Rs 40 crore-60 crore.
1 | 2
