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BAG Films and Media founder-promoter Anurradha Prasad has put up a mighty fight. Not many would have dared take her seat a year back as she had to fend for her two newly-launched channels amid an epic global economic downturn.
News24 was fighting for space in a crowded Hindi news TV market. The top tier – Aaj Tak, India TV, Star News and Zee TV – had settled. Just down below were IBN7 and NDTV India, both big brands and threatening to pace up.
Prasad promised hard news, a gap that wasn‘t being serviced too well. But down the road she realised that news consumption was changing. Riding the cyclic wave was important. So she changed gears without compromising the basic ethics of journalism. “We have to bring in the interesting element. India is a youth population. We have to show news that appeals to them,” she says.
News24‘s market share improved, inching close to seven per cent. E24, the Bollywood news channel, was also gaining currency. While the slowdown allowed her to trim costs, revenues also started looking up. The net result: bringing down the broadcasting business‘ operating loss to Rs 122.36 million during the first nine months of FY‘10.
The struggle, though, is far from over. The broadcasting business is still bleeding while the TV content production, which used to rake in revenues of around Rs 600 million, is almost blank.
In an interview with Indiantelevision.com‘s Sibabrata Das & Gaurav Laghate, Prasad says the broadcasting business will operationally break even this fiscal and the focus will be to revive the content production business.
Excerpts:
Bag Films recently raised $17.4 million. Is the funding complete with that or you will need more capital?
We have raised Rs 804.5 million ($17.4 million) through a GDR issue to fund our existing broadcasting business. The board had taken an approval to raise $30 million over two years. We will need new capital when we decide to launch two more channels.
But aren‘t the two existing channels bleeding while the TV content production business is almost a blank?
Yes, we are still posting losses, but they are much less than the earlier fiscal. The two channels will be operationally breaking even this fiscal. We will be raising our ad rates by at least 20 per cent while we have brought down the costs.
Won‘t there be a shortfall even then as your cash burn rate is about Rs 700 million?
For News24, the cash burn is around Rs 600 million, while our revenue at this level is Rs 400-450 million. We are starting with a hike in ad rates in the first quarter of the fiscal, but expect to post more growth during the course of the year. We will also be tapping more clients. As for E24, we are already very close to being in a break even state.
When you announced your broadcast plans, you said you needed a funding of Rs 4 billion. How much have you completed so far?
We had raised Rs 2.4 billion from India Bulls promoter Sameer Gehlaut, High Growth Distributors and Fidelity. Add to this the Rs 804.5 million we have just raised. There is still a shortfall but the original plan included the launch of four channels. We have put the launch of two channels on hold.
Recession hit the industry just as you made an entry into the broadcasting space. Were your plans upset in a major way?
We deferred the launch of our two channels. Our revenue projections also went for a toss. But the slowdown actually acted as a blessing in disguise. We could rationalise our costs very early into our expansion into the TV broadcasting space. We transferred our E24 operations from Mumbai to Delhi. This was a bold step as we had to take the risk of running a Bollywood news channel from Delhi, but we succeeded. We also initiated multitasking at the junior level.
‘The two channels will be operationally breaking even this fiscal. We will be raising our ad rates by at least 20% while we have brought down the costs by 30% on a monthly basis‘
Did this also mean trimming manpower?
Our peak staff strength came down from 900 to 650 people. But I did not make any compromise on the editorial and we did not ask anyone to leave. By restructuring operations, we brought down our costs by 30 per cent on a monthly basis. And now with the market improving, we see ourselves ready for growth.
News24 has managed to improve its market share in the Hindi news channel space to around 7 per cent. Just before launch, you had said that you would focus on serious news. Have you had to dilute from your original position to gain market share?
We have had to change along with the tastes of our viewers. So we brought in the “interesting” factor in news without compromising on our journalistic ethics. For example, we aired a story on prostitutes dancing on a cremation ground in Varanasi. We wouldn‘t have shown this two years back. Visually, it was a great story. We must remember that India has a dominant youth population and they consume news so differently. And why blame them? It is a twitter age.
So is news getting redefined?
Let‘s face it. A generational shift is happening in the TV news space. And there are cyclic waves of viewing preferences. After the Mumbai terror attack, all channels started ‘Pakistan bashing‘ while the ‘bhoot-pret‘ (ghosts and demons) element came down. And audiences loved that.
Indians love experimentation in every aspect. I also believe that though English has become the link language, Indians typically think in Hindi. Which is why some of the English news channels are also changing.
In such a cluttered Hindi TV news market, how will News24 wing its way up?
Our focus this year will be on distribution. We feel we have a strong chance of going up the ratings ladder among the second tier of Hindi news channels once this is taken care of. I firmly believe that chaos leads to creation.
We see a high growth and revenue potential for News24 as there are still over 200 advertisers to tap. And the effective rate of advertising is still the lowest in the broadcasting sector. We believe the market will expand to accommodate more players.
Also, the sporting events like Commonwealth Games, T20 World Cup and ODI World Cup will generate a lot of excitement, which will help the news channels.
Do you have plans to launch your channels in international markets?
We have international expansion plans for our broadcasting business. We plan to launch both the channels in the Middle East by the first quarter of this fiscal.
We already give the feed of E24 to DirecTV in USA for two hours daily.
How do you plan to revive your TV content production business that was raking in about Rs 600 million?
Since our broadcasting business is under control, we will bring back our focus on the TV content business. We understand that side of the business very well. We will make soaps as they are the staple diet of all Hindi general entertainment channels. Non-fiction content is expensive and the RoI (return on investments) is not good; broadcasters are realising this.
On the FM radio front, will you bid for phase III once the government comes out with a policy for it?
We have 10 operational radio stations at this stage. We will take a call on bidding for more stations once there is clarity on regulation. There are still question marks on royalty and permission of news on radio. Since we are already in TV news, we believe permission of news on radio will give us a definite push and advantage.
Are we going to see Bag Films being active on the movie production front this fiscal?
We will wait for further price corrections. Recent movies like LSD (Love, Sex aur Dhoka) are good business models.
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