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Tag: Subhash Chandra

  • ‘Future bright for only right TV news players’ : ZNL CEO Barun Das

    ‘Future bright for only right TV news players’ : ZNL CEO Barun Das

    It’s the festival of lights. And for many the festival of noise courtesy exploding fireworks. In the hope of reducing the number of those belonging to the latter tribe, we, at indiantelevision.com, decided to put a display of firecracker articles for visitors this Diwali. We have had many top journalists reporting, analysing, over the many years of indiantelevision.com’s existence. The articles we are presenting are representative of some of the best writing on the business of cable and satellite television and media for which we have gained renown. Read on to get a flavour and taste of indiantelevision.com over the years from some of its finest writers. And have a happy and safe Diwali!

    (Written By Sibabrata Das in 2012. He continues to write on the cable TV industry)

     

    Subhash Chandra could end his long wait to expand his television news empire in the two main language segments of the business. After slimming Zee News Ltd’s (ZNL) balance sheet by demerging the regional-language entertainment channels from the bouquet in 2010, he is now planning to launch an English general news channel towards the exit quarter of the fiscal.

     

    The main reason behind the timing: digitisation in the four metros by 1 November. ZNL, which runs a clutch of seven news channels, has also grown to a turnover of Rs 3 billion while its Ebitda stands at Rs Rs 533.5 million for FY’12.

     

    Shepherding ZNL’s growth has been Barun Das, the chief executive of the company. His key strategy: staying profitable while being true to the identity of the fourth estate.

     

    Das, thus, took the bold step of cutting ad cut the commercial time of ZNL‘s flagship Hindi news channel, Zee News, by 30 per cent from April while upping the ad rates by 40 per cent. The move followed the change in positioning of Zee News as it shed trivial news content to differentiate itself. His belief: viewership for serious news and ad rates will rise in tandem.

     

    Das could possibly follow the Zee News model for the English news channel. He believes there is space for a less opinionated and more research-driven kind of reportage.

     

    He is optimistic about the future of TV news in India but cautions that “it is bright only for the right players”. He warns news broadcasters of not repeating the mistake of paying unrealistic carriage by masking it under placement fees in a digital environment.

     

    In an interview with Indiantelevision.com’s Sibabrata Das, the ZNL CEO also talks about the growth of regional news markets and the challenges that they face in each language space.

     

    Excerpts:

     

    Q. Will TV news broadcasters have to expand their bouquet to scale up revenues as growth engines of flagship news channels are aging across the sector?
    Yes, flagship channels are maturing in revenues. And it is difficult for established existing channels to post ad revenue growth beyond 10 per cent unless there is a repositioning or reinvention of the brand. Expanding the bouquet and strengthening it is key to a TV news broadcaster’s growth strategy.

     

    Q. Sources say ZNL is planning to launch an English-language general news channel towards the exit quarter of the fiscal. Are you waiting for digitisation to come into force in the four metros before you join the ring?
    We have been planning to launch an English general news channel for some time. The approval process is not yet formalised. Any launch plan will, however, be linked to digitisation as distribution cost will ease to a large extent with there being no capacity constraint on digital cable networks.

     

    Q. So ZNL is now in a position to take the load of a new channel that would consume large capital in the gestation period?
    After demerging the regional general entertainment channels from ZNL in 2010, we decided to consolidate before firming up big expansion plans. We did launch a few regional news channels just before the demerger, but then slowdown started biting the industry. Our focus was to stay profitable rather than build scale. Now that our balance sheet has grown in size and our turnover has touched Rs 3 billion, we are in a position to make heavy investments.

     

    Q. In the past interactions, you have always maintained that the prime business model that you follow is protecting the Ebitda margins. Will the English channel not erode the margins and make ZNL operate in the red for at least some years?
    We want to maintain the 18-20 per cent Ebitda margins. While growing in size, we have a guiding time target to return to those margins.

    ‘There are three-and-a-half English news channels. People may think it is a crowded space to be in, but we see it as an opportunity. With the kind of content that is being currently broadcast, we feel there is a lacuna and void for us to fill the gap and exist profitably. There is space for a less opinionated and more research-driven kind of reportage‘

     

    Q. But wouldn’t you require to make investments of Rs 3 billion over three years and wait for a longer break-even period?
    I wouldn’t like to comment on how much we plan to invest. But yes, the break even period of an English news channel is normally 4-5 years. But there is cash flow coming in before that. So it is not like we have to wait for that long to correct the Ebitda erosion. It is too early, though, for me to give a target date when we have not even launched. But there will be a significant drop in distribution payouts for all TV news broadcasters in a digitised environment. The other channels in the bouquet will also post growth. So it’s not red ink all over.

     

    Q. How much would you expect distribution expenses to fall for news broadcasters in a digitised environment?
    There is nothing set as a rule. But as per the former Trai chairman (JS Sarma), carriage should fall by 90 per cent. We are expecting a formalisation of that in a digitised environment.

     

    Q. That is a figure hard to digest. But when you launch your English channel, it is only the four metros (Delhi, Mumbai, Kolkata and Chennai) that would have digitised if the government sticks to the 31 October sunset deadline for analogue cable. How much of carriage payout is doled out by English news broadcasters to cable networks in these metros?
    It is tough to guess but it should be around 60-70 per cent of their distribution budgets. The focus of the English channels is the metros. Distribution expenses are bound to fall for these channels.

     

    Q. There are five English news channels jostling for a share in the Rs 5.5-6 billion ad market. So will it be a market share fight for you or there is scope for expanding the ad revenue size substantially?
    I don‘t know how you are coming to five English news channels. To my mind, there are three-and-a-half of them.

    People may think it is a crowded space to be in, but we see it as an opportunity. With the kind of content that is being currently broadcast, we feel there is a lacuna and void for us to fill the gap and exist profitably. The thumb rule in media, and even in TV news in every genre, is that the top three channels can be profitable. Even the fourth player can make money if run and managed efficiently.

     

    Q. ZNL weighed the option of consolidating the English TV news market and even looked at swallowing NewsX. Why did the deal fall through during the due diligence process?
    The buyout would have given us a lead time of at least six months as it is a running channel. But we did not find it a viable proposition.

     

    Q. ZNL cut the commercial time of its flagship Hindi news channel, Zee News, by 30 per cent from April while upping the ad rates by 40 per cent. The move followed the change in positioning of Zee News as it shed trivial news content to differentiate itself. So will the English channel follow the Zee News model of serious news?
    Most definitely. However, I can’t talk about the positioning and other specific details now. We will work out those operational details when we have finalised the launch plan. But from a personal point view, I think there is space for a less opinionated and more research-driven kind of reportage. There is scope for significant differentiation to model upon and we hope that will make an impact in the marketplace.

     

    Q. Flagship channel Zee News is not in the top three even after changing its positioning to a serious Hindi general news channel. Now that you have also reduced the ad time, how long do you think it will take to drive in more viewership?
    The success criteria for a media product should not be the viewership rankings. The business of TV news is primarily about profitability while being true to the identity of the fourth estate. I am sure that in both these counts Zee News channel has significant lead over its nearest competitors.

    However, viewership raking numbers is also important which I believe we should be able to improve in the near future. We have also started rolling out content initiatives. The strategy seems to be working for us at this stage, albeit a bit slower than what we had expected.

     

    Q. Will you also scale back on commercial time for your other six channels?
    There is no such plan. The other channels are not under so much of inventory pressure.

     

    Q. Are you revamping Zee Business and isn’t slowdown in the financial services sector going to affect the Hindi business news channel?
    Zee Business is one channel with which we have never stopped our revamping work. I think that our content team will come out with at least one game changing idea in every 15 days. It is possibly the most dynamic news channel.

    There is undoubtedly a pressure on airtime advertising. But we are doing events and sponsorship programmes to tide over this tight situation. Besides, it is a strong subscription-driven channel.

     

    Q. Akash Bangla, the Bengali infotainment channel where ZNL holds 18 per cent stake, is loss-making and you had to provide for Rs 166.7 million. Will ZNL exit from the JV as it runs a successful channel, 24 Ghanta, in that market?
    Akash Bangla channel and our joint venture for 24 Ghanta are two different arrangements. We made strategic investment in Akash Bangla channel in 2009 and given the current circumstances, we decided to provide for that funding. 24 Ghanta is a strong No. 1 Bengali news channel with strong financial performance as well.

    Bengal, after all, is a news hungry market. The advertising size for TV news is around Rs 1.20 billion, and growing.

     

    Q. Isn’t the Marathi TV news market a sharp contrast?
    Unlike the GEC space, the Marathi news market has not yet not grown as per its potential. There is a lot of news consumption happening in English and Hindi. In fact, the Marathi TV news market is half the size of the Bengali market. The potential, though, is very high and it should catch up to the Bengal market sooner or later. We have Zee 24 Taas and are pushing it aggressively.

     

    Q. Won’t the Andhra market be the toughest for ZNL to crack as it is flooded with news channels?
    While it is the largest TV news market in terms of ad revenue, it is a weird market too. There are many politically motivated channels in that market and are, therefore, not run as typical business outfits. Thus, it is a difficult market, but we do have specific plans for that too.

     

    The advertising size is pegged at Rs 1.40 billion, and growing. Zee 24 Ghantalu has not yet steadied in that market but we hope that our positioning as a non politically aligned channel should work .

     

    Q. How is Zee News UP faring?
    It is the No 1 channel there, though it is a small market with combined ad revenues of around Rs 300 million. However, we are on course with our break-even target.
     

    Covering social issues of the area is important. Being close to Delhi, national news channels are an important part of television viewing in that region. So there is need for content differentiation.

     

    Q. When will ZNL’s new channels turn profitable?
    There are only two of them under the new channels category. We expect them to turnaround next year.

     

    Q. What is the future of TV news channels in India?
    Extremely bright, but for the right players.

     

    Q. What do you mean by right players?
    One thing which had ailed news channels to my mind is that we have consistently converted potential revenue sources into our cost heads. That is one of the first mistakes to be classified and corrected if you want to be the right player in the market. As an example, carriage is one of the largest cost heads for TV news operations while subscription is a miniscule part of that.

     

    Q. Aren‘t the news channels themselves to blame for burdening themselves with such high carriage costs?
    Possibly, I tend to agree with that. However, it is a long discussion that we can have later. Bye!

     

    Q. Just one last related question. Won‘t news channels replace carriage with what can be termed as placement fee in an addressable digital environment?
    I wouldn‘t like to answer this question. However, in general at a philosophical level, repetition of any mistake is an offence.

  • ‘The last 20 years belong not to Star but to Zee’ : Star India CEO Peter Mukherjea

    ‘The last 20 years belong not to Star but to Zee’ : Star India CEO Peter Mukherjea

    Peter Mukerjea became the CEO of Star India at a crucial period of satellite television history in India when the relationship between two media moguls Rupert Murdoch and Subhash Chandra had soured.

     

    led Star against India’s homegrown broadcasting business of Chandra and took its flagship Hindi general entertainment channel (GEC) Star Plus to the top in 2000, the position it still enjoys after he quit to try his hands at his own private equity-backed broadcasting venture.

     

    The former Star India CEO admits that the last 20 years of private television broadcasting belong to Subhash Chandra despite himself being at the helm of a significant piece of Indian broadcasting history by successfully leading Star India.

     

    In a tete a tete with Indiantelevision.com’s Sibabrata Das, Mukerjea speaks candidly about how Chandra has outrun Star and Sony and today “runs the most effective broadcasting network, has a thriving cable business and was the first to launch DTH in India”.

     

    Excerpts:

     

    Q. Rupert Murdoch and Subhash Chandra started as allies and formed a joint venture. But this relationship turned stormy by the time you became Star India CEO. How bitter was it?
    The relationship with Zee was initially harmonious. But as News Corp started becoming more grounded in the Indian market and established its capability, Chandra’s views on Star, Murdoch and a multinational broadcaster changed.

     

    That in a way was inevitable to happen. So long as Star was in English and Zee in Hindi, the two companies operated in two ecosystems. The moment Star started Hindi content, Chandra saw it as a violation of the joint venture agreement and there was a major shift in relationship between the two partners.

     

    Q. And the beginning of the pay TV industry in India also helped in Chandra taking a hostile approach?
    Yes, it built a hostile environment. Alongside the personal stresses and strains, pay TV was becoming a reality in India. Murdoch has experienced pay TV in other markets and successfully developed it in his sprawling media empire. Chandra knew this.

     

    Though the two also ran an equal joint venture in Siticable (the cable TV outfit), there was mutual suspicion. The partnership became frigid and fell apart.

     

    I was in the hot seat as CEO. And the only way to progress was for Zee to buy out News Corp’s stakes in the joint ventures – which they eventually did. Having finished with that task, Star got an opportunity to do a total Hindi entertainment channel. Punit Goenka (son of Chandra and now in charge of Zeel and Zee News Ltd ) was a baby then and Chandra was running the company.

     

    Q. Were Chandra and Murdoch bitter even when they met after they split?
    Even when the meetings were pleasant, there was always tension in the background. Both were media moguls in different parts of the world and there was mutual respect. But it was always laced with a fair amount of rivalry.

     

    Q. In your early days as CEO, how did you find Chandra’s aggressive attacks?
    There were lots of questions put in Parliament and Star was accused of repatriating money from India and showing obscene content (Star Movies). Some of these were public petitions but we suspected that they were from our competitors. We, though, had no proof that they were Zee-backed.

     

     

    ‘Lobbying, having deeper pockets, being able to hire better executives – all these don’t matter. In love and war, all is fair. As a piece of history, it is Chandra who started DTH first in India. He has a strong presence in cable and runs the most effective broadcasting network in India. It is only in sports broadcasting that he needs an international partner‘

     

    Q. Murdoch always wanted to be the first to launch direct-to-home (DTH) operations in India. So what made Chandra beat Murdoch in this race?You can say it is because of lobbying or whatever. But the truth is that Chandra launched the first DTH platform in India. And he deserves credit for that.

     

    Q. Even Murdoch is known as a lobby master. Is that how you see this as a neutral proposition?
    Lobbying, having deeper pockets, being able to hire better executives – all these don’t matter. In love and war, all is fair. As a piece of history, it is Chandra who started DTH first in India.

     

    Q. So who would you say ruled the first 20 years of private satellite television broadcasting in India?
    The last 20 years surely belong to Chandra. He runs the most effective broadcasting network in India today. He has created an Indian product and has built a phenomenal international business with that content. He is the first to set up a regional-language network across India. And he has a strong presence in DTH and cable.

     

    Q. You say this even though you used to work in Star and later head it?
    Yes, you have to give credit to the man. He has worked so hard getting back, despite being knocked off in Hindi entertainment business in 2000. That was the time he expanded into different languages. Chandra has helped Zee stay probably as the largest broadcasting business in India today and as a publicly listed company. He had a longer part of the rule in these 20 years.

     

    Zee has outrun everybody else. It’s not Star, not Sony but Zee which is the leader of the pack. And this despite not having the backing of the multinationals which have an advantage in bringing truck loads of money. Look at the impact he has had in Indian society and entertainment culture. Zee has connected deeply with the Indians.

     

    Q. Do you see Chandra becoming a leader in sports broadcasting?
    He has to find an international sports partner. Though India is just cricket, he needs to step out of the base and bet much bigger. If he has higher risk-taking ability in sports and finds an international partner to provide richness in content, Zee will become a strong competitor to Star in sports broadcasting.

     

    Q. But didn’t he bid the highest for the ICC World CUP and also the BCCI rights?
    You can blame that on pedigree. The sad truth is that if you are a decision maker in allocating sports rights, you may go for a lower bid which has greater capability rather than give it to the one whose monetary bid was higher.

     

    Q. Chandra is now stepping into local languages in overseas markets like Middle East and Russia. Is the timing good?
    After building a solid business in India, Chandra is now stepping out to other parts of the world. There are great opportunities in eastern Europe or the entire Soviet Union country base. Parts of America are also a good hunting ground.

     

    I think it is a great strategy. Chandra has built the capability, the resources and the relationships. And it is not a bad time to strike. News Corp is going through a crisis and a lot of management time is wasted on external issues rather than businesses. Zee can capture market share and grow it.

     

    Q. Do you think Zee’s over-the-top (OTT) platform has a fair chance to succeed?
    There are serious rights issues and OTT is not still an open book. The bulk of the revenues in OTT is in the movie business. Chandra will have to wait it out. But it is creditable to pursue OTT and see it as a future growth business. Even in India, OTT will happen and grow alongside TV.

     

    Q. Would you have loved to work as CEO of Zee?
    That is difficult to say and I have never thought of it. I have never spent time with Chandra to understand him as an individual and what his goals are. A lot depends on the personal chemistry that you share with your personal boss. If goals do not match, then that relationship can’t work.

     

    Q. How much does an organisational culture matter?
    The promoter always brings a certain kind of personality into the organisation. But a lot depends on the CEO rather than the owner in influencing that culture; he brings his style and charm to the operations of the company.

     

    There are many critics who say the corporate culture in News Corp is not as wonderful as it is supposed to be. Citing the phone hacking issue, they say the organisational culture is wrong. There is, thus, no fixed solution to corporate culture.

  • WWIL to raise Rs 3.24 bn via warrants to promoter firms

    WWIL to raise Rs 3.24 bn via warrants to promoter firms

    MUMBAI: Siti Cable Network Ltd, formerly Wire and Wireless (India) Ltd, is raising Rs 3.24 billion from promoter firms to cut its debt and fund digitisation.

     

    The company has received shareholders’ approval for issue of warrants convertible into equity shares to overseas promoter group companies Essel International Ltd and Essel Media Ventures Ltd.

     

    The Subhash Chandra-promoted multi-system operator (MSO) has a debt of Rs 4.5 billion.

     

    The funds will also be for acquisition of MSOs, local cable operators (LCOs) and to meet the working capital requirements.

     

    Essel International and Essel Media will invest the amount in tranches with the first tranche being 25 per cent of the issue price on allotment of warrants on a preferential basis. The balance amount will have to be paid by the two promoter companies within 18 months from the allotment of the warrants.

     

    Siti Cable will issue 16,20,00,000 warrants convertible into equivalent number of equity shares at a price of Rs 20 per warrant. The shares of the company closed at Rs 20.55 per share, down 2.38 per cent, at close on Friday on the Bombay Stock Exchange.

     

    The combined shareholding of Essel International and Essel Media will rise to 29.99 per cent after the two companies pay the full price of the warrants and convert them into shares, from the current 4.90 per cent. Simultaneously, the shareholding of other promoters (which includes Bioscope Cinemas Pvt Ltd with 57.95 per cent stake) will after the conversion of the warrants, fall to 43.09 per cent from 58.53 per cent. Essel Media currently has 3.63 per cent stake and Essel International 1.27 per cent.

     

    The total promoter shareholding after conversion of all the warrants will rise to 73.08 per cent from 63.43 per cent now and that of the public will drop to 26.92 per cent from 36.57 per cent.

     

    The price of the warrants is at a premium of 10 per cent over the price arrived at on the basis of SEBI regulations.

     

    The company has filed for approval of the warrant issue with the Foreign Investment Promotion Board (FIPB) as the two promoter group companies are registered overseas.

     

    The name of the company was changed to Siti Cable Network Ltd following a fresh certificate of registration based on a special resolution passed by the shareholders on 30 August 2012.

     

  • Zee News Ltd Q3 net up 61% to Rs 99.7 m

    Zee News Ltd Q3 net up 61% to Rs 99.7 m

    MUMBAI: Zee News Ltd (ZNL) has posted a fiscal third-quarter consolidated net profit of Rs 99.7 million (after minority interest), even as its advertising revenue has degrown marginally compared to the year-ago period.

    Advertising revenue dipped 4.2 per cent as the effect of festival season overlapped with previous quarter. Subscription income, however, grew 3.7 per cent growth.

    ZNL said that the real growth in subscription revenues was higher as they were booked net of expenses.
    “This change was necessitated due to the formation of Media Pro, a joint venture, which pays subscription revenues to Zee, net of expenses. Hence, the numbers are not comparable to those of corresponding period last year,” it said.

    The company posted a revenue of Rs 782.74 million for the three-months ended 31 December, up 5.1 per cent.

    ZNL’s Ebitda margin was at 24.6 per cent, compared to 18.1 per cent in the corresponding quarter of the previous fiscal. This includes the losses from the new business. The margins stand at 33.3 per cent for the existing businesses.

    ZNL had posted a net profit of 618.4 million for the third-quarter of FY’11 on a revenue of Rs 744.44 million.

    The company, which operates the news channels of the Zee brand, said that the corresponding quarter financials are not comparable as it discontinued the Tamil channel Zee Tamil on 31 March last year.

    ZNL chairman Subhash Chandra said, “The Indian economy has been facing headwinds of increased inflation, interest rate hikes and bearish markets forcing the GDP growth forecast to pare down to 7 per cent or so. My faith in the Indian economy for the long term remains intact. While there are as many views of impending slowdown in the economy as there are of bounce back, I remain cautiously optimistic in the short run that the situation is likely to improve in the next few quarters. The Company continues with its focus on innovative growth and I have full confidence that we will be able to come out stronger than most in the current year, in line with the trend of our past performances.”

    He added, “As has been pending for a few years, the media industry has begun to consolidate. This is obvious from the various deals being announced over the past few months. We see this consolidation as a confident step forward towards making this industry more profitable.”

    ZNL MD Punit Goenka added, “While the investment related policy decisions have been under pressure due to current political environment, Parliament’s clearing of cable digitisation signals the establishment’s commitment to make the media industry more efficient. The ad industry, meanwhile, has been hit as the advertisers have increasingly become choosy about their spends. The euphoria of a sustained industry growth which was prevalent at the beginning of the year has been dampened considerably. However, ZNL has shown exceptional operational efficiencies and posted strong financial results for the quarter. Going forward, we hope to maintain the edge in our performance.”

    Ebitda for the quarter under review stood at Rs 192.7 million and profit before tax at Rs 162.4 million. In the previous year quarter, Ebitda was Rs 134.5 million and PBT Rs 103.6 million.

    ZNL’s advertising revenue stood at Rs 518.8 mn for the quarter ended 31 December, as compared to Rs 541.7 million in the year ago period. Subscription revenue for the quarter was at Rs 192.7 million, which constituted 24.6 per cent of the total revenue.

    The expenses of the company stood at Rs 590 million, slightly lower as compared to the year-ago period when the expenses were Rs 609.9 billion.

    ZNL posted Ebitda profit of Rs 249.8 million (225.2 million in the year ago period) from its existing business (Zee News, Zee Business, Zee 24 Taas, Zee Punjabi and 24 Ghanta). The company’s Ebitda loss from new business has come down to Rs 57.1 million (from a loss of Rs 90.7 million in the year ago period) from its new business (Zee 24 Gantalu and Zee News UP).

    ZNL CEO Barun Das said, “We had sensed the slowdown in the industry by the beginning of the last quarter and made adjustments in our operations accordingly. Our top lines and strict vigil on our costs has resulted in our margins being strong at 24.6% despite slowdown, which is likely to be an exception. With the Media Pro initiative settling down, our subscription revenue has shown growth towards the end of the quarter and it is a trend that is likely to continue. We remain confident regarding our ability to grow in the current financial year.”

  • ‘We will keep aside Rs 10 bn for organic or inorganic growth opportunities’ : Zeel MD and CEO Punit Goenka

    ‘We will keep aside Rs 10 bn for organic or inorganic growth opportunities’ : Zeel MD and CEO Punit Goenka

    Punit Goenka is in control of the media empire that patriarch Subhash Chandra built assiduously over almost two decades. He is quick to take decisions, is unruffled by temporary ups and downs, and believes in continuity.

     

    The elder son of Chandra digs deep into the Zee culture, has his own ways of finding solutions and does not hesitate to bet on sports as he takes up the responsibility of shaping Zee‘s broadcasting business.

     

    “I have learnt a lot from my dad. He is no more hands-on. See, he has not called me for over an hour (during the interview). I have my own style,” says Goenka, a grin on his face.

     

    Soft-spoken and shy, Goenka is a people‘s man. He backs his senior team, even when certain decisions do not work in the short run.

     

    In an environment of raunchy reality TV shows, he believes in clean content and explains that Zee TV, the flagship channel, is designed for family viewing.

     

    Goenka crafts strategies that focus on profitability; he hardly plays to the gallery.

     

    Under his leadership, Zee ended its 12-year-old rivalry with Star to float a joint venture distribution company named Media Pro Enterprise India. The aim of the JV: to pave the path for consolidation and hasten the need for digitisation in the sector.

     

    In an interview with Indiantelevision.com‘s Sibabrata Das, Zee Entertainment Enterprises Ltd managing director and CEO Goenka talks about the lack of opportunity in the marketplace to make the right purchase, the need to bet on sports broadcasting and to stick to profitability in a high-cost environment.

     

    Excerpts:

    Zeel is sitting on a cash pile of Rs 14 billion (as of 30 June 2011). Are you looking at acquisition opportunities?
    There is nothing that is available today that is fitting our criteria; we see no opportunity in the marketplace for us to make the right purchase. Even in the southern states, we are taking the organic route and patiently building our businesses there.

     

    As a company philosophy, we have decided to keep aside a cash of Rs 10 billion at any stage for organic or inorganic growth opportunities.

    But isn‘t this the right time for consolidation in the industry?
    Every two years we think the time has arrived for the industry to consolidate. But then something happens and there are more launches. Last time, it was the private equity firms; before that, we had the international strategic investors.

     

    However, for the benefit of the industry, consolidation is the answer. The sector is sized at Rs 300 billion and there are 500 television channels in the country earning an average ARPU (average revenue per user) of $3. That is why we have become an unprofitable industry.

    In a drive to consolidate and digitise the industry, Star India and Zee Group recently ended their 12-year divorce to create a distribution company. Has the joint venture been able to shake up the pay-TV market?
    It has been three months since the merged entity got formally rolling (on 1 July). Although we have started billing as a joint entity, there are old individual contracts that have yet to run their full cycle. We have over 5000 contracts with cable TV networks individually. So the impact will be felt when we start inking new contracts. There will be no major revenue upside in the short run. The deal will have a deeper impact after 18 months of implementation.

    How deep in terms of percentage growth?
    Both Star India and Zeel are seeing single-digit growth in subscription revenue from cable TV networks. Our domestic subscription income from cable rose 16 per cent (Rs 3.88 billion) in FY’11, but that included sports. By pooling together the resources of both the partners, we hope to post strong growth and address various anomalies of the analogue market including piracy.

     

    A large part of the deal plays out in analogue cable. In case of DTH, both of us are in any case growing independently.

    ‘Given our growth trajectory and contracts, the sports business should break-even in two years. In the worst case scenario, we should be able to turn it around by the middle of FY‘14‘

    How painful has been the integration process?
    We have had to let go 20-25 per cent of the combined workforce. Some of them, however, have been absorbed inside the network.

    Media analysts say Zeel’s share price will get a boost if the sports broadcasting business is hived off and capital raised by offloading equity. Has any investment bank got the mandate to hunt for an investor for the sports business?
    We have no capital-raising plans. Zeel will continue to fund the sports business till it turns around. We have taken a long term call and sports broadcasting is a strategic business for us.

    When do you expect the sports business to turn around?
    Given our growth trajectory and contracts, the sports business should break-even in two years. In the worst case scenario, we should be able to turn it around by the middle of FY’14.

    Zeel‘s sports losses for FY‘11 stood at Rs 2.08 billion on a revenue of Rs 4.4 billion (excluding a one-time revenue gain of Rs 700 million as one-time fee for the pre-mature termination of rights for AIFF). So what will drive this to profitability?
    Subscription revenue will drive the business to profitability while advertising will be event-led.

     

    Ad revenue is heavily dependent on cricket. And within that segment, it is India cricket. While advertising revenue is cyclical, subscription income is consistent throughout the year.

    Zeel has bagged the eight-year Cricket South Africa (CSA) television rights for $180 million. Considering that the earlier five-year rights went for $75 million, isn’t the new price tag on the higher side?
    The price is in our comfort zone. It is an inflationary rise and has been one of the most valuable boards for us. By having one of the strategic boards under our belt for a longer term, we are under less pressure.

    We get to learn from sources that the Zimbabwe board rights have been retained for $20 million (earlier it had gone for $6 million for four years). But Zeel will be able to give its sports business maximum firepower when it is able to retain the telecast rights for the other three boards – Sri Lanka, Pakistan and West Indies. So will you bid aggressively?
    We have not yet signed with the Zimbabwe board, so I can’t comment on that. The other three boards are up for renewal during FY’12 and FY’13. We have done our calculations and will not bid recklessly for these rights. There are boards outside these which are also coming up for grabs.
    When is the golf channel getting launched ?
    We are awaiting government approval. We are ready to launch the golf channel within 60 days of obtaining the regulatory clearances.

    Will Comcast be a partner for the channel?
    Earlier Taj Television (which Zeel later acquired) had some sort of an agreement with Comcast for the golf channel. We have decided that we will do it ourselves and completely own it.

    When are you launching a full-fledged HD channel in sports?
    We are launching Ten Sports in HD format later this month. This will be a full-fledged HD channel and will have varied content from the other channels. So we will have four sports channels (Ten Cricket, Ten Action+ and Ten Sports already exist) by this month-end. We have acquired a slew of properties across different sports such as football and tennis. This has enabled us to launch three different channels and post strong subscription growth.
    Are there other HD launches planned?
    Zee TV, Zee Cinema and Zee Studio will be launched in HD format soon.

    Zeel has posted a measly 0.5 per cent ad growth in the fiscal first-quarter. Do you see the market improving?
    On the ad front, we have had a flat first quarter and do not expect to post double-digit growth this fiscal. But we will have a high single-digit growth.

     

    Subscription revenues will continue to have a similar growth trajectory, both on analogue cable and DTH. Our international revenues should stay flat.

    International subscription income actually de-grew two per cent in FY’11. Do you have any plans to fix the international business?
    The problem is with UK and Europe; the wobbly economy there is affecting our subscriber numbers. We have launched a hybrid channel, Zee Café, in the UK to arrest our degrowth in that market. The content, aimed at the South Asian diaspora, includes cricket and regional fiction shows sub-titled in English.

     

    In the other markets like the US, We are seeing growth.

    Is your localisation strategy working?
    Zee Aflam has seen reasonable growth and has reached break-even status within three years of operations. But operating in free-to-air markets (FTA) means the channel can grow only at limited speed.

     

    The other experiment we have carried out is in Russia. The audiences there love Bollywood, soaps and dramas. However, it is early days yet.

     

    We are also planning to launch in 3-4 other markets.

    Zee TV has slipped to fourth position as Sony Entertainment Television rejuvenated on the back of its big-ticket game show Kaun Banega Crorepati (KBC). Will you change the programming strategy and bring in celebrity-backed reality shows?
    There has been a streak of bad launches but it has not convinced us enough to believe that we need to change our content strategy. We are relaunching these slots.

     

    A large part of a particular channel‘s growth still comes from one show. A reality show may bring in spikes but we will wait to see what happens after that concludes. We will not take to celebrity-based reality shows unless we feel that we have a concept that needs to engage them. We are happy with our homegrown formats.

     

    Our prime competitor is Star. And as a network, we are in close competition.

    ‘We will be increasing original hours of content on Zee TV from 28 hours to 33 hours per week. There has been some delay in that because we have had a few bad launches and we want to first fix those slots. We have also had a slowdown in the ad market‘
    Will you increase the programming hours of Zee TV as you fight back to regain market share?
    We will be increasing our original hours of content from 28 to 33 hours per week. There has been some delay in that because we have had a few bad launches and we want to first fix those slots. We have also had a slowdown in the advertising market.

    Zee has kept away from purchasing big movie titles. Will that affect Zee Cinema when Viacom18 launches its movie channel?
    With movie acquisition costs touching the roof, we have reduced the number of big title purchases. But we have maintained our 30 per cent share in the genre due to the extensive reach the channel enjoys; we have also wisely worked on our library content. We control 2800 movies.

     

    Big titles give rating spikes but they are first run on GECs rather than on movie channels. The Hindi movie channel genre has become cluttered and unprofitable due to high acquisition costs. But we have stayed profitable.
    Star Gold has reduced ad inventory on the channel by 33 per cent and is showing six fresh movies a day. Will you follow suit?
    Such a move has to be compensated with an increase in ad rates. In the current market scenario, this may not be easy. But we are working on reducing the ad time on the channel. And don’t forget that Zee Cinema was the first channel to show five fresh movies a day.
    Sun TV is under attack from the Jayalalithaa government. With the launch of the state-owned Arasu cable, will you make aggressive investments in the Tamil Nadu market?
    With Zee Tamizh, we have a foot in that market. Arasu has got presence in some pockets of the state. It is still early days and we have to wait and see how the market gets impacted. But if we get more distribution, we will get more aggressive.

    Isn’t Zee under attack from Star in the Bengali and Marathi regional language markets?
    The growth of Star has only expanded the market. In the southern region, we have fortified our position in Telugu and Kannada. Going beyond the Marathi and Bengali and the southern belt, there is no distinct language difference and Hindi still rules. Bhojpuri, for instance, has not met with much success yet. The Punjabi market can see growth once TAM (the television ratings agency) starts reporting Punjab as an independent market. Now it is clubbed with Haryana, Chandigarh and Himachal Pradesh; there is no clear weightage in that market.

     

    Regional news, on the other hand, is easily doable.

    Isn’t the news genre too cluttered?
    The industry can support 6-7 national channels. With so much of fragmentation, the way forward is serious news.

     

    There should be more stringent norms in this genre as entertainment is also passing as news. We have positioned ourselves as a serious news channel and are seeing decent growth. Unlike other players, we also have a strong pay revenue from our news business.

     

    It is the regional markets that are getting cluttered. The Andhra market, for instance, has seen too many launches. Some national news broadcasters are also having issue over cost structures.
    Will you launch an English general news and business news channel or you feel the balance sheet of Zee News Ltd has to further strengthen before you go in for these high-cost launches?
    The balance sheet can support these launches. But strategically, we will focus on Hindi and regional news channels. Yes, we have two critical genres left. But we will first fill up the regional space.
    Are you looking at expanding through the franchise route?
    We will take the franchise route only if editorial content is with us. After all, that is what impacts our brand.
    When you started, you were part of the Agrani satellite project. Do you still nurture the ambition of owning a satellite?
    Agrani was a good project but the policies were not supportive. Banks also had no clue how satellite funding works. Owning a satellite doesn’t make sense now; it is more feasible to lease transponder space on a satellite.
  • Zee News Ltd Q3 net profit up as ad revenue surges

    Zee News Ltd Q3 net profit up as ad revenue surges

    MUMBAI: Zee News Ltd (ZNL) has posted a fiscal third-quarter consolidated net profit of Rs 61.84 million (after minority interest), gaining from the festive season and a better all-round performance coming from its old and new channels.

    Advertising revenue has seen a healthy growth while subscription has seen a slower pace in the quarter as it has moved into a fixed fee regime with DTH operator Tata Sky. The company posted a revenue of Rs 744.44 million for the three-months ended December.

    On a more positive note, ZNL has a 18 per cent margin, including the losses from the newly launched channels. The margins stand at 33 per cent for the existing businesses.

    ZNL had posted a net profit of 191.48 million for the third-quarter of FY‘10 on a revenue of Rs 1.71 billion.

    However, the company, which operates the news channels of the Zee brand, said that the corresponding quarter financials are not comparable as there were six regional general entertainment channels at that time under ZNL, which were demerged from the company with effect from 1 January 2010.

    ZNL has posted a strong sequential growth. For the fiscal second-quarter, the company reported a net profit of Rs 2.24 million on a revenue of Rs 615.87 million.

    ZNL chairman Subhash Chandra said, “The news genre on television is marked by intense competition in India, unlike any other country in the world. Most news channels in India are incurring losses. Our objective is to create a focused news organization which can create value for the shareholders in the long term. I am happy that Zee News Limited, not only differentiates itself by delivering unbiased, serious and credible news to its viewers, but does it profitably.”

    He added, “Our company continues to outperform competition due to its quality of manpower, which is kept motivated with several training schemes to build leadership in the organisation. We aim to create a news powerhouse which is close to the action and can reach out to every viewer in his/her preferred language and I am happy to say that we are progressing very well toward the goal.”

    ZNL MD Punit Goenka added, “Zee News Limited has shown significant growth in profitability in this quarter. Evidently, the editorial and business decisions taken by the company in the recent past are reaping rich dividends. The consistent emphasis on serious news has made Zee News Limited not just the largest, but also the No. 1 news network of India. The leadership position of the network has in turn helped augment the company’s financial position thus creating a win-win situation. Business performance during the slowdown and beyond shows great potential of growth from here. I am hopeful of continued improvement in business performance as we start are planning for the next fiscal.”

    Ebitda for the quarter under review stood at Rs 134.5 million and profit before tax at Rs 103.6 million In the previous quarter, Ebitda was Rs 70.2 million and PBT Rs 32.1 million.

    ZNL‘s advertising revenue grew stood at Rs 541.7 million, as compared to Rs 407.2 million in in trailing quarter (for year ago period figures see table). Subscription revenue for the quarter was Rs 185.9 million, which constituted 25 per cent of the total revenue.
      
           
      Though, the company has seen a surge in ad revenue (sequentially), the subscription revenue has fallen as compared to Rs 194.1 million in previous quarter (31.5 per cent of the total revenue).

    The expenses of the company stood at Rs 609.9 million, slightly higher on a sequential basis (Rs 545.7 million). In the year ago period, the expenses were Rs 1.34 billion.

    ZNL posted Ebitda profit of Rs 225.2 million (186.8 million in previous quarter) from its existing business (Zee News, Zee Business, Zee 24 Taas, Zee Punjabi and 24 Ghanta). The company, however, suffered Ebitda loss of Rs 90.7 million (from loss of Rs 116.5 million) from its new business (Zee Tamizh, Zee 24 Ghantalu and Zee News UP).

    ZNL CEO Barun Das said, “ZNL has shown that pragmatic and creative approach works best in the news market – national and vernacular. EBITDA margin of 18 per cent is quite healthy considering that there are three new channels which are still on way to break even; whereas the EBITDA of Rs 225.2 million and margin of 32.6 per cent for the group of existing channels demonstrates the quality of operational efficiency. In the context, the all-round performance of our bouquet of channels would continue to be our critical success factor. Our focus on “news that matters” has established our credentials as a network.”
     

  • Zee News Ltd Q1 net at Rs 33 mn on revenue of Rs 648.5 mn

    Zee News Ltd Q1 net at Rs 33 mn on revenue of Rs 648.5 mn

    MUMBAI: Zee News Ltd (ZNL) has posted a fiscal first-quarter consolidated net profit of Rs 33 million on a revenue of Rs 648.5 million.

    The comparing quarter a year ago had six regional general entertainment channels which powered a net profit of Rs 119.1 million for the three months to 30 June 2009. Since 1 January 2010 the regional GECs have moved to group company Zee Entertainment Enterprises Ltd.

    Ebitda for the quarter under review stood at Rs 81.2 million and profit before tax at Rs 55.3 million. 

    ZNL’s advertising revenue grew 14.5 per cent, a satisfying growth considering that the year-ago quarter benefitted from political ads for the general elections.

    The expenses of the company stood at Rs 567.3 million

    ZNL posted Ebitda profit of Rs 208.3 million from its existing business (Zee News, Zee Business, Zee 24 Taas, Zee Punjabi and 24 Ghanta). The company, however, suffered Ebitda loss of Rs 127.1 million from its new business (Zee Tamizh, Zee 24 Ghantalu and Zee News UP).

    ZNL chairman Subhash Chandra said, “Continuing its sound performance in FY 09-10, ZNL has started FY 10-11 with a great zeal. Immediately after de-merger the company’s aim was to consolidate its existing operations. Our focus on innovation, efficiency enhancement, and further rationalisation of cost has enhanced our competitive advantage and has resulted in such encouraging performance.”

    On the first quarter numbers, Chandra added, “ZNL has out-performed the industry in Q1 of FY 2010-11.The advertising revenue of the company grew by 14.5 per cent, which is quite creditable given the fact that last year during the same period news genre enjoyed an unprecedented revenue growth owning to general elections of the Country. Aggressive business strategy, coupled with operational efficiency has enabled us achieve a 12.5 per cent Ebitda margin for the company despite the losses accruing from the three newly launched channels. In a cluttered television news market where profitability is a prerogative of only a select few, ZNL’s performance certainly stands apart.”

  • Punit Goenka named Zee News MD

    Punit Goenka named Zee News MD

    MUMBAI: Zee News Ltd (ZNL) has appointed Punit Goenka as managing director of the company.

    Goenka has replaced Laxmi N Goel, whose resignation was accepted by the ZNL board. Goel will, however, continue as a non-executive director on the board.

    The change is effective 5 July. Goel will continue to drive Essel Group’s real estate business.

    Goenka, the eldest son of Subhash Chandra, is also MD and CEO of Zee Entertainment Enterprises Ltd (Zeel). He was designated as MD of Zeel starting 1 January.

    ZNL owns and operates the news channels of Zee network.

  • ”We have created a basket of Marathi channels to dominate our position in this market’ : Nikhil Sane – Zee Marathi and Zee Talkies business head

    ”We have created a basket of Marathi channels to dominate our position in this market’ : Nikhil Sane – Zee Marathi and Zee Talkies business head

    Subhash Chandra realised as early as 1999 that the next wave of Zee network’s growth would be in the regional broadcasting space. Up came a clutch of channels including Zee Marathi, Zee Bangla, Zee Punjabi and Zee Gujarati.

     

    Chandra has cemented his leadership position in the Marathi market with the launch of a news channel, Zee 24 Taas, and a movie channel, Zee Talkies.

     

    Following the vertical integration model, Zee has also got into the Marathi film production business.

     

    Starting as the first private Marathi channel on 15 August 1999, the initial years were slow. With the launch of ETV Marathi in 2001, Zee Marathi, in fact, even lost its leadership position. But it was in 2005 that things paced up as Zee Marathi scaled up its distribution and programming. Reality content through shows like Saregamapa, Eka Peksha Ek and Hasya Samrat gave the channel a big boost in ratings.

     

    In an interview with Indiantelevision.com’s Gaurav Laghate, Zee Marathi and Zee Talkies business head Nikhil Sane talks about the 10-year journey of Zee Marathi.

    Excerpts:

    Zee launched its Marathi general entertainment channel on 15 August 1999. How has the 10-year journey been?
    Everyone was skeptical at that time about Zee’s decision to launch a Marathi channel. In Maharashtra, Hindi channels – Zee TV, Sony Entertainment TV and Star Plus – were dominating television viewership. The only available Marathi content then was on Doordarshan – that also for four hours. So launching the channel way back in 1999 was a big, big step.

    But wasn’t it a big advantage to be the first private Marathi channel?
    In 1999, the Marathi TV industry was non-existent. So you can say that we created the Marathi TV viewing audience. What we got was a lot of talent. Maharashtra has produced ace directors, writers and actors, who supported us in this endeavour passionately. And we offered them a robust platform. So, Zee Marathi played a pivotal role in shaping the Marathi entertainment industry.

    What was the programming mix for the channel then?
    As I said earlier, there was no scarcity of talent, but it was scattered. With our launch, people from Marathi theatre and cinema joined us. That time we were experimenting a lot. We were the first channel to launch a daily show, Abhaalmaya, at 8.30 pm. The competition was against Amaanat on Zee TV, Heena on Sony TV and Saas on Star Plus.

     

    We got a humongous response for the show. Soon after, we launched the afternoon slot with Maansi, which again got a good response from viewers.

     

    Step by step, we increased our prime time, which at present is from 6 pm till 11 pm. We launched weekend programming, reality shows, events and even entered into film production business.

     

    Meanwhile, we launched the news channel (Zee 24 Taas) and the Marathi movie channel (Zee Talkies) to create a basket of channels and dominate our position in this market.

    When did you extend your prime time?
    We had a prime time from 7.30 to 10 pm till 2006. We extended this to a four-hour band starting 7 pm. We also had hourly news bulletin, which were very popular. Later, as we launched our own news channel, we shifted news from Zee Marathi.

     

    Earlier we used to air weekend movies on Zee Marathi. But as we launched Zee Talkies, the movies were shifted and we started daily soaps from Monday-Saturday.

    ‘It was in 2005 really when Zee Marathi scaled up its production, distribution and programming’

    You said initial years were experimental. So when did you manage to strike the right formula for growth?
    We launched some very good shows in our first five years. But it was in 2005 really when Zee Marathi scaled up its production, distribution and programming. It was like a channel revamp.

     

    We created reality shows like Saregamapa (singing talent hunt), Eka Peksha Ek (dance reality show) and Hasya Samrat (comic reality show). Recently, we launched Hapta Band, a quiz-based show.

     

    Also, we organised grand scale events like finale of reality shows, Zee Gaurav Puraskaar (awards for films and theatres) and Zee Marathi awards (viewer’s choice awards for Zee Marathi shows).

    What were the milestones in programming?
    We experimented with different genres. Our comedy show Hasa Chakatful saw performances from the best performers of the industry. Shriyut Gangadhar Tipre was also one hugely popular comic fiction.

     

    Among fictions, Abhaalmaya, Avantika, Asambhav, Vaadalwaat and recently launched Kulvadhu got us good viewership. Our reality shows and events also are some of the most popular properties on Marathi television.

     

    Apart from these, we had shows devoted to literature (Pimpalpaan), poets and musicians (Nakshatranche Dene) and horror (Gahire Paani).

    ETV, which launched in July 2001, emerged as a strong competitor and even surged ahead of Zee Marathi at one stage. What were the reasons?
    After a fabulous three-year ride, we had a tough patch for two years. ETV Marathi launched with a very strong distribution and this impacted us. We were popular in towns, though. But after 2005, we focused on every aspect of the business.
    Now there is new competition from Star Pravah. While other channels like Mi Marathi and Saam Marathi have launched, they haven’t really been able to shake things up. So do you see a three-player fight in the Marathi GEC landscape?
    If you see our current ratings in Maharashtra, we are only below Zee TV while outnumbering Star Plus, Colors and other national GECs. That is what our competition is. Today, Hindi viewership amounts to 26 per cent while Marathi is 20 per cent in the state. We have a lot of space to grow here. Also, competition gives advantage to viewers ultimately as they get variety. And it grows the market.

    You talked about entering into the film production business and have so far released six movies. How are you scaling this up?
    After establishing Zee Marathi, the natural progression was to launch a movie channel. So we launched Zee Talkies. The next logical step was to enter into the film production business ourselves.

     

    We have, in a big way, led the revival of the Marathi cinema industry. So far, our movies have done good business.

     

    We have released Saade Maade Teen, followed By De Dhakka, Galgale Nighale, Dudgus, Ek Dav Dhobi Pachaad and Gallit Gondal Dillit Mujra.

     

    The next movie we are ready with is Hai Kai Nai Kai. We have signed five directors for three films each.

    So how do you see the Marathi broadcasting space evolving?
    The time ahead is surely challenging. We have to be open to change and need to continuously evolve to stay ahead of competition. And by competition I do not mean Marathi or even Hindi GEC channels. The main competition is with new media. With so much available on different platforms, attracting viewers to TV will be a challenge.

     

    From now on, the biggest question to ask ourselves would be ‘what next’. Hindi GECs will survive as their base HSM (Hindi speaking market) is very big. Innovation is the only way to keep ahead in this Marathi TV broadcasting space.

  • Zee News Ltd Q4 revenue up 47 % at Rs 690 million

    MUMBAI: Zee News Limited (ZNL) has posted a standalone fourth quarter revenue of Rs 690.3 million, representing a 47 per cent growth as compared to the proforma numbers for the corresponding quarter last fiscal.

    The operating profit for the quarter stood at Rs 8.5 million, after expensing of initial investments in new businesses, amounting to Rs 154 million. The corresponding quarter last fiscal, as per proforma numbers, showed a loss of Rs 44 million.

    Profit before tax for the quarter ended 31 March 2007 was Rs 21.2 million while net profit was Rs 13.1 million, the company stated in a release.

    Consolidated operating revenues for the fourth quarter stood at Rs 710.6 million while consolidated operating loss was Rs 9.2 million.

    For the fiscal ended 31 March 2007, ZNL’s revenues grew 41.5 per cent to Rs 2.36 billion.

    Commenting on the results Zee Group chairman Subhash Chandra said, “ZNL has shown robust advertising and subscription growths of 37 per cent and 45 per cent respectively during the quarter While the existing businesses of the company have sustained the growth momentum, the new businesses are also showing encouraging viewership trends. This should stand us in good stead for the future. Digitalization should also enable our channels to garner good subscription revenues in future.”

    Added Zee News Ltd CEO Harish Doraiswamy, “We are pleased to report that excluding new business losses, our operating margins have improved from 18 per cent last year to 30 per cent this year.”

    Ad revenue grows 37 per cent

    ZNL’s advertising revenues increased to Rs 467.2 million, a 37 per cent growth as compared to the corresponding fourth quarter proforma numbers of last fiscal. “This growth in advertising revenues was a result of better yield and inventory utilization,” the company said.

    Subscription revenues grew 45 per cent at Rs 146.8 million. “Direct-to-home (DTH) services contributed significantly to the growth in subscription revenues,” Zee News said.