strategy seemed to work as growth engines of flagship news channels
are aging across the sector due to various reasons including commodisation,
too much clutter and choked bandwidth on analogue cable TV networks.
ZNLs turnover during these years has climbed to top Rs 3 billion
for fiscal ended March 2012.
time has finally arrived for Chandra to get into the big play in
the upscale language space. English news channels invest anywhere
between Rs 2.5-3 billion over the first three years. The bleeding
period is generally five years for a relatively successful channel.
Digitisation, however, will spur several news channel launches that
are weighed down by high distribution costs in an analogue cable
balance sheet has grown in strength and we are now in a position
to seek for growth from heavy investments. We have been planning
to launch an English general news channel but have not been able
to formalise the approval process. 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," says Barun Das, who has been shepherding the companys
growth since he joined as CEO in October, 2007.
news channels spend 70 per cent of their distribution budget on
the metros, according to market estimates. ZNL spends close to Rs
650 million a year to cable networks for carrying its seven channels.
focus of the English channels is the metros. Distribution expenses
are bound to fall for these channels, says Das.
government has mandated the first phase of digitisation in the four
metros of Delhi, Mumbai, Kolkata and Chennai by 1 November.
entry into the English space will allow ZNL to tap into the Rs 5.5
billion-6 billion advertising market, currently divided among four
players. Times Now, NDTV 24X7 and CNN IBN take away the bulk of
the advertising monies while Headlines Today is slowly gaining ground.
NewsX, launched by former Star India CEO Peter Mukerjea and wife
Indrani, has been struggling ever since its high-profile launch
on 27 March 2008 and the duo exited from it in less than a year's
time with NaiDunia promoter Vinay Chhajlani and former Businessworld
editor Jehangir Pocha taking over as new owners in January 2009.
weighed the option of consolidating the English TV news market and
even looked at swallowing NewsX. But during the due diligence, it
dropped the idea. 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, says Das, without revealing
was eventually sold this month to ITV Media, the company that runs
seven regional news channels including India News (Hindi).
may think it is a crowded space to be in but we see 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 also in TV news, is that the top three
channels can be profitable. Even the fourth player can make money
if run and managed efficiently, says Das.
will the English channel follow the Zee News model of serious news?
I cant talk about the positioning now. That we will
communicate when we have finalised the launch plan. But as a personal
view, I think there is space for a less opinionated and more research-driven
kind of reportage, avers Das.
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.
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, says Das.
ended FY'12 with Ebitda of Rs 533.5 million. For existing news broadcasters,
the new launch of an English news channel generally would require
a capex of Rs 200 million and an operational cost of Rs 800 million.
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 its
not red ink all over, explains Das.
analyst agrees that the situation will ease for news broadcasters
if digitisation rolls out across the country by end of 2014 as mandated
by the government. The Ebitda of ZNL can stay positive in
two years' time if the English news channel has a decent launch.
The company can save on carriage expense that can fall drastically
and the other channels have the potential to see some growth. The
new channel can also draw in some revenues," the analyst says
on condition of anonymity.