Television

'We are weighing various channel launch options' TV Today Network CEO Joy Chakraborthy

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TV Today Network is in the process of an organisational shake-up as it prepares for expansion into regional news channels and language newspapers through the Aaj Tak brand.

The route isn’t easy, considering that revenue growth for the TV news genre is under challenge, the advertising environment is slowing down and it is a highly competitive TV news market where there is too much supply.

Earlier sitting on a cash pile, TV Today took a conservative approach and has in the past few years merged the loss-making promoter business of radio while taking a 13 per cent stake in TV Today for Rs 455 million. Now with no cash reserve, it is planning to expand through self-funding and debt (as it is debt free); it is also not averse to raising equity financing.

The winds of change are blowing. There is talk of weighing each channel individually, having business heads for each of them, and even exiting from radio if the price is right while at the same time preparing for its operational profitability and building synergies between TV, print and radio.

Late last year, the company tapped into a senior executive who has grown up in the television broadcasting space as a revenue specialist. His fast-paced aggression may have been a counter-counter to an otherwise editorial-driven organisation that believes in expanding at a comfortable speed. But that could have also worked in favour when the company’s revenues are growing at a snail’s pace, three of its loss-making channels are supported by its flagship Aaj Tak and radio needs to be turned around.

In an interview with Indiantelevision.com’s Sibabrata Das,TV Today Network CEO Joy Chakraborthy talks about how he plans to grow the company in challenging times, upping revenues, improving profitability and making radio operationally break-even in FY‘13.

Excerpts:

Q. How difficult has it been to fit into a pure news organisation like the India Today Group that is very editor friendly as your past experience has been in entertainment broadcast networks?

There is certainly a difference between an organisation which has got GECs (general entertainment channels), sports, niche and other genres and that which is a pure news outfit. When you are working for an entertainment broadcaster, it is more about using research, marketing, strategy and planning. News business, on the other hand, is very brand driven and credibility plays an important role; it is very day-to-day driven. My past exposure in Star and Zee will help me immensely to do a cross-fertilisation of cultures. The sanctity of news, however, has to prevail.

Q. What skills you needed to acquire to transition from a revenue specialist to a CEO?

CEOs are not born in one day; they move up the ladder from different wings like finance and revenue. When you are the revenue head, you are acting like the CEO of that arm. And I was also running P&L of eight niche channels. So, anyway, I am familiar with handling the bottom line role. What matters is a basic understanding of the industry.

The biggest challenge in TV Today Network is to get the staff within oriented to my mindset. I have to get the existing team, which is very talented, to work at my pace. My task is to give the editorial the latest in technology and news gathering. Being a revenue specialist, I can work out innovative solutions and increase the company’s turnover.

Spending years in Zee has made me understand the cost part of the business very well. It is important for media companies to be very cost conscious and not to splurge money. For TV news organisations in India, which have the structural issue of high manpower and low top line, this is much needed.

Q. Will we see a new restructured TV Today that is less rigid and more nimble footed as an organisation?

As an organisation, there is a lot of potential to grow. It has built high credibility and is a very strong news brand. The Group will start a process of synergising across departments and functions so that we can streamline costs and build economies of scale. I also hope to get the right support for taking calculated risks.

Q. Does that mean that TV Today will have a less conservative approach to expansion in the areas of business and regional news?

We are making business plans that include regional news channels. We will be weighing various channel launch options. We are preparing for expansion, but will wait for the market situation to be good. Also, it has to make the right business sense.

"We are open to the idea of selling the radio biz, provided we get the right price. We are targeting break-even in FY’13. We are not going to bid for Phase III

"

Q. When TV Today was sitting on cash, it did not expand. Will it not be tough when there is no cash reserve and the company is averse to raising equity funding?

We will expand through self-funding and being a debt-free company, we can also source bank financing for our expansion. We are also not averse to raising money.

Q. TV Today’s cash reserves have dwindled after the merger of the loss-making businesses of radio on a valuation of around Rs l billion and a 13 per cent stake buy in TV Today for Rs 455 million. How do you justify such huge valuations and how will it help TV Today?

We feel that radio and print will help us have a 360 degree approach; along with our main television business, it will complete the link and give us a cushioning feel. It also makes us cost effective.

Q. How do you turnaround the radio business that had an operating loss of Rs 219 million on a meagre revenue of Rs 42 million last fiscal?

We are targeting break-even in the next fiscal. No doubt we are a weak player in radio. But we have a presence in the three main markets of Mumbai, Delhi and Kolkata. We are getting in a business head with a sales background. By doing proper structuring and sales, we can easily jump our revenues to the operating cost level. We are looking at packaging Delhi Aaj Tak sales with Oye (the radio brand). We will also be looking at the costs.

Q.Will you be bidding for Phase III to expand or you will be content being a small player?

We will not bid for Phase III. The radio industry is not growing substantially enough to compensate for huge capital investments and long waiting period for profitability. We will rather work on strategic sales alliances with smaller regional operators who have a presence in some of the key markets like Bangalore, Hyderabad and Chennai; they may even have a single market presence. We can handle their ad sales.

Q. Doesn’t it make more sense to find a buyer for the radio business now, particularly when the time for renewal of licence is just four years away and costs for retention are going to be higher?

We are open to the idea of selling the radio business, provided we get the right price. We are at the same time going to focus on reaching operational profitability and growing its revenues.

The recently launched ‘Sabse Filmy‘ positioning of our radio station gives us a big advantage as a large amount of film content can be drawn from our TV channels. With content and ad synergies with our local and national channels, we hope to make this operation highly cost effective and benefit from the fast growing radio market, which in India is much lower than other growing and developed markets. Also with news expected to be permitted on radio in the future, the fitment with our TV channels will be perfect. Radio can be a support medium to our main television business.

Q. What is the reasoning behind TV Today’s small stake presence in Mail Today that is bleeding profusely?

Mail Today investment is highly synergistic to our TV business, both from content and ad revenue point of view. The paper operates in the largest ad sales market in the country (Delhi) and has a huge growth potential. A foray into the newspaper space also gives us an opportunity to set up Hindi newspaper business around the Aaj Tak brand. The Hindi newspaper space is growing very fast and the Aaj Tak brand is one of the most powerful Hindi news brands.

Q. Sources inside TV Today tell us that you have been talking of a 20 per cent revenue growth target for TV Today in the next fiscal. Isn’t this an impossible target to achieve, considering that the revenue growth is under challenge for the genre (TV Today just grew 3 per cent last fiscal), the advertising environment is slowing down and it is a highly competitive TV news market where there is too much supply?

The market is tough at this point of time and there is too much of inventory in the news genre. The problem of news is that it has been sold on ratings rather than perception. The truth is that it should be measured like cricket; it has a huge ‘outside home’ viewership and is consumed by a lot of people. Being a revenue specialist, I know how to drive it up but will not be in a position to share my strategy at this point of time.

We are also looking at ways where we can have a premium rate for news and a separate pricing for non-news content.

As a genre, we have to optimise our revenue sources. That is the only way we can stay profitable. I also plan to control and rationalise the middle line. While personnel cost comprises a good chunk, distribution expenses have to be reviewed. Digitisation is a hope for broadcasters at this stage but it will take three years to feel the real impact.

Moving to our own building, which will have the latest technologies, will also help us save costs and make our on air news look the latest with great graphics and presentation.

Q. TV Today’s flagship channel Aaj Tak is supporting the other three loss-making channels. Why not shut at least two of the channels which play a flanking or a niche role?

I am planning to have business heads for each channel; they will have to manage their P&L. The idea of Tej as a flanking channel works when it is strong enough to cannibalise some viewership away from the main channel. There needs to be some shake-up; it needn’t necessarily imply a closure. We are in the process of microscopic analysis of each channel individually. We will take calls where we are heading keeping 3-5 years in mind.

Q. How can you have pricing power and up the revenues of Aaj Tak when there is so much of commodisation of news and the second and third Hindi news channels are priced so much lower? 

Aaj Tak may have deviated for some time and gone the wrong way of sensationalism. But it has always been a market leader and for the past 13 weeks, we have a 30 per cent lead over our nearest rival. It is present in most of the media plans. And don’t forget that 45 per cent of the channel’s viewership comes from females. There is a lot of untapped revenue potential.

Organisations sometimes make the mistake of feeding the weak child instead of the strong. I believe in feeding your generals even at the cost of the soldiers. We will be investing a lot in Aaj Tak.

We will be doing a lot of strategic alliances. We have tied up with Star for its biggest upcoming property with Aamir Khan; we are their channel partners for that. We will be launching a weekly show with the Bollywood star in Aaj Tak. The issue-based special follow-up show will be similar in nature to Star’s.

We will also get into awards and events without compromising our credibility. For starters, we are doing the Aaj Tak Care Awards event.

Q. Headlines Today has gone through new positioning and revamps a few times. How do you build the channel into a powerhouse?

The biggest challenge is Headlines Today as we see big potential there. We are investing in the channel where we think we can make money. It has to build numbers but what it misses more is perception. In fact, TV Today needs a big marketing and PR push. We have changed our agency to Black Pencil (Leo Burnett’s creative agency) with whom we are going to work on brand films. You will see a lot of action around Aaj Tak and our other brands.

Even with the channel’s current status, we can double its revenues next fiscal. We are setting up a separate ad sales team for Headlines Today and removing it from the rate card. The channel has not been able to get its true value because it was sold along with Aaj Tak; Hindi and English news channels have to be sold separately. We have already recruited an All-India head for Headlines Today who would be reporting to the existing network head and coming on board next week.

Q. What about Tej and Delhi Aaj Tak?

The value of Tej will be if it can effectively supplement Aaj Tak. Along with Delhi Aaj Tak, they can tap retail advertisers and dig deep. Retail, in any case, is Aaj Tak’s biggest strength.

Q. Are we going to see more launches internationally?

We will have to try and get more international revenues. We will be exploring other markets outside US and UK. We will also strengthen our existence in UK, US and Canada. We have recruited Vikram Das as our new international head who moves in from Neo Sports’ international business.

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