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An
Interview with TV 18 Managing Director Raghav Bahl
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"For
a niche channel like CNBC India, CAS, if properly implemented,
is a boon"
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Posted
on 26 August 2002
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Sitting
in the visitors' room, waiting for Raghav Bahl, managing director
of Television Eighteen Ltd, at the company's headquarters in Delhi
is an education in itself. Apart from books on TV and radio broadcasting,
there is this big screen LG television set with a fancy remote control.
But if one starts using it, one will realise that most of the channels
in the TV set are tuned to CNBC India only. The other channels that
one, probably, can see are Star News and some hazy visuals of DD
and Zee News. The setting tells a story: of a company that is focussed.
And Bahl does not mince any words when he says that the company
is in a consolidation phase after having managed to lay a strong
foundation. To hell with critics (there are many) and stock market
analysts who think there is not enough action happening in and outside
the company for the TV-18 scrip to become the darling of the markets.
A time for that will also come too.
TV-18 is India's first business news broadcaster and a leading media
content provider. TV18's wholly owned subsidiary, Television Eighteen
Mauritius Limited entered a joint venture with Business News Private
Limited, owners of the CNBC Asia brand in December 1999. The joint
venture owns and operates the CNBC India channel, the only dedicated
24-hours business news channel in India.
In this interview with indiantelevision.com's Anjan Mitra,
Bahl, who looked relaxed after just having returned from a rather
spiffy hair cut, holds forth on the company's present strategy,
future plans, and, of course, conditional access system which he
says will immensely benefit niche channels like CNBC India. Excerpts:
How
will you describe the present phase that TV-18 is going through which
some critics have dubbed a totally dull and inactive phase in the
company's history?
The company is in a consolidation phase and that is why the criticism.
But let me tell you it is also in a scalable phase from where we can
grow phenomenally, both in terms of revenue and reach. If I may give
some figures, then we are in a phase where after making losses for
the last two years, the company is generating cash on the investments
made in operations.
If I have to use a cricketing analogy, then the company is in the
25th over stage in a one-dayer (of 50 overs) where one can say probably
Rahul Dravid is batting; slowly and surely building up the inning
so that the an all-out offensive can be launched later.
What sort of investment has been made and what has been the return
on investment so far?
As I said, we have started generating cash. We hope to close the current
financial year (ending 31 March, 2003) with cash generation in the
range of Rs 5-6 crore (Rs 50 - 60 million). And next year, we hope
to better it with cash generation of about Rs 10 crore. We started
to see cash about five months back. Over the last two years close
to Rs 50 crore has been invested in CNBC India and over the next 18
months or so we hope to increase generation of cash. That's when Phase
1 of the strategy will be complete. From now on, every year we hope
to generate more and more cash.
(TV-18 Ltd recorded operating profits for Q1 ended 30 June, 2002 at
Rs 15.15 million compared to Rs 0.79 million an year ago.)
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"The
strategy to have one fixed team generate every entertainment-related
show was a blunder and it came a cropper"
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What is the revenue mix for TV-18 as a company?
CNBC India accounts for almost 90 per cent of the company's revenue,
while 5 per cent comes from moneycontrol.com (operated by a subsidiary
of TV-18) and the remaining 5 per cent comes from entertainment-related
products that we generate (like the Sonali Bendre-hosted musical show
Kya Masti Kya Dum for Star Plus).
At one time TV-18 had a fairly big entertainment division that
has been scaled down drastically since then with employee layoffs
also taking place. How do you explain this?
Agreed we had expanded our entertainment division thinking we can
be a fairly big player in that area of programme generation too. But
I must admit it was a wrong strategy decision, a mistake which we
have rectified and are still tying up some loose ends.
The strategy to have one fixed team generate every entertainment-related
show was a blunder and it came a cropper. Now the strategy is to be
a completely boutique player in the field of entertainment programming.
We are not here to compete with other production houses (like Balaji
Telefilms) whose expertise is in doing entertainment programming only.
We will continue to do programmes in this area, but only those that
have the possibility of a very high visibility.
Now that you admit the company is in the scalable phase, what are
the plans on launching new products and channels?
We are clearly interested in the broadcasting business and the value
that we are creating now will increase our ability to invest in larger
projects in the future when money, too, will be available for such
ventures.
Even till early last year TV-18, was very bullish on
launching an infotainment channel on the lines of NDTV World which
had been proposed by Prannoy Roy's NDTV. Is the infotainment channel
happening?
I can only answer for TV-18 and not Prannoy's plans. As far as TV-18
is concerned, we'd love to do an infotainment channel, in English
preferably. Initially we were looking at institutional funding for
this venture, but with the whole economy going into a tailspin, it
was advised to us to put the project on hold. Maybe one-and-a-half
years from now, when we will begin to generate more money ourselves,
we will have another look at the infotainment channel.
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"Maybe
one-and-a-half years from now, when we will begin to generate
more money ourselves, we will have another look at the
infotainment channel"
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It is being said that TV-18 is breaking its ties with Sony Entertainment
TV India for the distribution of CNBC India and shaking hands with
rival bouquet Zee Turner. Has the deal been formally completed?
I cannot comment on this. Officially speaking, we have a tie-up with
Sony for distributing CNBC India. If something happens on this front,
both Sony and TV-18 will let you know of the development.
What is the revenue mix where advertising and subscription is concerned?
At the moment, 70 per cent of the revenue comes from advertising,
while the remaining comes from subscription.
Do you see this mix changing if and when conditional access system
is implemented?
Definitely. For a niche channel like CNBC India, CAS, if
properly implemented, is a boon. Now, for example, CNBC India charges
approximately Rs 3.50 per household per month from the cable operator
who gives it to all his subscribers. If CAS is properly implemented,
then being a niche channel we would prefer not to go into every household.
Those who want to watch us will watch us anyway and also pay the subscription
amount even if it is higher than the present level. Post-CAS and addressability
- which is an inevitability – we can also charge for CNBC India a
multiple of the present price and people will pay too.
Market analysts are not all enthused about TV-18 scrip and say
that it is underperforming. What is your explanation?
The market is reacting the way as it has to and so are the analysts.
When are markets and analysts enthused? When a company is showing
excellent results and profits and/or undertaking new initiatives and
launching new products. As a company, TV-18 is doing neither of these
two in this phase of consolidation. Agreed we have started generating
some cash, but probably not enough to excite the stock markets.
But I am a great believer in the fact that the market will value you
correctly over a period of time.
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"If
something happens on this (distribution) front, both Sony
and TV-18 will let you know of the development"
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Why is it that layoffs seem to be a recurring factor in TV-18's
life history?
I have made more right decisions in life and business than wrong ones.
But the wrong ones seem to have had more impact than the good ones.
We did say goodbye to quite a few people in the mid-90s to late 90s
phase, but that was inevitable. For the survival of the whole company
and many more people, few had to be asked to leave. It was a survival
tactic. The same with the entertainment division. We have had to scale
down the manpower definitely, but again it was imperative to the growth
of the company. Still, I am happy to say that a lot of those who have
left us do work with us on assignment basis and many other production
houses also boast of TV-18 products who are doing well in life.
Where do you see the (10-year-old) company on its 15th birthday?
Well bigger, healthier and certainly more cash rich. I would also
love to add one more channel to the company's portfolio by then. And
hopefully, the portal business would also be doing well by then.
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