Television

'Consolidation in news business is an inevitability' : Laxmi Goel - Zee News Ltd director

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Laxmi N Goel, director Zee News Ltd and the second of the three brothers of Essel Group chairman Subhash Chandra, is not given to hype and hoopla.

Even when he has to announce his organisation's achievements, true to his style, he's most likely to hold the event in modest surroundings. A case in point being the launch of the book Pehal, which he authored, done in Federation of Indian Chambers of Commerce and Industry auditorium in Delhi instead of a five star hotel. As he says, every paise or penny saved is that much earned, which can be reinvested into the company.

He doesn't have any formal training in business management or television programming, but has still managed to oversee the functioning of Zee News channel quite successfully over the years after it was decided to do away with professional CEOs at the helm to manage news.

These days Laxmi Goel spends more time discussing annual budgets and increments of his colleagues than on the exercising cycle. After all, the restructuring of Zee Telefilms has landed him added responsibilities of all the Zee family regional channels, which have been hived off into Zee News Ltd to conform to government guidelines on foreign investment in television news entities. "I wish I could find some more time for my daily walks," Goel rues.

In an interview with Indiantelevision.com, held at the Zee News' headquarters in Noida on the outskirts of Delhi, Goel discusses some aspects of the restructured Zee News.

Excerpts:

Why was the de-merger of Zee News necessary?

When the organization becomes big, this type of de-merger helps in better control of various aspects of business. However, for me, things still remain the same. We have to do well and show good results to our shareholders. That was the theme earlier. It's still so.

Have you settled down in your new role and what would be the agenda now?

It's still early to spell out agendas as it'd take five to six months for things to settle down completely.

But, as I said earlier, the basic process remains by and large the same. We have started a Bengali news channel (24 Ghanta or 24 Hours) and we would evaluate our expansion options as the market pans out.

The Bengali channel seems to be a case of the Right shaking hands with the Left. Zee's promoter family are said to be Bharatiya Janata Party and parent RSS sympathizers, while Bengali channel partner Akaash Bangla owners are known backers of the Left parties. Comment.

I don't understand what political ideologies, if at all there is one, has to do with business decisions? 24 Ghanta was a business decision where Zee News thought Akaash Bangla to be the right business partner. Moreover, as Akaash Bangla is an existing TV channel, its owners had the advantage of understanding the TV business.

What would you like to do with the organization now that you have more properties to look after, apart from Zee News and Zee Business?

The functioning of the organization remains more or less the same. It has just taken a different avatar. What is remarkably different is that there would not be any consolidated profit and loss account for Zee News any more. You journalists can say that we would not be able to hide behind Zee Telefilms with our financial performance any more. Now, that's a challenge too. We would have to continue showing good results and keep our shareholders happy by nurturing the bottom-line.

Apart from that, we are now free to take independent decisions on expansion, which will always be guided by market forces. At the moment, we are not actively considering any addition to the present crop of channels, but I cannot predict the future. If a sudden need arises to have a product in a certain segment of television business or geographical area, we can consider it then.

Do you feel that so many news channels, including those from the Zee News stable, will survive in the long term?

India is a growing market where increasingly people are formally getting educated. A combination of this has fuelled consumption of news. The trick lies in delivering news quickly and in a manner that is consumer friendly.

But such mushrooming of news channels all over is unlikely to be supported by the market in the long term. The process of consolidation has started.

'We would have to continue showing good results and keep our shareholders happy by nurturing the bottom-line'

Will the economics of running news channels force consolidation?

Partly yes. Let's take, for example, a news channel that aims to have a national presence. On an average capital expenditure on national news channel can range between Rs 800 to Rs 900 million. At times it can go beyond that too. Then the running expense per month for a national news channel comes to approximately Rs 80 million, which would include expenditure on news gathering and marketing activities. Now these figures are not small, though not huge either.

As different news channels have different business models, over the years mounting expenses will force consolidation. This can happen in the form of mergers and acquisitions or can result in cutting down cost on news gathering and infrastructure by evolving a model where some sharing is done by various players in the industry.

Carriage fee that most TV channels pay to cable operators, coupled with growing employee wage bill in news organizations, also add to the cost. To outsiders, these costs might not look very important, but let me assure you that carriage fee and increasing pay packets of TV journalists do weigh down a TV news organization.

Since the Indian news market is still very active, the exact shape of consolidation is difficult to predict accurately. But consolidation is an inevitability.

How is Zee News Ltd addressing the problems of carriage fee and bloating wage bills?

We are not as aggressive as other news channels in holding back people who want to leave for another channel for a better pay packet. We do talk to people who want to leave and try to reason out the advantages of Zee News Ltd. However, we feel that beyond a point it's futile to negotiate on remuneration as the demands and wish list of some people just don't seem to end. Such people would leave anyway. If not today, then tomorrow.

In such cases, Zee News lets people go for the larger benefit of the company and its bottom-line. And, there have been innumerable cases when former Zee News employees have requested to be taken back at the salary that they had been drawing at the time of leaving.

As far as carriage fee is concerned, we feel CAS is the solution. Newer technologies like CAS and DTH would help in arresting the demands of cable operators, which can be unreasonable at times.

What is the revenue mop up level for Zee News and Zee Business channels?

A majority of the revenue, of course, comes from Zee News, which is in the range of Rs 10-20 million per month. Out of this, subscription revenue is more than advertising money.

How are the regional channels doing financially and ratings wise?

Most of the channels are doing well, but the actual process of consolidation is still on. Only after the formal work is complete, we'd get down to evaluate the prospects of each channel in our company (which include Zee Bangla, Zee Telegu, Zee Gujarati, 24 Ghanta, etc).

How many news channels do you foresee in the next two to three years?

At the national level, I foresee 2-4 channels surviving in the next three to five years time.

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