Television

Beep, Beep... Warning Signals

Around the world, the pure form of TV news is vanishing. The ‘flag-waving‘ style of coverage by Fox News Channel in

Iraq and Afghanistan may be an extreme case, but it goes to prove that the old format is dying in more ways than one.

In India, Hindi news channels have shown how they can expand mass viewership with soap opera style of coverage.

They have also taken advantage of the lack of a tabloid in the print media to tap the Hindi mass with crime, sleaze and entertainment content.

News channels, be it Hindi or English, have eaten away audiences from general entertainment channels (GECs). The news genre has grown from a 5.3 per cent share in 2004 to 8.4 per cent in 2007, according to TV ratings agency Tam in All-India markets.

Hindi news channels, in particular, have climbed from 5.5 per cent in 2004 to 7.4 per cent in 2007 (in HSM) while Hindi GECs have dropped from a share of 36 per cent to 33.1 per cent during this period.

"As Hindi GECs have provided no alternative for male and young viewers, there has been some audience migration to news channels," says BAG Films and Media Ltd managing director Anurradha Prasad.

The TV news business, however, is getting tougher. The market is being seized by a rise in operational costs, the threat of a deepening economic slowdown, and the entry of too many players.

The Hindi news TV space, pegged at Rs 6 billion, is getting too cluttered and would need capital to support sustaining power. The deal for 51 per cent acquisition of Hindi news channel Live India by property developer HDIL group reflects the troubled times roiling the genre.

Hindi news channels at the bottom of the ratings heap will find it difficult to steer out of trouble as the space is more or

less getting defined with the top six players. What could be additionally painful is the fact that the genre has seen a fall from a share of 7.4 per cent in 2007 to 7 per cent in the first half of 2008 (Tam data in HSM), despite new channel launches.

The biggies can take comfort from the fact that personnel costs, which were continuously climbing over the last couple of years, could now be stabilising. But bringing short-term misery will be the surge in distribution costs, estimated at Rs 5 billion, as news channels jostle for space on choked analogue cable networks. The price tag for presence in prime locations could go as high as Rs 450-500 million, about 40 per cent higher than last year as newly-launched Hindi GECs are willing to pay more.

"Personnel costs are well on track within our overall revenues," says NDTV Group CEO Narayan Rao. "As for distribution expense, it is a pressure point for the industry as a whole."

Agrees Prasad: "Distribution costs are going haywire. Even DTH operators have started asking for carriage money. For

single news channels, the game will become very difficult. The Hindi space is headed for consolidation, but we haven‘t yet reached the buyout stage."

The English general news channel space hasn‘t seen a flurry of new launches and is restricted to four players who are part of a bigger chain. INX Media has recently launched NewsX, targeting upscale audiences.

The genre enjoys a share of just 0.6 per cent, according to Tam data in All-India markets. Yet, Bennett, Coleman & Co is readying to launch an English business news channel to add to its existing bouquet of Times Now and Zoom.

TV news organisations are stepping up their expansion plans to create a full boutique. The race is on to fill up the regional pockets ahead of others. For Zee News Ltd, which will soon launch a Telugu news channel, the strategy is to launch a language GEC, wait for it to operationally break even, and then club it with a news channel. IBN18 Broadcast Ltd (earlier Global Broadcast News) has forayed into the regional space with the help of a print joint venture partner - Lokmat - for the Marathi market.

"The capex of launching a regional language news channel would be around Rs 200 million. The operational cost would be around Rs 150 million. Typically, it would take 2-3 years to break even," says the financial head of a leading news broadcaster.

It is clearly a land grab situation. News broadcasters have also worked on add-on channels to amortise their costs and keep the revenues up. TV Today Network Ltd has successfully added low-cost, targeted channels like Tez to keep their profitability high. Says TV Today chief executive officer G Krishnan, "The add-on channels have helped us not only meet our bottomline target but improve our ad rates."

Zee News is starting a franchising model to enter into new markets, the first of which will roll out in Chattisgarh with

local partner SB Multimedia. "We are in talks with several regional upcoming news channels to see if we can work out similar arrangements," says Zee News chief executive officer Barun Das.

When the market was buoyant, companies like Network18 Group and NDTV raised money to fund their expansions. BAG Films restructured at the right time to raise Rs 2.6 billion from three separate investors - Indiabulls promoter Sameer Gehlaut, Kolkata-based High Growth Distributors (P) Ltd and Fidelity.

The market, however, is entering troubled times. Several media companies have seen their market caps cropped off in a year‘s time. TV18‘s market cap has slumped from Rs 47.84 billion on 31 July 2007 to Rs 25.62 billion on 30 July 2008, TV Today from 9.20 billion to Rs 6.20 billion, and Zee News Ltd (which houses regional GECs as well) from Rs 16.32 billion to Rs 10.70 billion. NDTV has stayed steady with a market cap of Rs 24.58 billion on 30 July 2008, up from Rs 24.57 billion a year ago.

With the market toughening and the cost of money going up, news broadcasters may put on hold their growth plans.

"Media companies will have to find alternate sources of funding including debt, rights issue and convertible instruments rather than just depend on equity. There may be some slowdown but these companies have chalked out their expansion plans to scale up their businesses," says ICICI Securities senior vice president Ravi Sardana.

So where is the TV news business headed? If the tabloid form of Hindi news grows, we could see a situation where news broadcasters find it economically viable to segment audiences with separate channels. A new wave of growth can also come from news channels which wear political stripes like the Shiv Sena. And why not when the print has done it successfully.

The story first appeared in Indiantelevision.com‘s The NT Magazine. The PDF of the magazine can be accessed at http://www.ntawards.tv/y2k8/nt_mag.pdf.

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