Over the last week or so, some real nasty mails have been popping up in my mail box. Nasty not for me per se, but for the vast tribe of fellow travelers. In quick succession, the media economy has been debilitated with two stunning strikes, first from NDTV’s Narayan Rao and then from Bennett’s Ravi Dhariwal – both addressed to the staff, and bearer of very bad news. It has resulted in a flutter of gargantuan proportions in media land’s dovecotes. Employees across the media vector have been shaken and stirred at the tidings that these mails bear.
I have a strong suspicion that this is the first of many such missives which will fly around the Internet. I believe that many other media promoters will use this as an opportunity, even an excuse, to trim their sails. I have dealt with the travails of the media economy in the past, but such moves will only exacerbate the problems. I have a simple question – why weren’t media owners and promoters careful about cost during the boom years? What was the need to go overboard with salary packages? Why wasn’t financial prudence followed? Editors being paid in crores; God, some of the more venerated names from the past must be wondering what they did wrong?
NDTV’s short missive comes with the catchline – we will overcome? How, pray after declaring a net loss for several quarters in a row? What companies like NDTV require is capital infusion with management visibility. I doubt very much if any financial investor will take a punt on the company at this crucial juncture. Which leaves strategic investors seeking management say. And that I presume is unacceptable to Dr Roy. Dr Roy has built a strong brand, but he has also provided best of breed facilities to his staff and perhaps paid them a tad too much. Those chickens have now come home to roost.
So, what is the good doctor’s prescription – a 20 per cent cut for all employees earning over Rs 2 lakh per month and a 10 per cent cut for all those earning over Rs 1 lakh per month. The mail says, “This is one of the toughest decisions in our 20-year history.” Fact. It also says, “Let us all look forward to this storm passing and once again becoming a financially strong and vibrant NDTV.” Brave words, now let us hope they are implemented for this crisis is not over by a long shot.
It is Ravi Dhariwal’s mail to Bennett employees which has everyone’s knickers in a twist. For we are talking industry leader, papa bear, recession proof big daddy, which, according to the mail, is now a billion dollar enterprise. When Bennett, which is five times the size of say an HT, decides to do the unthinkable – cutbacks – then guess what smaller fries will resort to? They will follow the leader and go ahead with similar, but deeper cuts.
Dhariwal writes, “Over the last five years, we’ve had a dream run as a company. In July 2008, we grew to be a billion dollar company, growing at 20 per cent per annum, nicely profitable, growing shares in almost all geographies, expanding our editions into newer territories and winning important competitive battles. Why do I call it a dream run? Because we met success everywhere, including against competitive attacks in large markets. This encouraged us to think of expanding even more rapidly. We made plans to double our capacity, launch many more new editions, take Mirror to other cities and continue to grow our business at the same pace. Not only our business, we all grew, both
professionally and personally in the last five years.”
And now the bad news, “Starting May-June last year, the first road bump in the form of newsprint prices hit us. We started paying between 60-70 per cent more for newsprint than we had been paying previously. This depleted our profitability to less than half of what we had enjoyed previously. We saw some of it coming, and took necessary steps to mitigate it as much as possible. Small cover price increase, rationalisation of pages, strictly incurring only necessary costs were our focus then. By doing these, we were able to keep ourselves profitable though at a reduced level during the first three months of August, September and October. Actually October was our best month in the history of BCCL in terms of revenue, though our profits were at half the level of what we had originally expected. All because of the higher newsprint costs. At that stage, we thought we will be able to cut more costs and restore the company to its original financial health. Profit is like oxygen – if we don’t have it, the company and its employees eventually suffocate. We needed to ensure a level of profitability, which provided enough cash for us invest in future growth. Till October we were confident that we would be able to do so.”
I wonder whether Bennett took the odd punt or two in the forward contracts market for news print, playing for a continuous spike and then when the newsprint price worm turned, all hell broke loose? Now, I just wonder? We know that Bennett has taken a massive hit in its private treaties business. If the newsprint hedge has also gone wrong, then it would be a serious double whammy. It would be akin to rumours about a big industrialist, who has done something similar in the oil futures market when the spike saw it taking crude prices to $200. I hope not.
Dhariwal then goes on to say, “The last four months have turned out to
be very challenging. Instead of growing in the previous three months,
we saw advertising decline by almost a quarter, and, because over 90
per cent of our revenue comes from advertising revenue, this has been
a huge barrier for us… In times like these, we are all asked to make
personal adjustments and sacrifices for a greater cause; to nurse the
company back to the pink of health it once was. I am sure all of us
are working harder, and, hopefully smarter to overcome the challenges
that we face.”
Let me cut to the chase:
a) There will be no salary revision in August this year
b) There will be no TVP pay out in August this year
c) There will be a roll back of increment for all employees starting March 1, 2009. This will be graded, i.e. employees who got a smaller increase will get a lower reduction and the employees who got a higher increase will have a higher reduction of their increment.
Which brings me to the small matter of ET Now and its 270-odd staffers. A finance/ business/ economy channel when vast swathes of the globe’s economy resemble Stalin’s scorched earth policy in the Second Great War? The channel, slated for an April-May launch, will now be under the cosh. I was the editor of Dalal Street Journal in the mid-1990s when it was a veritable cash register. The Padodes were making money hand over fist. Till they decided to launch India TV (yes, long before Rajat Sharma thought of that name), hired many deadbeats from Bennett and sank faster than they could say DSJ. Look at my singular misfortune that I landed in one of the pre-eminent, but cash strapped business magazines of our time – Business India – in 1999. I enjoyed every moment of it, and Ashok Advani’s editorial leadership. But this was the era in BI when every buck earned was spent on a blackhole called BI TV. The channel soaked up money like sponge and we stopped getting our salaries regularly. Though to Ashok’s credit, he was fair to several of us who worked damn hard for his magazine. He managed to adjust our salaries by giving us other advances. The bottomline, the channel finally came a cropper under a mountain of debt and the once all-powerful magazine is now a pale shadow of its pristine past.
So, do we need another business channel? And that too now when the law of gravity has inextricably altered our eco-system? Mr Dhariwal will provide answers to this poser very soon. After Mr Jain takes the decision that is.
(Sandeep Bamzai is a well-known journalist who started his career with The Statesman in Kolkata in 1984. He has held senior editorial positions in some of the biggest media houses in three different cities - Kolkata, Mumbai and New Delhi - with The Indian Express, Illustrated Weekly, Sunday Observer, Dalal Street Journal, Plus Channel where he ran India's first morning business show on Doordarshan, The Times of India Group, Business India, Hindustan Times and Reliance Big Entertainment. Starting his career as a cricket writer, he graduated to becoming a man for all seasons under Pritish Nandy, who he considers as the premier influence on his career. Since he studied economics at Calcutta University, Bamzai decided in 1993 to branch out into business and financial journalism. Familiar with all three media, he is the author of three different books on cricket and Kashmir. The views expressed here are of the writer’s and not necessarily those of the editors and publisher of exchange4media.com.)