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Guest Column<br>Retrofit: Telly news is sexy, but not a business for the faint hearted

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Guest Column<br>Retrofit: Telly news is sexy, but not a business for the faint hearted

That news television is a bruising business is a gross understatement. It is bruising and in many ways unrelenting for the human resources engaged in the business, as also for the promoters and management associated with it. Many are still coming to grips with the harsh lessons taught by the vagaries of the meltdown. Only a few have barely survived the economic holocaust, while others have had to take recourse to retrenching people and narrow focusing on their core for sheer survival. Many journos and technicians have lost their jobs. Worst part was the level of cash burn that had taken place at some of the bloated listed establishments. Last week, we saw the filing of results by some of these companies. Let us begin with NDTV. Interestingly, some of these channels sit in judgment on other companies’ financial performance. Both NDTV and CNBC have financial channels which morning, afternoon and night examine other companies. Putting them under the microscope, their vast legionnaires of analysts, number crunchers and reporters trying to draw a bead on some oddity that may make news. They take calls on buy, hold and sell when the irony is that their own financials are permanently under the cosh. But they sally forth regardless, offering sermons from the mount to all and sundry, holier than thou.

Anyway, ET Investor's Guide, which appears every Monday as a supplement of the main edition had some very disparaging remarks on NDTV the other day. Obviously, the remarks are based on fact for the ETIG analysts have offered their viewpoint on the company's stock performance based on its financial parameters. Mind you, they don't make for extremely pleasant reading. It said, "The company's gross block has increased steadily over the last few quarters. This means it conserves less cash and has a meagre cash profit… Consolidated debt on the company's books has increased in the last three years from Rs 17 crore to Rs 704 crore as of FY09. NDTV continued to make losses in the March 2010 quarter. This is the seventh consecutive quarter in which the company posted losses." Wow! Just the other day, the financial press reported that NDTV had called off the sale of its Good Times channel to Scripps Networks Interactive. Scripps was paying $35 million for 69 per cent in the channel. Good Times modelled on the lines of Discovery Travel & Living is a niche channel which has been burning cash. I wonder what the loss of this $35 million means to the company's future prospects? In its audited financial results filing, it clearly states that "during the year, the Company, NDTV Networks Plc. and NDTV Lifestyle Limited (operating the lifestyle channel "NDTV Goodtimes") have reached a definitive agreement with Scripps Networks Interactive Inc., and its affiliate that will result in Scripps Networks acquiring a 69% stake in NDTV Lifestyle Limited, a subsidiary of NDTV Networks Plc. for a consideration of US$ 35 million. NDTV Networks Plc. will retain a 31% stake in NDTV Lifestyle Limited compared to 92% stake presently held. The aforesaid agreement is subject to necessary regulatory approvals."

Well, that has put paid to any realisation from that deal. Let ET Investor's Guide take up the narrative again, "The company (we are talking NDTV Ltd here) incurred a loss of Rs 4.6 crore against a loss of Rs 44 crore in the same period a year ago (small mercies). During the March quarter, the company recorded an operating profit of Rs 1.13 crore as against a loss of Rs 6.19 crore in the March quarter last year." Signs of a turnaround and perhaps a revival even. While the company's standalone income is Rs 299 crore for the full year, the incessant bleeding seems to have stopped – operating losses are down from an astounding Rs 101 crore to a much more respectable Rs 65 lakh and employee cost is down from Rs 113 crore to Rs 73 crore due to large scale layoffs. Which again means that the top of the pyramid is still very expensive. But the numbers also reveal that NDTV on a consolidated basis has registered a net profit of Rs 117.65 crore this year, while standalone net loss for March 31, 2010 is shown as Rs 20.52 crore (against Rs 73 crore). Did this include the monetization of the Scripps deal is the moot point? Confusing?

Now let us take a gander at Infomedia18 Ltd, which is grappling with the same money losing reality that NDTV is. For the financial year March 31, 2010, net loss after tax is Rs 50 crore against Rs 84 crore in the previous year. The top line has also shrunk from Rs 123 crore to Rs 107 crore in FY 2010. Further, it has sold off its entire publishing BPO business to Cenveo Inc for Rs 16 crore, which has been disclosed as an exceptional item. As much as Rs 2.27 crore has been shown as termination cost of employees for the year. Yes, telly news is sexy, but it is not a business for the faint hearted. Agreed that Dr Prannoy Roy and Raghav Bahl have tried to keep their enterprises afloat, but it is getting harder with the passing of each day. In this self discovering journey, decision making has been suspect at times and brilliant at other times. Maybe it is part of the architecture and DNA of a high velocity, cash burning capital intensive television business.

Oh yes, last word, ETIG is part of Bennett, which also owns ET Now, which goes head to head with NDTV Profit in the financial and business news space.

(Sandeep Bamzai is a well-known journalist, who started his career as a stringer 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. In late 2008, he joined three old friends to launch a start-up – Sportzpower Network – which combines his two passions of business and sport. Familiar with all four media – print, television, Internet and radio, Bamzai is the author of three different books on cricket and Kashmir.

The views expressed here are of the writer’s and not those of the editors and publisher of


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