Here's how listed news broadcast companies fared in FY17
While revenues de-grew at Network18 and NDTV, other listed companies such as TV Today and ZMCL managed single digit top line growth
The fiscal year ended March 31, 2017, was quite a suboptimal one for several listed news broadcast companies in India. From the standpoint of revenues, companies either underwent de-growth or improved their performance when compared with the fiscal before in the range of 1-6%. For instance, total revenues at Network18, the holding company behind brands such as CNN-News18 and CNBC TV18, de-grew by 4.92% from Rs 1625.89 crore at the end of FY16 to Rs 1545.76 crore in FY17. NDTV’s top line also plummeted by 7.2% from Rs 577.12 crore to Rs 535.21 crore.
On the other hand, their competitors managed a slight increase in top line. While ZMCL went up by 1.74% to Rs 571.41 crore from Rs 561.59 crore earlier, Network18’s listed subsidiary TV18, registered 6.62% growth in revenues. At TV18, revenues headed northwards from Rs 959.2 crore to Rs 1022.7 crore. TV Today managed to be in the green zone as well. Their top line moved upwards from Rs 602.19 crore to Rs 630.57 crore at an annual growth rate of 4.71%.
Having the benefit of a smaller base, Anurradha Prasad’s BAG Films strengthened its top line by 16.58% from Rs 117.24 crore to Rs 136.68 crore. Interestingly, none of the other five companies mentioned above could manage a top line growth of double-digit percentage points.
Despite having moved out of news broadcasting, Sanjay Dua lent an insight into the financial results of domestic television news companies premised on his vast experience. “If you ask me then it (financial results) should have been slightly better. The numbers should have been in the range of 8-12%,” said Dua, former CEO, Network18 News Media Network.
Throwing light on what caused the drying down of revenues, he opined that demonetisation hurt the broadcast business for a period of three months. However, the successive three months, which witnessed the assembly elections, neutralised the effect, he argued. Citing the momentum generated in February and March, Dua insisted that channels have been able to take up the yield and its implications will be on show during the first quarter results of FY18.
Though companies such as NDTV and Network18 are conglomerates with business interests in mediums apart from news broadcast, the costs involved in running their television operations is a major cause of concern. After having vowed to “cut costs at all costs”, NDTV benefitted by slashing its expenditure by more than Rs 50 crore or 8.09%. The company’s total expenses reduced from Rs 645.23 crore to Rs 593.02 crore. But that cannot be said of others. Costs went spiralling up at both Network18 and TV18 by 11.82% and 21.1%, respectively.
Network18 piled up an additional Rs 189.22 crore in expenditure as costs increased from Rs 1599.84 crore to Rs 1789.06 crore. TV18 was not far behind with heightened expenditure of Rs 179.3 crore from Rs 847.6 crore to Rs 1026.9 crore. Even BAG Films underwent 13.12% expenditure increase from Rs 104.11 crore to Rs 117.74 crore. However, ZMCL and TV Today managed their costs reasonably well. Subhash Chandra’s Zee Media saw only a marginal hike of 1.9% in expenditure from Rs 559.49 crore to Rs 570.46 crore. Expenses at Aroon Purie-led TV Today Network, whose Hindi news channel Aaj Tak competes with Zee News, rose by 6.2% from Rs 457.2 crore to Rs 485.87 crore.
Shashi Sinha of IPG Mediabrands noted that carriage fee was taking a toll on broadcast companies. Referring to the broadcast ecosystem in foreign countries, he emphasised that nowhere in the world were broadcasters shelling such a huge amount to simply get their channels across to the viewers. He was quick to add another major challenge faced by news broadcasters in particular. “In India, while there is subscription revenue coming in for GECs, no money is coming in from subscription for news channels,” said Sinha, CEO, IPG Mediabrands.
However, Tony D’silva, who was until recently the Managing Director & CEO of IndusInd Media & Communications, disagreed with Sinha on the question of carriage fee. “That is the cost of doing business,” maintained D’silva, pointing out that DD Free Dish also charges a reserve price. Claiming that advertising revenues in the country were higher than many places elsewhere, he criticised the broadcasters for eyeing both ad and subscription revenue but expecting free carriage. “They have to cut down the cost of their operations,” said D’Silva, while urging news channels to become “subscription viable” in order to benefit economically. At the moment, he found “nothing exclusive” in the content of news channels which was the fundamental reason behind the unwillingness of platforms and consumers to pay for it.
Identifying distribution, manpower, and content as major expenditure heads, Dua expounded upon the costs involved in running a news broadcast business. “If you have a few things moving in these heads, the needle will move,” asserted Dua, highlighting that Q4 of FY17 would have been expensive owing to the election season. Therefore, the rationale provided by him was that the expenses of news channels would have surely gone up in Q4 had they invested in quality election coverage. Shedding light on the recent controversy pertaining to the usage of multiple logical channel numbers (LCNs), the former Chief Revenue Officer of ITV Network was critical of the tactic since it could lead to blowing up of carriage fee. “If you put your channel on multiple frequencies then obviously costs will be high,” he said. Speaking from the perspective of media buyers, Sinha added that news channels commanded a high reach but their problem was in relation to the low average time spent viewing (TSV).
“The reach of news television in India has gone down by 15% in the last five years,” remarked Pankaj Pachauri, Editor-in-Chief & Director, Cloudburst Mediaworks. While new players have simultaneously entered the market, they are essentially fighting for the same eyeballs. In Pachauri’s assessment, this has led to “questionable” and “substandard” content which the advertisers are unwilling to pay for. “The news television industry has to engage the audience in such a way that they are ready to pay for content,” he said. Prophesising that this will not merely increase subscription revenues for the media, he claimed that private companies would be attracted to it and seek partnerships for branded content. Therefore, the financial positioning of the industry will improve.
Besides revenues and expenditure, profitability eluded some of the major news networks in the recently concluded fiscal. Network18 suffered massively as it went into losses after posting a profit in FY16. The P/L standing before taxes at Network18 went from the green zone at Rs 112.64 crore to Rs 261.15 crore in losses. Its subsidiary TV18 remained profitable but the figure was cut short by a huge amount of Rs 166.6 crore. The profit before tax at TV18 slipped from a staggering Rs 198.1 crore to just Rs 31.5 crore. ZMCL, whose books recorded a loss of Rs 4.04 crore in FY16, suffered an increased loss to the tune of Rs 20.91 crore in the following fiscal. Nevertheless, NDTV had some relief with losses coming down from Rs 68.11 crore to Rs 65.21 crore.
Fortunately, TV Today found itself on the positive side with profits increasing by Rs 38.57 crore from Rs 114.68 crore to Rs 153.25 crore. Though BAG Films did undergo a loss of slightly over Rs 50 lakh in FY16, it turned profitable in FY17 at Rs 3.52 crore. “All are going to lose out to deep pockets,” said Jawhar Sircar, former CEO of Prasar Bharati, when approached to comment on the results. He told exchange4media that NDTV has been making losses for a long time with the market churning with rumours around Times Now going the same way. The latter, however, is not a listed entity.
“English news media attracts only 0.01-0.02% of the eyeballs,” he claimed, hinting at the shallow market size. Criticising the news media for succumbing to the “compliance culture”, he lamented at the “contracting space for autonomy of views” on television. As he indicated the entry of big capital in news media through the takeover of Network18 by Reliance, he confidently stressed that English news broadcast had gone to big money players with financial resources. Meanwhile, Dua conceded that news is underpriced. According to him, English television as a category, including news, is “under stress” with digital taking away a lot of money.
Ashish Bhasin felt that the “inherent issue” is the limited size of the market. “My own belief is that there are too many players in various genres including news,” said Bhasin, Chairman & CEO – South Asia, Dentsu Aegis. Stressing that there is no place for so many news channels, he predicted that the market is headed towards consolidation. As per Bhasin, the consolidation may lead to the emergence of 3-4 large players with others either getting acquired or merged. “In five years time, I clearly see a transformational process of consolidation,” he concluded.
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