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The Meltdown: UTV cuts down investment in broadcasting arm by Rs 200 crore

18-November-2008
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The Meltdown: UTV cuts down investment in broadcasting arm by Rs 200 crore

It was a black day for quite a few employees at the Delhi office of UTV Broadcasting as the company undertook some severe cost cutting initiatives that have even resulted in the loss of jobs for some of the employees. In a bid to cut down on its projected losses, UTV has embarked on a “cost rationalising” course. It has identified its Broadcasting vertical as the division that would have had seen the most significant investments in the year.

Given the economic slowdown, and following a “sharp review in the last 60 days”, UTV has rationalised its future investment plans by cutting down investments by over Rs 200 crore to “ensure that the total future investments doesn’t exceed Rs 100 crore, in addition to the initial investment of Rs 360 crore made by Walt Disney and UTV”.

It has also decided to consolidate the operations of all four of its channels in Mumbai. Prior to this, two of the channels were operated from Delhi. As part of the cost cutting initiative, the Delhi operations would now be phased out, and this has resulted on job loss for many employees.

UTV has said that these steps allow it to cut down projected losses by 60 per cent, which in turn means that the loss in the broadcasting vertical for Q3 and Q4 of the fiscal 2008-09 does not exceed Rs 15 crore; loss in fiscal 2009-10 doesn’t exceed Rs 25 crore, and that breakeven is achieved in the subsequent year.

UTV has also said that the company was on track in its other verticals that include Motion Pictures, Gaming, New Media and TV Content. The media major has also said that given its “diversified revenue mix and minimum dependence on advertising revenues”, it is “extremely well placed to emerge as a long term leader because of all the challenges faced by the other media companies in the next 18 months”.

UTV is not unique in its cost cutting initiatives. Every company is cautious on how they are spending their funds to be future ready. There are exceptions like Colors that have said that they wouldn’t cut down on any of their costs as this is the time for the channel to gain the momentum. This step from UTV would have scared a few more in the – or looking to be in the – broadcasting industry.

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