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How NDTV turned around
Shuchi Bansal |
August 14, 2004
Who is the Titan of small screen news? Is it Delhi-based NDTV which took a daring gamble by breaking away from Rupert Murdoch's Star TV last year? NDTV trumpets the claim that it's the nation's Numero Uno news network in terms of 'highest overall 'reach' and 'viewership'.
Switch to Aaj Tak, the popular Hindi news channel. Aaj Tak is bringing in both viewers and advertisers but its English language stablemate Headlines Today has been a laggard so far. Aaj Tak's selling line is that it's India's biggest Hindi news channel in terms of viewership.
Welcome to the battle behind the television news. Just one year ago, when Star News and NDTV parted ways to launch their own channels, Aaj Tak was the undisputed leader with a huge 60 per cent share of the market.
Today, NDTV is close on its heels. Even more galling in some ways is that NDTV India's net profit is slightly higher than TV Today's in the first quarter this year.
The two channels have, in fact, turned in astonishingly similar results. NDTV's income from operations (read advertising revenue) was Rs 39.9 crore (Rs 399 million) while its net profit was Rs 7.6 crore (Rs 76 million). Aaj Tak, meanwhile, made Rs 34.49 crore (Rs 344.9 million) from advertising and declared a net profit of Rs 6.16 crore (Rs 61.6 million).
For Aaj Tak those results are in line with expectations. But NDTV's results came as a pleasant surprise for shareholders. That's because the company closed the year ending March 31, 2004 with a loss of Rs 50 crore (Rs 500 million).
Says NDTV director, K V L Narayan Rao: "We have been a broadcaster only for a year and our first quarter results are very encouraging. But we are well aware that we are just beginning and have a long way to go."
As NDTV and TV Today go head to head, the surprising laggard is a third player which most analysts had expected to be out in front -- Star News. Media watchers had predicted last year that Star with its vast financial clout would be a frontrunner in the news business. Instead, it's a distant number three.
Though Star News revenues are not officially available, insiders say that the channel is in the red. Star News is run by MCCS in which Star holds a 26 per cent equity and the remaining rests with the publishing company, ABP Ltd.
A Star source says: "We need to fix things at Star News, but I don't think we've done badly either as we're number three."
Despite the similarity in the revenues there's no doubt that Aaj Tak and NDTV are very different beasts. In Hindi news it's generally accepted that Aaj Tak is still way ahead of NDTV India.
Aaj Tak executives reckon that about 60 per cent of NDTV's revenues come from the English channel. At TV Today, however, 95 per cent of its revenues still come from Aaj Tak and Headlines Today is a small player.
How did NDTV achieve a dramatic turnaround in the first quarter? Media marketing experts attribute it to the elections and the budget. "The company has been synonymous with elections and budget coverage and it helped them generate an additional Rs 10 crore (Rs 100 million)," says an expert. Rao, however, says that no single factor was responsible for the company's turnaround.
Rao believes that good, hard-hitting journalism has been backed by good marketing and effective distribution. "Good journalism, even if it is well distributed, means little unless it can be converted into a revenue stream, which our sales and marketing team, has been very successful in accomplishing," he says. Lastly, he feels that the company's sound accounting and financial system also helped.
Behind the ratings points there's also a story of how the top two channels have taken an entirely different approach to news. Aaj Tak always stayed sharply focused on hard 'as it happens' news. NDTV, by contrast, decided that it had to spread further afield and focused on current events style programmes like The Big Fight and We the People.
Also, it has translated most of these programmes into Hindi. NDTV Media CEO, L S Nayak says that the network does not treat its Hindi audiences like morons. "Our programmes like Muqabala, Hum Log, Jai Jawan and Gustaakhi Maaf attract a high viewership," he says adding that advertisers are happy to buy sponsorships of such properties.
According to Optimum Media Solutions' president, Sandeep Vij, "Premium image along with viewership numbers have driven NDTV towards profitability."
Maxus (a JWT media buying company) managing director C V L Srinivas, points out that the company's English language channel has a whopping 40 per cent viewership share in the genre and attracts premium advertisers as it targets the high networth viewers.
To be sure, the market no longer sees NDTV as a challenger brand. "It has cemented its position as a number two player. And in the media business the top two players mop up the largest chunk of advertising," says the marketing head of a rival channel. Rao claims that the company probably gets a better premium on both its channels compared to its competitors.
In fact, media industry sources say that sorting out the distribution issues also helped improve the company's performance. During the initial three four months of its launch in April 2003, the NDTV channels were not available on the prime band in most parts of the country. "It was only after the company started paying a huge carriage fee that the news channels were seen. Today, carriage fee is an industry norm, internationally," says an Aaj Tak source.
Nayak, however, says the problem was slightly different. Last year, in anticipation of the launch of several new channels, Aaj Tak sewed up the advertising market by signing up annual deals with advertisers in a big way. "The advertiser's money was blocked. Most of the deals were over this April and now we can play on an even field," he says.
However, the question being asked is whether NDTV will manage to sustain its growth considering that it is seen to be a high cost operation that spends generously on both people and infrastructure.
Rao does not agree that its a high cost operation: "We are the only television news network that has two full-fledged 24 hour news channels and despite that our costs are only 20 per cent higher than our closest competitor." Besides, the company has taken cost cutting measures in the last one year.
Marketing experts also feel that NDTV's strategy of pushing its anchors as stars also worked. Says Rao: "We believe that this is a people-centred profession and good journalists, whether they are anchors or correspondents must be accepted by the viewers." Rival channels like Star however, point out that NDTV had built its network long before striking out on its own.
Executives in other channels, however, feel that this could only lead to trouble and may eventually work against NDTV. "When people become bigger than the channel, their egos become difficult to manage. People from NDTV India are already looking for jobs and some have come back to Aaj Tak," warns an Aaj Tak source.
Meanwhile, both NDTV and TV today are in an expansion mode, though neither will get into any details. Of late NDTV has been showing a lot of business news on its English channel. So is a business channel on the cards? Rao is non-committal. "Economics and business news has always been one of NDTV's core competencies. Yes, we are focusing on this area but our specific plans are fluid and confidential."
The Aaj Tak executive, however, says that when the company was raising money from the market, its had made it clear that it was for expansion. However, he would not divulge details.The media industry is closely watching the battle for eyeballs where fortunes can turn at the click of a TV remote.