Even as the competition in the television news business gets hotter, broadcasters such as Times Global Broadcasting Co Ltd, Network 18 and UTV are looking to raise over Rs 600 crore (Rs 6 billion) to fund their growth plans.
Industry estimates show that the business news channels generate about Rs 300 crore (Rs 3 billion) a year in advertising. However, with the economic slowdown, ad revenue is expected to drop by about 15-20 per cent this year.
Times Global, promoter of the leading English news channel, Times Now, is expected to raise between Rs 250 crore (Rs 2.5 billion) and Rs 300 crore (Rs 3 billion) to finance its general news channel and to fund its entry into business news channel segment. To be launched in June, the group's ET Now will take on the three existing English business news channels, CNBC TV18, NDTV Profit and UTVi.
UTVi was launched last year by Mumbai-based media magnate Ronnie Screwvala. It now wants to bring in a strategic partner with the offer of a 'significant stake.' Investment banking sources said the company was looking to raise between Rs 100 crore (Rs 1 billion) and Rs 125 crore (Rs 1.25 billion) on a company valuation of about Rs 200 crore (Rs 2 billion). UTV executives declined to comment, but the numbers suggest Screwvala is willing to offer a controlling stake in the television operation.
Meanwhile, Raghav Bahl, whose group runs business news channels CNBC TV18 and Awaaz, and general news channels CNN-IBN and IBN7, has already said he would raise Rs 200 crore (Rs 2 billion) in Network18, the group holding firm. Speaking to Business Standard earlier, Bahl said: "We need money to fund ventures which are still in the investment stage. We need Rs 150 crore (Rs 1.5 billion) for Viacom 18 (Colors and MTV) and about Rs 50 crore (Rs 500 million) for Web 18."
And NDTV has announced plans to split its entertainment and news channels into separate companies, apparently to raise fresh capital to finance operations. No specific capital-raising plans have been announced yet, though.
While Times Global and UTVi are privately held, NDTV and Network 18 have a market capitalisation of Rs 530 crore (Rs 5.3 billion) and Rs 425 crore (Rs 4.25 billion) respectively.
Asked about fund-raising plans, Times Global CEO Chintamani Rao did not comment. According to information available, the Times group has already made substantial financial commitments, totalling more than Rs 450 crore (Rs 4.5 billion), in the news television business.
Of this, close to Rs 300 crore (Rs 3 billion) are said to be in the form of equity and preference capital, while Rs 160 crore (Rs 1.6 billion) is said to be in the form of unsecured loans. By the end of March 2009, the company is estimated to have incurred about Rs 300 crore (Rs 3 billion) in cumulative losses over four years.
At UTVi, more money was needed to meet losses for the next two years, a source said. The channel, launched in April 2008, earns around Rs 2 crore (Rs 20 million) a month and incurs an operating monthly expenditure of Rs 7.25 crore (Rs 71.5 million). So, its monthly loss is around Rs 5 crore (Rs 50 million), translating into an annual loss of around Rs 60 crore (Rs 600 million), the source has said. The losses are mainly due to low advertising revenues and increased 'placement' fees to cable operators.
