TV18 is banking on acquisitions and internet properties for growth. TV18, the company that owns channels like CNBC and Awaaz, has demonstrated 45 per cent growth in its topline at Rs 32 crore. This is noteworthy given that the June quarter has traditionally been a dull quarter for this business. Investors would also be benefited from the restructuring that will happen soon.
A new entity, Network 18, would be created which would be listed along with TV 18. Currently, the news channels and web portals are clubbed under two entities "" TV 18 and Global Broadcast News (GBN).
After restructuring, TV18, which currently consists of CNBC and the portals""moneycontrol.com, commoditiescontrol.com and poweryourtrade.com""would also bring into its fold Awaaz from the GBN stable. GBN would be left with the recently launched channels CNN IBN and Channel 7. Network 18 would hold a 51 per cent stake in each of the entities. Analysts see this move in positive light.
We spoke to the CEO of TV18, Haresh Chawla, to throw some light on this and share his thoughts on the way ahead for TV18.
With rising competition, how is CNBC""TV18 going to retain its position going ahead?
Our strength lies in the expertise of our anchors and analysts and we continue to invest in building our knowledge and expertise. We will continue to evolve our programming.
Even after the launch of channels from competition, we hold a large sway over the business space. CNBC""TV18 is today the largest business brand in the country""we reach more business users compared to any business daily, magazine or channel.
Channel 7 and CNN IBN operate in an already crowded general news space. How do you plan to achieve dominance here?
After dominating every facet of the business genre with CNBC""TV18, Awaaz and moneycontrol.com, it was only logical for us to set our sights on the general news genre. I would attribute the 'quick' success of CNN IBN to a fantastic editorial effort led by Rajdeep Sardesai along with great inputs and learning from a global leader like CNN.
When the first signs of success in the English news genre started showing, we started making our moves in the Hindi news space. Channel 7's ratings have already doubled since we took over and we hope to break into the top three within a short while.
Our progress in the news genre has been as follows:
To become India's No. 1 English news channel ""achieved with CNN IBN Become India's No. 1 news network""achieved (4 news channels today) Become India's No. 1 Hindi news channel"" WIP What has been the trend in ad rates and how do you expect it to be going forward?
We have been steadily hardening our ad rates across the network. As a network, most of our distribution revenue comes through CNBC""TV18 and Awaaz "" the pay channels in the bouquet.
Therefore, the ratio lingers at around 85: 15 skewed in favour of advertising revenues. We expect this to change as alternate distribution platforms gain traction in the market place. There is also an emerging market abroad for our channels and various opportunities here are being worked on as well.
Over the last two years we've grown in excess of 50 per cent per annum on the ad revenue front and this was for one channel, CNBC""TV18. This year we have three more channels which have come on""stream and have started gathering momentum. We expect that our older channels will grow at about 20 per cent and the newer ones at a much higher rate.
What would be the impact of CAS, whenever it comes through, on your subscription revenues?
The entire landscape of the business is set to change with CAS, DTH and broadband delivery over the next three years. As a news broadcaster with 'must""watch or must""have' channels, this development should have a significant positive impact on our business model as subscription revenues start becoming drivers for our business.
At present, we realise only 10""15 per cent of our potential subscription revenue. Further, it will impact our growth plans too since channel viability will rest on twin pillars of subscription and advertising unlike the one""legged hop all broadcasters have to suffer through today.
Beyond this, other avenues such as mobile, non""linear TV, IPTV are emerging as sources of revenues.
Are you eyeing any acquisitions? What are your future growth plans?
We are always on the look out for inorganic modes to grow our business. Historically, most of our growth has come from inorganic acquisitions of businesses or teams. One of our keys to success is the fact that we've been able to integrate and scale up acquired businesses rapidly. We'll continue on this path.
What are your internet plans? What is the kind of growth you expect here?
Between moneycontrol.com and ibnlive.com, we are the leading financial and general news portals in the country. We expect to expand rapidly and the way forward will be to build and nurture online communities across various content areas.
Our entry into the online travel space (yatra.com) and the recruitment space (jobstreet.com) are a few indicators of the direction we are taking. We are on the verge of clinching a few more acquisitions in the internet space. Like in the TV business, our internet business will also be propelled by inorganic growth followed by a massive scaling up exercise.
Going forward, we expect the TV""Internet combination to be an effective tool for building communities and for offering solutions to advertisers. I would not be surprised if, one year down the line, we are known as much for our internet properties as we are today for our TV properties.
We've done over $1mn in revenues from our internet businesses in the last two quarters. The revenue stream, though only comprising about 10 per cent of our topline, has grown by over 400 per cent since last year.
We expect this kind of momentum to continue. Our spends on these businesses is marginal compared to competition since we have a large television franchise and thus our customer acquisition costs are minimal.
Could you throw some light on the restructuring?
We have received the High Court approval for our restructuring and expect the exercise to be completed in the next 6""8 weeks. All our internet businesses have been spun off into a single entity "" Web18.
Three years down the line, how do you see the revenue mix of the two key companies?
I believe that the entire industry is headed for a re""rating of its business model. I expect that in the next 3""4 years we will garner anywhere between 30""35 per cent of overall topline from subscription revenues (in absolute terms it may go up by 4""5 times), about 50 per cent from advertising and the balance from the Web services business.
