News behind the headlines

Shobhana Subramaniam peeks behind the news on the English channels to figure out why a recent entrant like CNN-IBN is grabbing so many eyeballs.

A college student in Pune discovers that the graveyard near his house is being dug up. He gets hold of a video camera, pans the scene and hands it over to CNN-IBN. Actor Prithviraj's autistic son is not allowed to board an aircraft.

With a camera handy, the actor is able to capture the callousness of security guards. A little boy falls into a deep hole in the ground and for over 24 hours viewers are transfixed as they watch the child being rescued.

Conventional thinking has it that Indians are not a news-hungry nation, but news stories like these, many of them sent in by viewers, appear to be working. It's not a trend that has gone unnoticed.

Says Lakshmi Narasimhan, national director, Group M Media, "Part of the audience is definitely moving away from mass channels to news channels."

It's showing in the numbers too. A couple of years ago, the audience share commanded by the news genre was a pitiful 3 per cent, in 2004 it moved up to 5.4 per cent and at the end of 2005 it was 6.5 per cent. But of the nearly 100 million television households in the country, barely 1-1.5 per cent view English (including business) channels.

Marketers are certainly waking up to the potential. Farokh Balsara, partner, media and entertainment, Ernst &Young, says that of the total advertising revenues for television of Rs 5,500 crore, news channels are estimated to have a share of Rs 700-750 crore, up from Rs 645 crore at the end of 2005.

The lion's share belongs to Hindi channels, with English channels accounting for 25-30 per cent or somewhere in the region of Rs 200-225 crore. What's key is that at 30 per cent a year, advertising revenues for the genre have grown the fastest.

And the emergence of strong contenders such as CNN-IBN is making marketers sit up and take notice.

Launched in mid-December 2005, the channel, according to TAM Peoplemeter, has notched up an audience share of 31 per cent (January-September 2006) "" against Times Now's 15 per cent and NDTV 24x7's 38 per cent.

Says Rajdeep Sardesai, "I don't believe there can be monopolies in television, so there was space for us to come in."

But is it that easy to break into the market and gain marketshare? Entry costs are not quite prohibitive: a start-up channel like Times Now, a joint venture between Reuters and Bennett Coleman & Co, is believed to have spent Rs 60-80 crore, and a venture from an existing broadcasting house could be still cheaper.

Moreover, as G Krishnan, executive director and CEO, TV Today Network, points out, "Coming from a reputed media house makes a big difference. Sound business planning and experienced industry hands help greatly."

But Sunil Lulla, CEO, Times Now, doesn't agree with the low-cost entry proposition, arguing that distribution or carriage costs can pinch. "With subscription revenues practically non-existent, we need to pay the multi-service operators huge sums just to stay connected."

Times Now is estimated to have spent Rs 18 crore on carriage fees, much less than CNN-IBN's estimated Rs 25 crore.

Nor is news gathering cheap, given the expense of technology and people. "On a conservative estimate, we need Rs 50 crore annually to run the business," claims Lulla. Typically, he says, this is likely to be "as much as Rs 70-80 crore".

Then how has CNN-IBN pulled off what others have failed to? Lulla believes his rival's success stems from its ability to get the distribution strategy right: "They invested in distribution and managed to get shelf space." TV Today's Krishnan too feels that placement is important, though "good content will hold the viewer's attention longer".

That's where CNN-IBN appears to have scored too. Industry watchers feel the "participative nature" of CNN-IBN's interactive shows Public ka Kaptan and Citizen Journalist have been a big plus.

A senior executive from India's biggest broadcasting house observes that "the channel doesn't talk down to the viewer, it talks to him". Adds Raj Gupta, chief strategy officer at Lintas Media Group, "The reason CNN-IBN has become popular is because it comes across as a youthful channel and has a tempo that is faster than that of NDTV 24x7."

Ernst & Young's Balsara agrees that beyond getting the distribution right, "CNN-IBN came with a pedigree brand in CNN and a strong editorial team with Rajdeep Sardesai. The channel has an editorial style that appeals to a section of people."

Adds Punitha Arumugam, group CEO, Madison Communications, "You can't say the entry barriers are low; the quality of content has to be sustained."

According to Arumugam, the fledgling channel has done a good job of promoting itself, and much of the competition believes Rajdeep Sardesai is a strong brand himself, while programmes like Citizen Journalist have played a role in building loyalty.

"It's not always the numbers that matter, it's the emotional involvement," points out Lulla. Observes Sardesai himself, "We believe aggression is missing in Indian journalism today and we want to bring that in. That's not easy."

Besides the credibility of the CNN tag, the marketing team took branding initiatives with leading newspapers such as The Hindu, Indian Express and Deccan Herald, to break stories together. Says Dilip Venkatraman, director marketing, Global Broadcast News, "We got tremendous mileage by teaming up with the papers and reaching out to audiences that partly overlapped with the channel's."

Media buyers who admit they didn't believe CNN-IBN could establish itself so soon, are now coming round. Says Group M's Narasimhan, "We are using CNN-IBN for our clients because it is becoming a significant challenger."

Lintas' Gupta, who advised Idea Cellular to sponsor Citizen Journalist because "it was a brand-building property, different and would give Idea visibility", confirms recommending the CNN-IBN platform. Of course, NDTV 24x7 still commands a big premium for its slots. "I think we'll command this for a long time," says Raj Nayak, chief executive, NDTV Media.

However, Nayak concedes that slots on NDTV Profit "" the English business channel "" are going at a 40 per cent discount to rival channel CNBC TV18's slots.

According to TAM Peoplemeter System, CNBC TV18 commanded a 67 per cent relative market share compared with 33 per cent for NDTV Profit (CS AB 15 years plus, six metros) between January-September. CNBC TV 18's success is attributed by industry watchers to the quality of its content.

Says a media buyer, "NDTV Profit didn't do anything different from the incumbent, so viewers had little reason to switch. The news space tends to become commoditised. However, a couple of channels stand out."

Says Narasimhan, "CNBC TV18 has become almost like a home page for decision-makers and does not have an identity crisis."

Retorts Nayak, "We don't believe in TAM. According to us, we are neck and neck with CNBC TV18." However, Dhanraj Bhagat, practice leader, Grant Thornton, says, "Apart from content, the quality of anchors too makes a big difference."

NDTV Profit, however, attracts all the top brands and commands revenues of over Rs 40 crore, according to Nayak. With more advertising money moving to news, the channel has benefitted.

Says Nayak, "With so much fragmentation in genres across television, advertisers find news emerging as an effective way to target audiences. Marketers realise spending on live cricket may be more costly and less meaningful than advertising on a news channel "" because the same budget can fetch you many more slots over a longer period of time."

Bhagat believes the margins for channels too can be very attractive after the initial gestation.

"Though operating costs may be high, the leverage will kick in once viewership grows and a channel is able to command premium rates," he explains.

And there are enough reasons why the genre will grow: a low base, a growing educated and working population, demographics skewed in favour of the young, a booming economy and stock markets, and enough catastrophes and calamities to keep viewers hooked.

Moreover, as Balsara, points out, "Most news channels are throwing in entertainment, cricket-based shows and general trend stories for good measure."

Marketers are aware of the huge purchasing power of the younger audience. "It's a new trend. English channels are attracting youngsters between the ages of 29-34 and are therefore beginning to get ad revenues," says Balsara, who estimates ad revenues for the genre could grow at 18 per cent in the next few years.

That's possibly why the space is going to see more entrants. There's talk of an English news channel from Reliance Industries and an English business channel from the TV Today Network. But not everyone will make money.

Says Krishnan, "There is definitely potential, but for a new channel to gain a foothold will be an uphill task."

Add to that falling tariffs "" media buyers say NDTV 24x7's pricing is bound to be impacted sooner rather than later "" and it certainly doesn't look like it's going to be easy for anyone.

What will ease the pressure, to some extent, is increasing digitisation (CAS and DTH) which, as Lulla points out, would take away the pain of distribution. Then, the future may lie in differentiated, niche channels, as in the West.

The consumer, of course, will continue to call the shots.

It's all ha ha, hee hee, haw haw
The next peg in the race for leadership is going to be fought in the entertainment space, and online

Having built up a strong broadcasting presence, the Rs 224 crore NDTV is now leveraging its competencies in the media and broadcasting spaces to add several new growth drivers: media process outsourcing, Internet ventures, media consultancy and entertainment.

The idea: to be a complete media and communications house with a presence in the television, Internet and mobile spaces.

Projecting revenues of Rs 2,275 crore in the next five years, NDTV management has said it is looking to launch a bouquet of new channels including one each in the Hindi general entertainment, lifestyle and metro spaces.

It had already forged a joint venture with Astro Broadcast, in which it has a 20 per cent stake, to launch news channels in countries abroad: the first channel has been launched in Indonesia, and another in Malaysia is on the cards.

In March 2006, NDTV had announced a 50:50 joint venture with Genpact for media process outsourcing for services such as editing, digitisation and closed captioning. The addressable opportunity: an estimated 1 per cent of the global media business coming India's way could translate into revenues of $15-17 billion.

NDTV is also aggressively scaling up its Internet ventures, gunning for both advertising as well as transaction-based revenues from portals including those for travel, shopping, commodities and movies. In the meanwhile, it has entered into a strategic marketing tie-up with Microsoft to market ad space at MSN in India.

In alliance with Astro Broadcast and Value labs, NDTV is trying its hand at radio: it bought out Red FM "" which operates in Delhi, Mumbai and Kolkata "" from the TV Today group. It is obviously hoping that the government will open up the radio space for news.

The TV18 group too, which boasts strong properties across news genres through four channels, has been quick to take advantage of the growing popularity of the Internet space, starting out almost five years ago.

Leveraging its television viewership "" estimated at 70 million adults "" the group has built up a franchise across verticals, ranging from sports and shopping to investments and travel, launching a number of properties in quick succession.

While some of these properties are the result of inhouse efforts, the company has also opted for the inorganic route wherever possible. It now has a variety of properties including www.moneycontrol.com, www.commoditiescontrol.com, www.poweryourtrade.com, www.ibnlive.com, www.jobstreet.com and yatra, all of which have the potential to be scaled up and monetised.

Says Ajay Chacko, head marketing, CNBC TV18, "There are a lot of things that cannot be done on television, so we intend to be in the Internet, CD and mobile spaces too. We believe we will be able to bundle these services for advertisers and give them several options, and advertisers will pay us a premium for our reach and quality."

The group intends to house all its Internet ventures in Web18 "" a wholly-owned subsidiary of TV18. In April 2006, TV18 signed an MoU with JobStreet Corporation Berhad, Asia's largest recruitment portal, picking up a 50 per cent stake in its Indian outfit.

This was followed up by the acquisition of three Internet companies "" Cricketnext.com, Compareindia.com and Urban Eye, a web design and technology firm, giving the Internet initiative a further fillip The high-margin Internet businesses contributed approximately 12 per cent of revenues in the first quarter of FY07 of Rs 42 crore.

To fund some of its new ventures, the company plans to raise around Rs 300 crore, possibly through financial and strategic investors.