You'll have 20 - that's right, 20 - news channels

India now has 8 news channels. Another dozen or so more are being launched

Sanjay Gupta, chief executive officer of Jagran Prakashan Ltd, the publishers of India's most widely read (according to the latest Indian Readership Survey) Hindi daily, "Dainik Jagran," is unusually busy.

With his younger brother, Siddhartha, he is shuttling between television industry consultants, market research agencies and Broadcast Engineering Consultants India Ltd, the government company that executes turnkey television and radio broadcasting projects. Gupta and his Australia-returned brother are working on a big project. Launching a television channel, perhaps?

"Yes, we are getting into the television news business," admits Gupta, adding that it is too early to share details. "The launch is a few months away "� may be August or September. Indian Market Research Bureau's field work is under way and the name of the channel is yet to be decided," he says.

A 24-hour Hindi news channel is on the cards as it has synergies with the group's newspaper business, which reported nearly Rs 240 crore in advertising revenue last year.

Gupta is not alone in exploring the potential of television news. At least two other Hindi newspaper publishers "� "Dainik Bhaskar" and "Rajasthan Patrika" "� are rumoured to be considering a foray into television news. Bhaskar's director Girish Agarwal, however, says that there are no immediate plans.

"But we are a dynamic group and if there is a clear niche we will not miss the opportunity," he adds. Rajat Sharma and the Adhikari brothers too have publicly stated that their companies plan on launching Hindi news channels.

Notes Zee group vice chairman Jawahar Goel: "Suddenly politicians, software companies and print media houses are rushing to launch channels, the most vigorous action being in the news category."

According to one television channel project report, nearly 22 million of the over 40 million cable and satellite homes in the country are in the Hindi-speaking states. Small wonder, then, that most channel promoter wannabes are eyeing the Hindi heartland.

Nor is the rush to launch news channels confined to new entrants. At least one national news channel company is considering launching metro or city specific and vernacular news channels. Says Ravina Raj Kohli, president at Star News: "While metro-specific channels could give us retail advertising, vernacular channels will open up a new advertising stream."

Even TV Today has been toying with the idea of launching metro channels, according to insiders, though the company's executive director G. Krishnan maintains that TV Today will first consolidate its existing channel business.

Right now, at least eight national news channels are fighting for viewership and advertising (see chart). By the end of this year, at least three additional news channels (SAB Samachar, Rajat Sharma's India TV and "Dainik Jagran's" 24-hour Hindi news channel) will be in place, apart from a host of metro and regional news channels. So that could add at least another 8 channels to the tally, taking the total to almost 20 channels.

All the new news channels won't have a national footprint. Most will be confined to regions and will cover local news. While Ramesh Sharma's Moving Pictures' city-specific Dilli One is waiting in the wings, BAG Films is also said to be preparing to become a broadcaster.

Ask BAG Films' managing director Anuradha Prasad about her channel plans and you'll get a cryptic reply: "There are no immediate plans to get into the channel business. However, the fact is that we are just about 20 per cent short of a full-fledged news channel's infrastructure. All we need is an uplinking facility and distribution," she notes.

It is not difficult to fathom why companies of all hues and sizes are flocking to the news business. For starters, the cost of launching a channel is not too high. According to "Dainik Bhaskar's" Agarwal, it takes about Rs 40-45 crore to launch a news channels, including the first year's operating costs.

"An entertainment channel may cost you no less than Rs 200 crore," he says. Transponder and uplinking costs have dropped dramatically over the last 10 years, from Rs 15 crore a year to a little under Rs 1 crore.

Besides, television news advertising is showing no signs of tapering off "� it's grown from Rs 30-40 crore five years ago to Rs 360 crore last year and is expected to top Rs 400 crore this financial year. "I don't see why news channels cannot generate Rs 1,000 crore in advertising in the next three to four years," says Krishnan.

Sandip Tarkas, president (south Asia) at media agency MPG, says that the news segment's market share of viewership is growing. "The future looks good. The news channels' combined share has grown from 3 per cent two years ago to roughly 8 per cent now. Revenue is bound to grow."

The money is what's driving everyone to launch news channels, not the influence of being a channel promoter. "What clout? It is pure profit that is pushing people to enter the business, though they must remember it is a long haul," says Kohli. Once direct-to-home (DTH) services are launched and the conditional access system (CAS) is put in place, subscription revenue will start flowing in.

Broadcasters now make about Rs 1,200 crore a year from subscriptions. This figure is expected to double by 2007. Kohli also notes that once news channels become pay channels, they will be a big source of revenue for television broadcasting companies.

To be sure, a foray into news channels is seen as a necessity for newspapers. "The growth of the news channel genre is the first real challenge to newspapers and it will be interesting to see how they cope with it," points out Tarkas.

How will the increased competition affect the news channel market? It is bound to erode the profitability of the existing channels. In the last one year, the viewership share of market leader Aaj Tak has dropped from over 60 per cent to under 40 per cent.

Though it is said to have garnered nearly Rs 145 crore in advertising between April 2003 and March 2004, its profitability is likely to be affected, says a former Star India executive. "As of now, Aaj Tak seems like Maruti Udyog Ltd "� it will see its market share drop but it will continue to be the leader. A lot will depend on how other channels perform," he adds.

Senior executives at some of the existing channels privately admit that the newcomers cannot be taken lightly because they have the potential to garner advertising from the them. For instance, "Dainik Jagran" is India's most widely read Hindi newspaper and has a captive market in the Hindi belt.

"Besides, the "Kuber paan masalas" and "Today chais" are originally their print clients. Advertisers such as these who made their debut on news channels may move back to channels run by regional papers," a media industry expert says. Counters Krishnan: "I fear no migration. Our inventory is full."

MPG's Tarkas too believes that newspaper companies don't necessarily have an edge in the television business. "They are as much threat as anybody else. They need to have a compelling offering which will get them eyeballs and have the right positioning, content, distribution and marketing strategies. Merely having a presence in the newspaper segment does not make them any more or any less formidable opponents," he says.

Adds Kohli: "The scale of news operation in the print and television media is completely different. Television news is a high investment, high return business."

Those who're leaping into television news won't find the going easy either. NDTV has already lost Rs 47 crore in its first year of independent operations. Kohli admits that Star News has not broken even in the first year, though its revenues are "bang on target."

Industry estimates suggest that Star News mopped up nearly Rs 50 crore in advertising. Indeed, Krishnan warns those who may be entering the business without doing their sums: "You need to keep investing in the business to stay competitive. Our cost of operations has almost doubled in the last three years, from Rs 45 crore to nearly Rs 80 crore today." The cost of news gathering, salaries, infrastructure (OB vans) has added to the bills,he adds.

Besides, the viewership of news channels can never match that of general entertainment channels. "Entertainment will always receive the dominant share of advertising as that's where the largest audiences are found. Advertisers are primarily interested in the quantum of the audience, apart from the quality," explains Tarkas.

Ravina Raj Kohli

Yet Kohli thinks that the news genre is under-served and under-developed. "As of now it seems that there is space for at least four to six good players in the segment," says Tarkas. Ultimately, however, there's bound to be a shakeout "� reason perhaps for Sanjay Gupta to evaluate his business plan more carefully.

Sanjay Gupta