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Moneylife » Companies & Sectors » Sector Trends » BBC Entertainment’s pull-out symbolises deep flaws in the TV channel business

BBC Entertainment’s pull-out symbolises deep flaws in the TV channel business

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Moneylife Digital Team | 06/11/2012 05:07 PM | 

BBC Entertainment could not survive due to extreme fragmentation of the advertising cake and high cost of operations. But then how are so many other Indian channels surviving? By a combination of paid news and endless supply of dubious funding? If so, we have created a system by which bad channels will drive out the good ones

BBC Worldwide has confirmed the closure of two of its channels, BBC Entertainment and CBeebies in India. In a statement it said, “BBC Entertainment and CBeebies are to be withdrawn and will no longer be available beyond the end of November 2012 for viewing from India.” The closure of these channels, which were providing quality entertainment, raises a key question over the means and methods of survival by other mediocre TV channels that continue to thrive in the country.

 

According to data from the Telecom Regulatory Authority of India (TRAI), as of March 2012, there were 831 registered private satellite TV channels in the country, out of which 184 are paid channels. Maximum number of TV channels including pay, free-to-air (FTA) and local being carried by any of the multi-system operators (MSOs) is 377, while the same for conventional analogue form is limited at 100 channels. Last year, the number of TV channels in India was 745, out of which 366 were in news and current affairs category while 379 were in non-news and current affairs category. That too when the government increased the net worth criteria for those seeking permission to run TV channels in the country in order to deter non-serous players from crowding the electronic media landscape.

 

This shows there is no dearth of new TV channels or rather there is ample funding available for running TV channels in India. What is the source of this money? Certainly not advertising because there is just not so much of advertisement available to support so many channels. It is also not subscription because most channels are bleeding losses paying carriage fee to cable and DTH companies just to be beamed. According to the research report, called Chrome Dii R2 (Distribution Investments Index - Round 2), the carriage fee paid was Rs28 crore per year, if you were new, or Rs22 crore if you were an existing one. So, how are hundreds of mediocre channels surviving and what does it say about the quality of news and information we can expect in future?

 

One source of revenue is paid news and long TV commercials which encourage you buy dubious products that slim you down or gold coins that bring you luck. But the main source of funding for TV channels, especially news channels, comes either directly from politicians or dubious businessmen running chain money schemes and who want to be close to politicians. From national parties to independent corporators, everybody is interested in controlling the TV screen.

 

In Kerala, the Communist Party of India (Marxist) or CPI-M, controls Malayalam Communications, which owns Kairali TV and People TV. The Kerala Pradesh Congress Committee (KPCC), along with four businessmen own a combined stake of 26% in Jai Hind TV that is owned by Bharat Broadcasting Network. Former minister and KPCC spokesperson Ramesh Chennithala controls the operations of this channel. Some members of the KPCC had an investment of about Rs20 crore in Indiavision channels, which is controlled by MK Muneer, former minister and Muslim League leader.

 

Neighbouring Tamil Nadu is really a battlefield for TV channels. Here almost every political party or politician seems to either own or control a channel. The biggest name, of course is the Maran brothers, who are grand nephews of Karunanidhi. Besides significant presence in radio and newspapers, the Marans control Sun TV, Sun News, KTV, Sun Music, Chutti TV, Sumangali Cable, Adithya TV, Chintu TV, Kiran TV, Khushi TV, Udaya Comedy, Udaya Music, Gemini TV, Gemini Comedy and Gemini Movies.

 

On the other hand, Karunanidhi, the patriarch of Dravida Munnettra Kazhagam (DMK), controls Kalaignar TV. His close associate M Raajhendran owns 11.3% stake in Raj Television Network, which runs Raj TV and Raj Digital Plus. Kalaignar TV allegedly received funding from the 2G spectrum deals, courtesy Andimuthu Raja, the then telecom minister.

 

Karunanidhi’s arch rival and Tamil Nadu chief minister Jayalalitha controls Jaya TV, Jaya Max, Jaya Plus and J Movie through a company called Mavis Satcom. Congress, which does not have a significant presence in the state, however, figures on the TV screen. H Vasanthkumar, MLA and president of Tamil Nadu commerce wing of Congress, controls Vasanth TV, while former Union minister and MP KV Thangbalu run Mega TV. S Ramadoss, chief of Pattali Makkal Katchi (PMK) and father of former union minister for health, Ambumani Ramadoss, controls Makkal TV

 

In Andhra Pradesh the oldest and biggest media empire is owned by T Venkataram Reddy (TVR), who is nephew of T Subbirami Reddy, a Congress MP. TVR owns a 21% stake in Deccan Chronicle Holdings, which has four newspapers, Andhra Bhoomi, Deccan Chronicle, Asian Age and Financial Chronicle. The TV space in Andhra Pradesh, however, is influenced by Jagan Mohan Reddy, son of the late chief minister Y Rajasekhara Reddy (YSR). While the YSR family owns Sakshi TV, NTV and TV-5, a channel called T-News is controlled by K Chandrasekhara Rao, the chief of Telangana Rashtra Samiti. N Chandrababu Naidu indirectly influences Studio N, owned by his close associate N Srinivasa Rao. Telugu Desam Party MP YS Choudhary has significant stake in Maha TV.

 

Surprisingly, despite having ample funding, the politically well connected Ramoji Rao could not save his Eenadu TV channels. In 2007, when Blackstone group wanted to sell its 26% stake in Ushodaya Enterprises, the holding company of ETV, investment banker Nimesh Kampani stepped in as Mukesh Ambani wanted to help Ramoji Rao at that time. Reliance Industries Ltd (RIL) had admitted that the company and its group companies invested Rs2,600 crore in Ushodaya.

Following a deal with Raghv Bahl of TV18 group, the Mukesh Ambani group later divested its 100% interest in ETV news channels, 50% in entertainment channels and 24.5% in Telugu channels to TV18.

Read: Indian media: Mukesh Ambani's growing media empire

 

Karnataka does not seem to have the political connections like Tamil Nadu, Kerala and Andhra Pradesh, as far as TV space is concerned. Anita Kumaraswamy, wife of former chief minister HD Kumaraswamy owns Kannada Kasturi. Rajeev Chandrasekhar, an independent MP from Karnataka, controls number of language channels. He controls Asianet and Asianet Plus (Malayalam), Suvarna (Kannada), Vijay (Tamil) and Sitara (Telugu). The Reddy brothers from Bellary own Janashri and Kannada daily Ee Namma Kannada Nadu.

 

In Maharashtra, several politicians control the print media. The Darda family, which controls IBN-Lokmat and also Lokmat, one of the most read Marathi newspapers from the state. Shiv Sena chief Balasaheb Thackeray is the editor of party mouthpiece Saamna, while the Sharad Pawar family controls Marathi daily Sakaal and also owns Sam TV. Former chief minister Narayan Rane own’s Prahaar, a Marathi daily and has plans to start a TV channel.

 

In Punjab, Sukhbir Singh Badal of the Shiromani Akali Dal owns or controls PTC, PTC News, PTC Punjabi and PTC Chak De. In neighbouring Haryana, Venod Sharma, former minister and father of infamous Manu Sharma, owns India News and Aaj Samaj.

 

The CPI-M’s media empire in West Bengal is controlled by Avik Dutta through the Ganashakti newspaper and TV-24 Ghanta. Dutta also controls Aakash Bangla. Interestingly, TV-24 Ghanta is a joint venture between Dutta’s Aakash Bangla and Zee group. Trinamool Congress, also have a significant presence in the media. The Mamata Banerjee-led party controls Kolkata TV and Channel 10.

 

Minister of state for parliamentary affairs Rajiv Shukla and his wife Anuradha Prasad control News24 TV channels through BAG Films. Anuradha Prasad is sister of BJP leader and former Union minister for information and broadcasting (I&B) Ravi Shankar Prasad.

 

Even when we talk about local level presence, one can easily find the political connection behind a cablewala. Several corporators and even MLAs not only own, control and operate local cable networks. Some of the biggest operators even aspire to own a satellite TV channel through partnership with either their ‘godfather’ or other prominent politician or a minister.

 

How expensive is it to start a TV channel? It’s not small amount for businessmen who have to make money but its peanuts for top politicians who can make a few hundred crores in one irrigation scam—enough to support the channel for years.

KPCC’s initial (indirect) investment in its news and entertainment channel Jai Hind TV, for a 51% stake was just Rs33 crore in 2007. Actually obtaining a licence for starting a TV channel in India is not that expensive. One just needs to have a net worth of Rs5 crore for up-linking of non-news and current affairs channels and down-linking of foreign channels. For up-linking of “news and current affairs” channels the required net worth is Rs20 crore for the first channel and Rs5 crore for each additional channel. While there is no official figure available as cost of starting a TV channel, according to unconfirmed sources, the cost is around Rs100 crore. The cost of operating, however, depends on the content and salaries of anchors, reporters and the cost of operating OB vans used for ‘live’ reporting, if it is a news channel.

 

However, when it comes to earning a profit, it is a different story altogether. None of the new media companies are have registered a profit on continuous basis. Surprisingly, many of the loss-making TV companies have time and again found new sources of funding either from overseas or by hiving off some business.

 

Read - Media: NDTV continues to find buyers

 

While poor quality channels continue to thrive with dubious funding, the better quality channels too have to resort to paid programmes. Real quality channels that do not have endless black money are bound to shut the shop like the BBC channels. And there is no immediate solution to this Gresham’s Law in action here in media, under which bad channels drive away the good ones.


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