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Increasing competition and loss-making revenue models have been forcing Network18 to go in for cost-cutting measures, including laying off employees. At the same time, the media company has been pumping money into its cash-strapped, loss-making businesses
Media and entertainment company Network18 Media and Investments Ltd, which has been pumping money into its cash-strapped, loss-making businesses to keep them alive, is finally taking a call on the situation. According to sources, the media company has laid off about 350 employees, mostly technical and production employees from its Web operations. It (the layoff) also includes some journalists, the majority of whom have now joined Zee Business.
According to a source, who wishes to remain anonymous, the company has not offered any increment this year. Even its Web-based commodities operations employees have not received any increment since the last one-and-a-half years, the source added. Network18 has also reportedly closed its technical analysis beat from the Web operations of moneycontrol.com and wants to outsource the same to cut costs.
In November too, Network18 laid off around 200 permanent employees as part of a restructuring exercise aimed at merging broadcast operations of its Hindi and English business news channels. According to a filing by the company to the Bombay Stock Exchange, the 'one time' restructuring cost it Rs4.50 crore on account of rationalising the workforce.
During the quarter to end-December, Network18 reported a consolidated loss of Rs21.30 crore from Rs44 crore, as total revenues increased to Rs370 crore from Rs222.76 crore, a year ago. It also swung into positive earnings before interest, tax, depreciation and amortisation (EBITDA) with Rs8.11 crore from a loss of Rs38.90 crore in the same period last year. Network18's operating profit margin remained poor at just 2%.
In a release, Raghav Bahl, managing director, Network18, said, “We are holding on to cash, equivalents and liquid investments in excess of Rs1,000 crore across group companies. If revenue growth momentum continues as projected, we hope to enter a strong profitability and cash generation phase in the next few quarters."
During the third quarter of FY10, Network18 also received cash infusion from Nokia and GS Home Shopping into its Web business. Nokia Growth Partners, an investment fund owned by Finnish mobile handset maker Nokia Oyj, has invested $10 million (Rs48 crore) in Web18 Holdings. Similarly, South Korea’s GS Home Shopping, the world’s third-largest home shopping network, has invested $18.50 million in HomeShop18, a Network18 subsidiary.
These investments have given Network18 a 'comfortable' position. "Both the Web and HomeShop businesses have welcomed strategic capital (from Nokia and GS Home Shopping) in Q3, putting both operations in a comfortable cash position to aggressively scale up their ambitions," Mr Bahl said in a release.
At the same time, the media company has been pumping money into its cash-strapped, loss-making businesses, to keep them alive. Unfortunately, several group companies and subsidiaries of Network18 are so heavily weighed down by losses, that their net-worth has been completely eroded. Belying their glitzy public images and continuing expansions, they are essentially sick companies.
The revenue model of media companies, especially those with a bouquet of TV channels, has always been under tremendous stress. Obscene salaries, lavish overheads and large dollops of equity options made these companies among the most expensive operations in India relative to their revenues. Quarter after quarter, we have marvelled at the ability of TV channels to survive the deluge of red ink that would have drowned companies in any other sector.
The launch of ET Now, a business news TV channel, by the deep-pocketed Times group has created more pressures for peers like CNBC TV18, NDTV Profit and Zee Business. With its 'complete package' for advertisers, including a business daily and TV channel, the Times group is snatching away a major chunk of ads from other media companies.
Moneylife had reported about this earlier (see here). The properties and titles of Network18 are spread across print, Web and television (news, business, general entertainment and music) and almost all of them are making losses. Last month, Network18 had to rescue its sister concern, Infomedia, the publishing unit of its group company TV18, by infusing liquidity through inter-corporate deposits of Rs58.50 crore. Network18 had also supported Infomedia when its rights issue failed in January.
Incidentally, Network18 has been busy launching and acquiring several new businesses with funding mostly through public money and later from bank finances. Virtually nothing has been funded through internal accruals, raising doubts about the inherent viability of the businesses.
The prime minister has told a party meeting that necessary steps have been taken in consultation with chief ministers and the results would be visible in the next few weeks
The results of the steps taken to control price rise would be visible within the next few weeks, prime minister Manmohan Singh said on Friday, reports PTI.
Dr Singh gave this assurance at the Congress Working Committee (CWC) meeting in New Delhi which deliberated on the issue of rising prices, according to party leader Mani Shankar Aiyar.
The PM told the meeting that necessary steps have been taken in consultation with chief ministers and the results would be visible in the next few weeks.
Chief ministers of Congress-ruled states gave a presentation on steps taken to control price rise.
"We have been asked to take steps to control rising prices and check hoarding and black marketing," Assam chief minister Tarun Gogoi said.
The issue of Telangana also came up in the meeting with home minister P Chidambaram stating that the terms of reference of the Srikrishna Committee would be finalised soon.
The issue of 'Mumbai for all' also came up with some leaders being critical of the stand taken by the Shiv Sena and the Maharashtra Navnirman Sena (MNS). Rahul Gandhi was not present as he was away on a tour of Maharashtra. The state’s chief minister Ashok Chavan was among those absent as he was in Mumbai with Mr Gandhi.
This is the first meeting of the CWC in the New Year amidst increasing criticism of the Union government's alleged failure to control prices.
Today's meeting came a day before the conference of chief ministers convened by the prime minister on price rise and at a time when consultations are on for the Union budget to be presented later this month.
The price rise in recent months has led to a veiled attack on agriculture minister Sharad Pawar, with Congress leaders saying that not enough was being done on this front by the Nationalist Congress Party (NCP) leader.
Congress president Sonia Gandhi in a letter to party workers had recently said that the issue of price rise was one of the highest concerns and she had taken up the issue with the prime minister.
The previous CWC meeting on price rise was held in August last year in the wake of the drought situation and rise in prices of essential commodities. The meeting had asked the party and government to observe austerity measures.
Toyota faces probes of brake problems with its latest model Prius in the US and Japan but remains tight-lipped about adding the gas-electric hybrid to the millions of cars it has recalled
The damage to Toyota Motor Corp's image is growing by the day with the automaker now considering a US and Japanese recall of its Prius hybrids—the vehicle that's a symbol of its technological prowess and green car ambitions, reports AP.
The beleaguered automaker faces probes of brake problems with its latest model Prius in the US and Japan but remains tight-lipped about adding the gas-electric hybrid to the millions of cars it has recalled. Toyota is also investigating possible brake problems with its luxury Lexus hybrid. Nihon Keizai, Japan's top business newspaper, said on Friday that Toyota would soon notify the country's transport ministry and the US Department of Transportation of a recall of 270,000 Prius hybrids.
Toyota said it is considering a recall but no decision had been made. "Nothing has been decided on whether we will recall or not," spokeswoman Ririko Takeuchi said.
Some owners of the 2010 Prius have reported that their brakes do not always engage immediately when they press the brake pedal, or that the brakes have an inconsistent feel. The problem has been fixed with a software programming change for Prius vehicles sold in Japan and overseas since late January but not for vehicles sold before then.
The US National Highway Traffic Safety Administration said it would assess the scope of the problem in the Prius and the safety risk to about 37,000 cars that could be affected.
Toyota, however, has said that it sold 103,000 of the new Prius in the US since May last year.
The investigation comes as safety questions surround Toyota, which has already issued broad recalls for millions of its best-selling vehicles, including the Corolla and Camry, because of gas pedals that can become stuck.
US officials have blessed Toyota's solution to that problem, a small piece of steel designed to eliminate excess friction in the pedal mechanism, but have criticised Toyota for being too slow in responding to customer complaints.
Takeuchi said Toyota is also investigating possible brake problems with its luxury Lexus hybrid, which uses the same brake system as the Prius. Toyota has not received any complaints about the Lexus HS250h and the probe is to ensure safety, she said.
Congressional investigators expanded their review of Toyota to include the Prius as California Rep Darrell Issa, the ranking Republican on the House Oversight Committee, asked Toyota for records on its Prius brakes.
The committee plans a hearing next week on Toyota's recalls, the first of two in Congress this month. Mr Issa said he would focus on whether Toyota or NHTSA failed to properly deal with safety complaints or address them quickly enough.
"We think they should have acted more aggressively or quickly," said Mr Issa, who owns four Priuses, none of which fall under the investigation.
Connecticut attorney general Richard Blumenthal said that he and attorneys general in other states may take legal action against Toyota over possible deceptive claims to consumers about the safety of the company's cars.