Chennai: NDTV-Hindu Media Ltd, a loss-making Chennai-focused television channel that found no takers despite being on the market for nearly six months, is likely to be sold or shut by August, two people familiar with the matter said.
“They are trying to sell it or wind it down. If they don’t find a buyer even two months later, they will have to close it,” one of them said, asking to remain anonymous. “They are trying to sell the channel for the past six months. The channel never made money or broke even.”
Business Standard reported the possible sale of NDTV-Hindu yesterday.
Publicly listed New Delhi Television Ltd (NDTV), founded by journalist Prannoy Roy, has a 51% stake in the joint venture. Kasturi and Sons Ltd, publisher of The Hindu and The Hindu Business Line newspapers, has a 49% interest. NDTV-Hindu, with its Chennai-specific English news and entertainment programmes, has made losses since its May 2009 launch, according to people with knowledge of the financials. The joint venture has lost at least Rs20 crore so far.
“Revenues were no more than 10-15% of the anticipated figures of Rs9-10 crore a year,” said the second person familiar with the matter, who also didn’t want to be named. “And so they are not finding any buyers.”
One reason for the poor performance was the timing of the start. Advertising revenues were slack in 2009 after the global financial meltdown. Moreover, the channel’s English programming attracted a small, niche audience. Advertisers prefer widely watched regional channels with local language content, media buyers and analysts say.
“Generally, the reason for approaching any news channel is the distribution, and local channels in general are unable to get the distribution right,” said Rajendra Prasad, who heads media-buying company MEC’s south India operations. “In the case of NDTV-Hindu, the accessibility and opportunity to see the channel was not there, because it did not appear in the top two or three channels.”
Besides, the start of a power struggle at family-owned Kasturi and Sons couldn’t have helped the financial health of the channel, which started out with equity investments of roughly Rs10 crore from its stakeholders.
“NDTV’s cost structure has always been very high—very high salaries and other costs,” said a media analyst with a Chennai-based broking firm, who didn’t want to be named. “It may find a buyer—the channel is decent enough. They will stay open until they find some equity funding.”
The joint venture’s troubles escalated last year when chief executive Rajiv Lulla quit.
An NDTV spokesperson confirmed Lulla’s departure, but declined to talk on the likely sale or shutdown of NDTV-Hindu. “We don’t comment on market speculation,” the spokesperson said.
NDTV and its related businesses reported a loss of Rs60.8 crore for the March quarter, and a loss of Rs173.9 crore for FY11.
NDTV’s stock ended 95 paise lower at Rs67.30 on Thursday on the Bombay Stock Exchange.
Harini Subramani and Amritha Venketakrishnan contributed to this story.