Raghav Bahl already rules the television news space in the world’s largest democracy. His broadcast network comprises two business news channels—CNBC-TV18 in English and CNBC Awaaz in Hindi (both market leaders that account for almost 70% of the advertising revenue in the TV business news segment) and two mainstream news channels—CNN-IBN, market leader in English news that has exclusive partnership with CNN, the Time Warner news venture, and IBN-7, the third largest Hindi general news channel, in a partnership with Jagran Prakshan Ltd, a leading Hindi publication group.
Last year, the 45-year-old managing director of TV18 Group acquired Crisil MarketWire, a leading business news wire service, and he also runs a host of Internet properties across consumer services and content domains, including one of India’s largest business portals, www.moneycontrol.com. The group’s revenues were around Rs330 crore in 2006-07 and his flagship company, TV18 Ltd, has a market capitalization of Rs4,600 crore, making Bahl both a powerful and a rich entreprenuer.
But this is just the beginning as far as Bahl is concerned.
“Today, we are India’s largest news broadcast group... We want to be a very large media and entertainment group with a significant presence across the television broadcast business, Internet and films, and filmed content space,” he says.
It isn’t just talk. On 22 May, Bahl signed a 50:50 joint venture with Viacom Inc., one of the leading global entertainment content companies, to launch a general entertainment channel. He has also taken the plunge into movie making and says films will be a significant part of his overall content business. He has just sketched out ambitious plans for a separate events business.
That leaves Bahl with no presence in radio and print. While he says he won’t get into radio, Bahl says he would love to buy “a good business newspaper, if only their owners would want to sell”.
In a relatively short time, Bahl has come a long way. In the early 1980s, as a student, he used to anchor programmes for state-run public broadcaster Doordarshan for Rs250 a day. After finishing his MBA from Delhi’s Faculty of Management Studies in 1984, Bahl worked as a management consultant with AF Ferguson & Co. and American Express, but four years later, his original love for media brought him back into television—to Newstrack, the country’s first television news magazine launched by the India Today group. Then, in 1995, it was a content provider relationship with a channel called Asia Business News (ABN) that led to his deal with CNBC, an NBC Universal broadcast venture, to launch a 24x7 business news channel in 1999. (ABN merged with CNBC in Singapore in 1997 to create CNBC Asia).
In a freewheeling interview, Bahl discusses his larger game plan, his relationship with the world’s top three media and entertainment companies and the challenges he foresees. Edited excerpts:
After the Viacom deal, print and radio are the only two gaps in your media and entertainment business. So are some more announcements in the offing?
We do want to have a presence in the print space, the business news space, to be precise, but there are no plans to get into radio. Radio is a local medium whereas we are a national player and we neither have the management bandwidth to run a local business nor the need to do so.
What are the plans for the print space? You will launch a new product or you plan to acquire one?
Given a choice, we would want to acquire a running business paper. That will be the ideal thing to do and we have the wherewithal to take this call. Launching a new product from scratch is a tedious process.
There has been some buzz that you are in talks with Business Standard.
There is no truth to it. It is just a rumour.
What explains your sudden plans to enter the general entertainment and films genre? These are, after all, extremely crowded and competitive businesses. Then, a host of new players, and quite strong ones at that, are entering the space.
It is a logical step after having acquired a leadership position in news broadcast genre. We are also a dominant player in the Internet consumer service and content space. So, where do we go from here now? The economy is growing fast and so is the media business and it is throwing up interesting opportunities. If we want to avail of these opportunities, expand and have a meaningful presence in the overall broadcast and entertainment space, we have to have a presence in the general entertainment and films businesses. General entertainment, despite its declining market share, is the single largest genre on television and we find films to be extremely synergistic with our overall goal of being a top media and entertainment company.
Please don’t forget that films and filmed content form a very large part of entertainment business across the world.
But are a growing economy and positive consumer sentiment strong enough triggers to warrant such action? We are told some 70 new channels are waiting to be launched, while some 350 are already on air. Add to this the fact that almost 40% of the country’s population still doesn’t have access to TV. Those who do, don’t contribute much to broadcasters’ coffers because of the flaws in the system. Advertising, thus, is the main source of sustenance (it stood at around Rs6,600 crore in 2006). Is this a good situation to get into?
The growing economy is good enough reason for media companies to expand their footprint. Media and entertainment are very much organically linked to the economy because these sectors are a direct beneficiary of GDP expansion. By all yardsticks, India is going to be a large GDP expansion economy for next several decades. And Indian consumers have shown that they will evolve the way consumers in the developed economies have evolved. So, their consumption of media, leisure and entertainment is only going to grow in the future. The population that is not in this consumption fold as yet is again a promise that will unfold gradually.
So those who want to avail of these opportunities have to get their act together now.
So why did you partner with Viacom and not go it alone? All other players, like UTV Communications, Inx Media or NDTV, are marching in on their own. In fact, all your broadcast ventures are run in partnerships with big established players. While these deals have given you a certain status in the industry, the phenomenon also reflects some diffidence on your part. Are you hedging your bets by tying up with the big boys?
Let me clarify here that with CNBC and CNN we only have a branding and content tie-up. The investment in both the ventures is our own. So there is no question of hedging our bets. We tied up with them because they enjoy a certain standing and credibility. They have a solid experience of running successful broadcast ventures. A tie-up with them gives us an unmatched depth and global access.
As far as our deal with Viacom is concerned, I agree, we are hedging our bets in some ways. Indeed, it is a 50:50 risk hedge joint venture and instead of taking the 100% risk, we have a partner who is taking the 50% risk with us. We could have gone in for a financial partner but we decided against it because financial partners don’t bring in any strategic strengths. The deal with Viacom gives us three strategic benefits: one, a partnership with a leading global player who has valuable experience in running such ventures globally. Two, a head-start in two very important genres of the broadcast business—music and children— through their well-established channels MTV, VH1 and Nickelodeon. And thirdly, a much stronger balance sheet because we aren’t taking the risk independently but hedging it between us and also, pooling in our resources.
But I guess here the question you should be asking is: how did we manage to strike deals with three prominent, competing, global players? Everyone in the industry was vying to partner with them. So how did the deal fall into our lap?
I intended to ask that question. CNN, CNBC and Viacom don’t have a common partner in any other market. Didn’t they raise concerns about some possible conflicts of interests in India or the other markets?
No. The fact that we run our businesses with three competing global media and entertainment companies speaks volumes of our management abilities. I am sure each one of them did sufficient reference checks on us before tying up with us. We have been in this business for a long time and we have a flawless background. We run our partnerships very transparently and professionally. They were confident that our deliveries will be in sync with their own and a relationship with us will not hurt them in anyway. On our part, these partnerships have given us a global reach and immense depth. And the results of these partnerships are there for anyone to see.
Your broadcast and Internet business has grown almost 100% in the past two years. Wouldn’t this sudden expansion into new areas dent growth and profitability in the near term? If yes, do you think it might raise concerns among your investors? Or that your stocks, which have been hogging the limelight because of your stupendous financial performance, might lose some sheen?
As far as growth is concerned, we will continue to grow at a fast pace even then because in all the new spaces, we are entering afresh. Profitability might take some initial hit but there comes a time in every business’ lifecycle where you have to decide between expansion and profits. Right now, we think to avail of the opportunities present before us, growth and expansion are more important than profitability. This doesn’t mean at all that profitability is not important but expansion is more important right now and we think our investors appreciate this necessity.
Would you be getting into other genres such as sports or regional channels to complete your bouqet of offerings?
Not immediately. In the next nine months, the focus is going to be on the general entertainment channel only. But we can’t rule out this possibility. Of course, having a complete bouquet of offerings is important if you want to be a full spectrum broadcast service provider.
Any plans to get into the distribution business? Leading players such as Zee, Star or Sun TV have, in fact, built robust balance sheets by going in for forward and backward linkages in the broadcast business.
No. We intend to remain a purely content-driven company, be it the broadcast business, Internet or films. That’s where our synergies are. That’s the business we know and that’s where we want to focus on. I know distribution is a significant part of the business but right now, I don’t think we have the management bandwidth to manage this aspect.
You seem quite aggressive in the Internet space. How do you see the business panning out?
We wish to be a big player in the consumer Internet space. It may be a small business as of now, but it will take off sooner than later. We believe that media companies in the West have, in a way, missed this opportunity. They couldn’t foresee the growth of the Internet in the manner it has happened. We are also very clear that we don’t want to be just a content player because that’s a given. We want to have a significant play in the Internet consumer services business. Last year, our Internet operations contributed around Rs25 crore to the top-line and we see it doubling again this year.
Finally, where do you see Network 18 five years down the line?
We wish to be a very large television broadcast company, a very large films studio and that doesn’t mean film production only. It will include acquisitions, syndication, marketing, promotions and the whole gamut of films-related services. And we want to be a very big Internet consumer service and content provider.
Your peers in the industry are talking of ambitious targets, like being a $1 billion company by 2010. You don’t have any such goals?
No. We are in such a dynamic market space that I don’t kn-ow where we will be six mon-ths down the line. Six months ago, we were not even looking at the mass entertainment space and today, we are investing to challenge Star Plus (the flagship channel of Rupert Murdoch’s broadcast network, Star India, which has been the market leader for the past several years). So it will be very imprudent on my part to make some projections at this point.