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Television 18 plans business portal - Views on News from Equitymaster
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  • Mar 10, 2000

    Television 18 plans business portal

    Television 18 (TV 18) plans to set up a vertical business portal. This would be via a 100% subsidiary of the company 90% of whose equity is owned by TV 18 and the balance by the company’s employees.

    The purpose of setting up a portal via a subsidiary is that the management did not think fit to burden the shareholders of TV 18 with the cost required for the marketing of the portal which would come to around Rs 500 m. The value for the shareholders would be derived as and when the subsidiary would go for a listing.

    The business model for the portal is based on the lines of a transaction based interaction. The company would tie up with brokerage houses and offer Internet trading. However, the management does not expect e–commerce to contribute much to the revenues. The management believes that there would be nearly 400 e–broking outfits and expects a severe shakeout in the sector. The company also plans to have an investment advisory team, which would advise investors in respect of their investments. The technology partners for the portal are Planet Asia while the web casting has been done by Pentamedia.

    TV 18 is looking at a model based on the lines of CNN and CNN.com where (say) a guest appears on CNBC (the channel in which TV 18 is a 49% stake–holder). It would be announced that if individual viewers want to chat with the guest they should log on to the Internet site.

    The management explained that TV 18 would remain a content provider for both business and the entertainment programmes. The copyright of the entertainment programmes that it produces for Star (Amul India Show, Kinetic Mega Show), Sony (Bhanwar) however, remains with the broadcaster. TV 18 earns margins ranging from 25–40% on such programming.

    As far the arrangement with CNBC India is concerned TV 18 gets to market 50% of the free commercial time (FCT) which works to four minutes per hour. The company plans to provide 12 hours of content to CNBC Asia. Even the revenue from the advertisements of MNCs accruing from the Indian operations accrues to TV 18. Apart from this the company gets 33% of its cost as margins. Thus this gives it an incentive to spend money adequately, if that is required for providing quality programming since its costs are covered. As per an arrangement the company is prohibited from doing business news programmes on BBC, CNN, Star and Bloomberg.

    The company has also ventured into bidding for FM radio broadcasting with Vertex Broadcasting Corporation a 50:50 joint venture with the Dabur group. The joint venture has already bagged frequencies to the Calcutta, Chennai, Vishakapatnam, Bhopal and Indore. The investment that the management envisages is around Rs 120–160 million over the next three years.

    The company has appointed Deloitte Haskins and Sells as its auditors and plans to have its accounts on US GAAP model. TV 18 is well in line to achieve its projections for the current year ending March 31, 2000 (Revenues: Rs 3.02 bn, Net profit: Rs 113.6 million).



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