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Balaji Telefilms: The television content 'k'ing - Views on News from Equitymaster
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  • Sep 19, 2007

    Balaji Telefilms: The television content 'k'ing

    Company overview
    Balaji Telefilms is the number one entertainment software provider in India's fast growing television market. It is promoted by veteran Indian actor Jeetendra Kapoor, his wife Sobha Kapoor, daughter Ekta Kapoor. Star Group is its prime customer and a major shareholder (holding a 26% stake in the company). Balaji commenced operations in FY95 with the production of a fiction thriller called 'Mano Ya Na Mano' for Zee TV. In October 2000, the company raised Rs 364 m through an IPO.

    A look at the business...
    Programming for Indian channels: Balaji develops content for Star Plus, Sony TV, Zee TV, Sun TV, Gemini TV, Udaya TV, Surya TV and DD Chandana. Its popular serials include Kyunki Saas Bhi Kabhi Bahu Thi, Kahaani Ghar Ghar Kii, Kasamh Se, Kadambarii. It made a considered decision to sustain its core competence in mass programming and family-centric entertainment. A market survey conducted in 2004 revealed that mass entertainment (Balaji's core competence) accounted for 40% of the total genre wise viewership share. Balaji Telefilms also possesses an established track record of successful programming in genres like thrillers, sitcoms and children shows.

    Balaji had 26 serials on air during FY07.The company's serials accounted for 79% of the aggregate TRP of the weekday prime time shows featuring in the top 100 Hindi cable and satellite shows. BTL is the leader in the Hindi space, accounting for more than 40 of the top 100 programmes in the Hindi mass entertainment genre. Balaji produces serials in Hindi Telugu, Kannada, Malyalam and Tamil languages with Hindi accounting for greater than 90% share of the revenues.

    Nature of programmes
    Balaji's programmes are either of the sponsored or commissioned.

    • Sponsored: In this structure, Balaji makes an upfront payment to broadcasters to buy a telecast time band and receives free commercial time (FCT). Balaji recoups its investment by either getting sponsors for its programmes or by selling FCTs to advertisers. The intellectual property rights (IPR) remain with Balaji for such programmes. It is a high-risk, high return strategy.

    • Commissioned: In this structure, the customer commissions Balaji to produce episodes on a specific fee per episode basis along with incentivised TRP linked rate structure. When programmes became successful, Balaji renegotiates its remuneration rates in line with its popularity. The intellectual property rights (IPR) remain with the broadcaster for such programmes. It is a low risk, moderate return strategy.

    Films business
    It has formed a wholly owned subsidiary M/s. Balaji Motion Pictures for undertaking film ventures. The first release of its co-production film, "Shootout at Lokhandwala", was a commercial success. This subsidiary plans to produce films individually as well as in collaboration with leading producers. It also plans to distribute its own films as well as the films of other producers. The company plans to release at least 4 to 5 films a year initially. Though still in a nascent stage, the prospects of this segment looks good with the changing lifestyle of people and growing demand for multiplexes.

    Broadcasting JV with Star
    In 4QFY07, Balaji entered into a joint venture with Star for launch of channels in regional languages other than Hindi. As per the deal, Balaji will acquire 49% equity in the joint venture, which includes the existing Star group channel "Vijay", for an initial investment of approximately Rs. 600 m. A new Telegu channel launch is also planned in 2007. It also expects to create customized content for regional channels through its exclusive agreement with the Star TV network where it would command prime time slots and also address emerging opportunities in markets like West Bengal, Kerala and Tamil Nadu. The share of regional channels in terms of viewer ship and TRPs is rising and hence this move is beneficial to the company. This would give it access to newer channels and further reduce dependence on the Hindi general entertainment segment.

    Programming for foreign channels
    Balaji through a wholly owned subsidiary in Sharjah viz., 'Balaji Telefilms FZE' caters exclusively to that region and is further planning to expand its reach to other Gulf regions and the Indian subcontinent. This subsidiary will provide programming content to leading channels in that region with limited telecast rights.

    Going forward...
    Balaji has established itself as a leading content provider in the Hindi entertainment genre with its flagship programs logging high TRPs in target segments consistently. The company has also successfully ventured in the regional programming space. It has identified new growth drivers like films and has made the necessary investments. Further, it has also moved into the newer geographical areas. Though these new ventures do not contribute significantly to the company's revenues in the near term, the move is expected to benefit the company from a long-term perspective.



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