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Media: TV 18- SWOT Analysis - Views on News from Equitymaster
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  • Nov 7, 2007

    Media: TV 18- SWOT Analysis

    In an earlier article we had provided an overview of TV 18's channels "CNBC TV 18" and "Awaaz". In this article, we shall analyze TV 18 by doing a SWOT analysis.

    High viewership ratings: The strength of flagship channel CNBC TV 18's viewership can be gauged from the fact that during market hours (9 am to 4 pm), the channel has more viewership than Hindi news and English movie channels. The channel has gradually widened its coverage beyond stock markets to include features, events, commodities and fine arts. The channel has programs such as 'Auto Show', 'Tech Show', 'Devils Advocate', which have helped in diversifying its viewership base and would protect its TRP ratings in case the interest of retail investors in Indian stock market reduces. Advertisers from diverse sectors such as banking and finance, FMCG's, automobiles, telecom, lifestyle advertise on CNBC TV 18. Besides this, TAM Media research has shown that CNBC TV 18 has an affluent viewership audience, which helps the channel to enjoy high advertisement rates.

    Association with a foreign broadcaster: The flagship channel, CNBC TV 18, is a joint venture between CNBC Asia Pacific and TV 18. CNBC is a subsidiary of NBC Universal, a US $ 13 bn company and a leader in business news globally. This association helps the channel to bring to the Indian shores formats and content with proven track records, a huge competitive advantage in an information based industry like the business news.

    Risk from a potential stock market downturn: CNBC TV 18's content largely revolves around the Indian stock market and as such, is vulnerable to any prolonged slowdown in the equity markets. This in turn would affect its viewership and also hurt its advertisement revenues.

    Intense competition in new businesses: The company's Internet properties require a lot of marketing expenditure. Besides this, they face excessive competition from established websites across genres such as timesjobs.com, ndtv.com and cricinfo.com. Also, the company's news and market data platform 'Newswire 18' is still in the investment mode and faces intense competition from established global majors such as Bloomberg and Reuters.

    Overseas subscription revenues: The Indian diaspora is increasing its investments in the booming Indian stock markets. A large part of this diaspora would be interested in viewing CNBC TV 18 to get more information on the Indian stock markets. Hence, the company has the opportunity to significantly increase its subscription revenues from this source and this in turn, would also help it command higher ad rates.

    Potential increase in viewership base: IIMS Dataworks 'Invest India Incomes and Savings Survey' 2007, found that there are at least a million people who earn an income of Rs 1 m per year or more in the age group 18-59 years. Though 90% of the rupee millionaires have an insurance cover, just over a third invest in mutual funds and merely a fifth directly into equities. Currently, there are 5.3 m mutual fund investors. Of the 3.5 m equity investors, over 80% have put fresh investments in stocks in 12 months and another 1.26 million new equity investors are expected to come into the markets in the next 12 months. The findings of this survey indicate the huge potential in the viewership base and consequently, the advertisement and subscription revenues of the company.

    Domestic Subscription Revenues: Digitisation process (rollout of CAS and DTH) would lead to an increase in cable penetration from around 70 m homes in 2006 to around 113 m homes by 2011. The average revenue per user in India is very low compared to other developing and developed countries. The share of broadcasters in the total subscription revenue is also low compared to the developed nations. Subscription revenues of the broadcasters are expected to grow at a CAGR of 25% over the next 4 years and the broadcasters share is expected to grow faster at 58%. (Source: PWC report on the Indian Entertainment and Media sector). TV 18's channels enjoy high viewership ratings and so it would be a major beneficiary of this trend.

    Robust growth in television advertisement revenues: Indian advertising spends, as a percentage of Gross Domestic Product at 0.3%, is abysmally low, as opposed to other developing and developed countries. Advertising revenue of the television industry is projected to grow from Rs 66 bn in 2006 to Rs 123 bn by 2011. Again, TV 18 is likely to be a major beneficiary of this trend.

    Economic downturn:Advertisement spends are discretionary in nature and any slowdown in India's economic growth would negatively impact the advertisement revenues.

    Slow rollout of CAS: The government may delay the rollout of CAS. The viewers may be hesitant in opting for paid channels. Both these factors may cause a dent in the subscription revenues of TV 18.

    Increase in competition: The entry of other players in the business news space or an improvement in the viewership of competition like 'NDTV Profit' may hurt its market share and revenues.



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