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TV Broadcasting: Attrition agony!

Nov 12, 2007

The TV broadcasting sector is growing exponentially due to the increasing penetration of television, robust growth in advertisement and subscription revenues. As per the FICCI - PWC report on the Indian entertainment and media sector, the television sector is expected to grow from around Rs 191 bn in 2006 to around Rs 519 bn by 2011, implying a CAGR of 22%. Many new players are foraying into the television broadcasting space to take advantage of this robust growth. INX Media, UTV, NDTV, Viacom- TV 18 are foraying into the Hindi General Entertainment space. Balaji has formed a JV with Star to launch regional entertainment channels. More than 80 channels across various genres and languages are slated to be launched in the next 12 months. Increase in demand for personnel:The demand for talented and trained personnel in the media industry has increased significantly due to the foray of these players. Every new channel launched would require talented personnel for various key departments such as programming, creative, advertisement sales and distribution.

Limited supply of talent: The major source of talent for the TV broadcasting sector are the media and communication schools, which are limited in number. Besides this, the satellite television itself is only about fifteen to sixteen years old in India. Thus, the supply of entry level as well as experienced talent is limited.

Attrition and poaching:This limited supply of talent has led to attrition and poaching of key personnel of television broadcasters and from other service industries. At times, entry-level talent is even recruited from allied industries such as advertising. Samir Nair, the former CEO of Star Entertainment India, who is credited with the success of the programme "KBC" and making Star Plus subsequently the number one entertainment channel left to join NDTV's proposed general entertainment channel NDTV Imagine'. Infact he even has an equity stake in the channel. Peter Mukherjea former Star TV CEO left Star TV to start his own venture INX Media with the help of private equity funding. INX Media has launched a general entertainment Hindi channel and a Hindi music channel. It also has plans to launch an English news channel and entertainment channels in regional languages.

Increase in employee costs: This attrition has led to an increase in salaries and doling out of special employee bonuses by the broadcasters. In some cases, stock options have been granted to the employees. These stock options give the employees the right but not the obligation to buy from the company its equity shares at prices substantially lower than the prevailing market price. Eg: When Rajdeep Sardesai, Managing Editor of NDTV quit to join CNN IBN, NDTV increased the salaries of its employees and also granted stock options to them. The grant of stock options led to an increase in the equity base leading to a drop in the earnings per share. Some broadcasters have also increased their bench strength in order to cope with the increased attrition levels in the industry. Eg: Zee Entertainment has decided to keep bench strength of 15 % in the key departments (Source: Transcript of Zee Entertainment 2QFY08 Analyst Concall)

Loss of market share: The exit of key employees also many times leads to a loss in market share and consequently a drop in revenues and margins. Eg: When Rajdeep Sardesai quit NDTV to join CNN IBN, it led to a drop in the market share and advertisement revenues of NDTV. It remains to be seen whether the new entrants in the Hindi general entertainment space would be able to make a dent in the market share and the revenues of the existing players Star Plus, Zee TV.

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