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NDTV: Conference Call Excerpts - Views on News from Equitymaster
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NDTV: Conference Call Excerpts
Nov 26, 2007

We recently had a conference call with the management of NDTV, the leading news broadcaster to get an insight into the company’s performance and its growth prospects going forward. Following are some of the key excerpts of the conference call. Company overview:
NDTV is promoted by Dr Prannoy Roy, a renowned news anchor and one of the most known faces in TV news broadcasting. NDTV currently operates the channels, ‘NDTV 24/7’, ‘NDTV Profit’, ‘NDTV India’, ‘NDTV Metro Nation’, ‘NDTV Arabia’ and ‘NDTV Good Times ‘.

Viewership of various channels:
‘NDTV 24/7’, currently has the highest market share of 23% in the English news segment though it has lost market share to CNN IBN in the previous two years. NDTV has positioned its Hindi news channel ‘NDTV India’ as a non-tabloid news channel. The channel is currently ranked fifth in terms of viewership among Hindi news channels but the management claims that the channel has the second highest share of revenues. As per TAM data, ‘NDTV Profit’ has a market share of 46% in the 6 key metros.

New initiatives:

City centric news channels:
A Delhi centric news channel named ‘Metro Nation’ was launched on 28th September. This channel, within the first month of its launch has been able to garner very high viewership ratings and has the fourth highest viewership ratings among English news channels in Delhi. This channel telecasts local news such as civic issues, upcoming rock festivals and themes such as good restaurants in the Delhi NCR region. NDTV plans to launch similar channels in Chennai and Mumbai in the coming months.

NDTV Arabia:
A new channel named ‘NDTV Arabia’ has been launched on 30th October 2007. It is a General News and Business News channel targeted at the expat South Asian population. National news from the company’s English news channel ‘NDTV 24/7’ and stock market news from the channel ‘NDTV Profit’ is telecast on this channel.

General entertainment:
The company has created a separate subsidiary for launching a GEC channel named ‘NDTV Imagine’. The channel would be launched in January 2008. NDTV hopes to capture a market share of 20% within 12-18 months of the launch of the channel. This channel is headed by Samir Nair, the former CEO of Star Entertainment India who is credited with the success of the programme ‘KBC’ and making Star Plus the leading GEC in India. Some other key personnel of Star India have also joined NDTV in key departments of this channel. ‘NDTV Imagine’ has partnered with Karan Johar’s Dharma productions for this venture. Karan Johar has picked up an equity stake in this subsidiary and his company will produce shows for ‘NDTV imagine’. It has tied up with various leading content providers such as Balaji Telefilms for this entertainment channel.

Lifestyle:
It has launched a lifestyle channel ‘NDTV Good Times’ through its subsidiary ‘NDTV Lifestyle Ltd’. It has bagged advertisements and sponsorships from various jewelry and fitness brands. It has also entered into a five-year advertisement deal of Rs 1 bn with Vijay Mallya’s UB group. NDTV plans to launch another channel in the lifestyle genre in the next one year.

News channels in foreign countries:
NDTV is launching news channels in partnership with Astro Malaysia, a major DTH player. It has launched news channels in Malaysia and Indonesia and has signed a MOU to launch channels in other South East Asian countries. NDTV provides consultancy services to Astro Malaysia for launching these channels and all its costs are reimbursed. Besides this, NDTV does not have to incur any operating expenses and gets a 20% equity stake in these channels.

Other businesses:
NDTV has created separate subsidiaries for different businesses. NDTV Convergence has been formed for launching Internet portals, NDTV Labs for development of technology and software solutions for television broadcasting, NGEN Media Services a 50:50 JV with Genpact for media process outsourcing. None of these businesses contribute significantly currently but could gain a critical mass in the future.

Fund raising:
NDTV has raised US$ 120m (around Rs 5.1 bn) by diluting 24% stake in its fully owned subsidiary NDTV Networks. NDTV Networks comprises of five subsidiaries NDTV Imagine (82.05%), NDTV Lifestyle (100%), NDTV Labs, (100%) NDTV Convergence (100%) and NGEN Media Services a 50:50 JV with Genpact.

Way forward:
Stock options granted to employees have led to equity dilution in the past, adversely affecting the EPS. The company does not plan to grant any more significant ESOPs in the near future. A successful foray in the Hindi general entertainment space would help the company to create enormous shareholder wealth though the company would face intense competition in that space.

What to expect?
We would be coming out with a detailed research report on the company shortly.

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