Q&A: Haresh Chawla, CEO, Network18 Group
'It's been a roller coaster ride, need to be away from my BlackBerry'
In 1999, Haresh Chawla joined a Rs 15-crore television production firm with a channel and 120 employees. In just over a decade, the CEO of Network18 Group converted it into a Rs 1,484-crore, 6,000-people group spanning television, print and internet media brands and a film studio. The group also made some acquisitions and formed joint ventures. In the process, it has been overleveraged, reckon analysts. While it has good brands — CNBC-TV18, CNN-IBN, Colors, Forbes or HomeShop18 — many still guzzle cash. In November, Chawla, 43, put in his papers. He will stay on to put a successor. In a chat with Vanita Kohli-Khandekar, he talks about everything from the group's growth to what ails Indian media. Edited excerpts:
Why quit now, what are you planning to do and who is the successor?
In 2005, we made a presentation to some investors. It was a blueprint for the network. That is now in place. We will launch two more channels in the next few weeks — a channel for kids and Comedy Central. We launched History a month back. The HD bouquet is out and there is a regional foray in the pipeline. (He refuses to say whether it would be an acquisition or own channel, though the buzz is that both Sony and Network18 are in the race to buy ETV). We have scaled up the movie business, signed up with Paramount and have one of the finest slates of movies in the business.
It has been a roller coaster ride every day. So, I need a break, need some silence and some time away from my BlackBerry to think. What I will do is something that involves more learning. As for the succession plan, we are looking at internal and external candidates, but the focus is on continuity.
Is this the wrong time, considering how overleveraged the group is? Shouldn't you be consolidating?
Almost all the businesses are throwing up cash. The (cash) burn is in e-commerce, new channels and local search. In print, we are making money. Forbes started making money six-seven months ago.
In television, as a network, we are only two-and-a-half years old. Our subscription revenue is under indexed to the market; we are at 12 per cent, while others are at 30-40 per cent (of the total revenues). At present, we average 11-13 per cent share of viewership. With the regional channels and others, it should go to 17-20 per cent. (Close to what STAR and Zee command.) That is when the network will be complete. Then the consolidation phase will start. The company has all the assets it needs to have, to get market share. After digitisation (of TV in India is complete), the networks with negotiating power, meaning large networks, will work. That phase doesn't hold the same challenge for me as the earlier one.
We picked up debt at the right time, and it is debt, not equity. Plus we have enough assets in the group that can be used to pay it off. And Raghav Bahl (founder of Network18), will probably do that.
What were the turning points?
The first was the decision to scale down the production (of TV content) business. (This was soon after Chawla joined.) Then, to get into general news, with CNN-IBN. We are now the biggest news network in the country, associated with five news channels. We could do 20 channels if market infirmities were not there. The third was the bet on Viacom18 (and Colors).
Why have mergers and acquisitions worked for Network18, when they don't seem to work for the rest?
Roughly 30 per cent of our entertainment and news business is acquisition-led. On the whole, it has been, more or less, organic. Acquisitions have worked for us because we have a professional culture with no bureaucracy. We try and stick with existing management (in an acquisition) and make minimum changes. Moneycontrol.com was our first acquisition and Joyson (Thomas), one of the founding members is still there. He is now the chief operating officer of Web18 and one of the oldest employees after me.
I am not saying our culture was designed for M&A-led growth; it is the way we work. You have to have the best on the day you launch. So, whether it is Colors, CNN-IBN or Forbes, we know that there is entrenched competition here. We cannot enter with less money or programming.
But why is scale such an issue in the media business?
Media is one of the most dynamic businesses, globally. More so in India, because all media houses took off simultaneously in the last 15 years. Therefore, the people managing it are among the most talented folks anywhere. But collectively, they have destroyed value by fighting each other .
Why not take the first step; you are a part of this fraternity?
We are one of the smallest and youngest networks in the country, so our voice has been small.
Is TV an easier business to be in than print or the internet, in India?
Ultimately, the business is very simple — you make a product and sell it. It has to be habit-forming and you have to get the distribution right. The business models are all there. It is all about execution.