NDTV: The news isn't getting better

The demerger won't help improve the business though value may be created if new investors are roped in.

Broadcaster NDTV has received the approval of shareholders to demerge its business into two separate entities. While one company will house the news channels, the second will house the lifestyle and entertainment channels and other businesses. Should new strategic or financial investors be roped in, value could be created for shareholders. Otherwise, although the split does allow investors a choice of an exposure to either the news or the entertainment genres, the bad news is that NDTV isn’t doing too well in either. In the December 2008 quarter for instance, revenues from the news operations fell 10 per cent to Rs 82 crore and the business posted a loss of Rs16 crore. NDTV 24x7 is among the top three English news channels but it is becoming increasingly difficult to scale up the business in a crowded space.

In the equally cluttered Hindi news segment, NDTV India is now among the smaller players with Aaj Tak retaining its number one position. The business news channel NDTV profit has always lagged way behind market leader CNBC TV18; with the arrival of ET No, the competition can only become more intense. As for the entertainment business, NDTV Imagine’s gross rating points range somewhere between 60-80 and the channel is believed to be clocking revenues of around Rs 35 crore a quarter.

Over the past few weeks, the top three Hindi channels have cornered a viewership share of 65 per cent indicating that these channels are becoming stronger. With Colors having shaken up the space with its disruptive programming, NDTV Imagine is now finding it hard to attract viewers and unless it spends a huge amount on fresh content, shoring up GRPs will not be easy. While NBC Universal, does have a 26 per cent stake in NDTV Networks, which it picked up for $150 million in January last year, NDTV doesn’t seem to have benefited too much from NBC’s content and distribution strengths. In the December 2008 quarter NDTV’s consolidated net losses (pre-esops) were just over Rs 100 crore.