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Changing Priorities of Telugu News Channels

Television both reflects and affects society like no other medium that came before it. Because of
the power of this medium, the television industry affects everyone. The power of the medium is
used to get profits; after all it is a commercial medium. Most of the channels never hesitate to buy
this argument. Those who do not subscribe to this theory may try to say that they feel it a
responsibility towards the society, the feeble voice itself is a testimony to their commercial
motives.

The sole aim of the television is to gather viewers for the advertisements. So, the programming
always revolves round the simple theory of ‘what people like’ and in the process the aspect of
‘what people need’ is conveniently ignored. This theory of television, though appear rude, is
indisputable. The changing pattern of content of the news channels explains the relative priority
given to ‘what people like to watch’ rather than ‘what people need’. With the advent of the news
channels, the conventional dichotomy between news and entertainment has been blurred and as a
result, news has become a component t of the entertainment industry. With the mushrooming of
the news channels, in order to earn the viewership, the upcoming channels are left with no option
but to spice up their news content with the elements that constitute entertainment.

Why News Channels?

Those who wish to enter the media for a plethora of reasons are left with two options: either the
print or the TV channel. For obvious reasons, the days for the single edition –black and white daily
newspapers are surely numbered. To stay in the market one has to come up with multi-editions in
multi colours along with district tabloids and other supplements. For one need to invest a
minimum of Rs. 300 crores towards non-recurring expenditure, leave alone the recurring costs. On
the other hand a news channel doesn’t need more than Rs.25 crores to establish. Keeping in view
the entry level barriers, most of the media savvy investors are opting for the more glamorous and
politically useful television than the print. The second consideration (analysts claim that it is the
prime reason) being the respect they enjoy in the society, by virtue of owning a news channel,
particularly in the political circles. The ‘respect’ may even be translated into ‘political favors’ too
in times of need. This has even prompted politicians to spread their tentacles to grab cable TV.
Vanita Kohli rightly describes this situation “as a result of so much cash sloshing around
unaccounted in the system, the cable industry has become a bit like what the film industry was
earlier. The underworld is called in at times to sort out territorial disputes. According to some
estimates currently about 60 percent of the cable system in India is owned by politicians or their
relatives. This unaccounted money, say industry sources, has become a huge cash source for
fighting local elections.”

Economics of News Channels

It doesn’t cost more than Rs. 25 crores to establish a news channel, subject to five conditions:
1) It should be in SDTV (Standard Definition Television) mode and not HDTV (High
Definition Television) equipment

2) Cost of construction of the building is not included since most of the channels are in rented
premises only.

3) The number of DSNG ( Digital Satellite News Gathering) vehicles do not exceed five and the
make of the vehicle is an ordinary one.

4) The amount payable to the MSOs (Multi System Operators who distribute the channel to the TV
households through the Last Mile Operators) towards carrier fee do not exceed Rs. 3 crores and

5) The pre-launch expenses (unproductive costs like salaries etc paid before the launch of the
channel) do not exceed Rs. 2 crores.

As for the recurring costs is considered, it varies from channel to channel depending on the ratio
between news and programming content. The cost increases with the increase in programming. In
general, the recurring cost of a news channel varies between 1.2 to 1.8 crores per month,
considering the monthly payments being made by most of the news channels to the MSOs is
anywhere between 25 to 35 lakhs per month. Earlier, when there were only 5 news channels –
ETV2, TV9, Gemini News, NTV and TV5, the cost used to be Rs 1 crore per month, split into two
halves – 50 lakhs for salaries and the other 50 lakhs included expenditure like rent, power,
transponder lease, subscription to news agencies like Reuters and APTN, phone bills, vehicle
maintenance, depreciation, interest on bank loans etc., When Sakshi TV started hiring staff with
reasonably good salaries, other channels had to hike salaries both to retain the existing staff and to
fill the vacancies caused by the poaching. With this, the average salary bill of a news channel has
increased from Rs. 50 lakhs per month to 75 lakhs per month, making the average recurring costs
1.25 crores per month. However, for a new entrant now, the costs have come down and the
monthly working capital is somewhere between 75 and 85 lakhs due to “retreat tendency”.

Revenue sources

Television is a commercial medium and it survives solely on the revenue generated through
advertisements. Media in Andhra Pradesh is on a strong wicket since there are sectors with high
advertising potential compared to other states. Real Estate, Textiles and Jewellery, Corporate
Education, Corporate Health, strong and wealthy Political parties are the five major areas where
revenue is accrued through adverts. (Real Estate advertisements are seen in Karnataka and
Textile/Jewellery advertisements are found in Tamilnadu also). This must be one of the major
reasons for the investors to opt for launching more and more channels in Andhra Pradesh.

The pay channel revenues are also a source of income for the channels. Some channels, after
finding that viewers are addicted to their programmes, started encrypting their channels, thus
making the signal available to those who pay fees on monthly basis through the operators. This
class of channels is classified under pay channel category. Usually news channels are FTA (Free
to Air). However some media houses that air entertainment channels, after successfully attracting
viewers, converted their news channels into pay channel category along with their successful
entertainment channels. For example, ETV became a pay channel in 2005 and could successfully
made its ETV2 as part of its ETV package, collecting Rs 5 each per month. It is interesting to note
that the number one news channel in Telugu (TV9) is a free to air channel where as ETV2 with
less than half the viewership of TV9 is a pay channel. Same is the case with the Gemini group.
Gemini news is a pay channel. Those who subscribe to Gemini are indirectly forced to opt for
Teja, Gemini Music and Gemini News. Despite the fact that Gemini News channel ranks last of all
the 14 Telugu News channels, it earns not less than Rs. 50 lakhs per month through subscriptions.

Apart from the subscription revenues that a few news channels garner periodically, the other major
source of income for news channels is advertising. This is in five forms.

1. Spot Selling
2. Slot Selling
3. Sponsorship
4. Branding
5. Scroller Advertisements
6. Infomercials

However, apart from the above mentioned six categories of advertisements, we have advertorials.
Advertisements that look like editorials are termed ‘advertorials’. This is not a new practice in the
print medium, but the television medium has also started this practice so ingeniously that the
viewers hardly doubt that it’s an advertisement. This trend was seen clearly during the last election
campaigns. Though the amounts are very small, revenue from overseas markets, mobile and
internet also count.

So much is said about the advertising revenues, though the share of ad income of the Telugu News
Channels doesn’t exceed Rs. 8 crore per month as per the market estimates. This has to be shared
by 15 channels. While the first 4 channels (TV9, TV5, NTV, ETV2) take away 50 percent of the
total ad revenue, remaining 50 percent has to be shared by a whopping 11 other news channels,
thus showing the average revenue of each channel approximately at Rs. 40 lakhs per month.
Talking about the recurring expenditure that each channel has to shell out per month is around
1.25 crores per month while the returns are only 40 lakhs. Even if there is some unaccounted ad
revenues, the average loss of news channels (except those with subscription revenues) is estimated
to be between 60 lakhs to one crore. Now the question is, how long can the investors bear brunt at
this rate?

The Mad Race for Ratings

In the backdrop of the discussion that ad revenues are vital for the survival of the news channels or
any other channel in general, the channel has to churn out programmes that attract viewers. As
George Rodman has rightly pointed out in his book Making sense of Media , “because advertising
profits depend on the size of the audience, the ratings that measure that audience are extremely
important to the television industry” (The term ‘ratings’ actually refers to two separate terms—
ratings and shares. Rating is the percentage of all homes equipped with televisions that are tuned
to a particular station at a particular time. The rating therefore includes in its calculation homes in
which the TV is not turned on. The share is the percentage of homes in which the television is in
use and tuned to a particular station.) Every channel tries to attract viewers to improve its market
share. With the increase in number of news channels, the competition is even stronger. There is a
rat race for ratings and market share. We have 29 satellite channels apart from DD Saptagiri and;
among them, 15 are news channels. However, news channels could garner only less than 15
percent of the market share (see table below). General Entertainment and Music channels devour
the lion’s share, while a very nominal share goes to the three devotional channels.

Telugu News Channels and the Market Share


(Male 25+ Age Group)
-------------------------------------------------------------------------------------------------------
CHANNEL % OF SHARE CHANNEL % OF SHARE
ETV 2 2.21 TV9 4.55
GEMINI NEWS 0.15 NTV 2.02
TV5 1.73 I NEWS 1.10
HMTV 0.48 SAKSHI 1.32
ZEE 24 GANTALU 0.74 MAHAA 0.29
STUDIO N 0.20 TOTAL 14.79
SOURCE : TAM data for the week 19th to 25th April , 2009

The News market in Andhra Pradesh is already saturated by 2007 with 5 news channels but 9
more channels have come up during the last two years.

COMPARISON OF MARKET SHARE

( BEFORE AND AFTER THE NEW CHANNELS )


---------------------------------------------------------------------------------------------------------------------
CHANNEL EARLIER SHARE PRESENT SHARE DIFFERENCE
(21st to 27th Dec 2008) (19th to 25th April 2009)
ETV2 2.51 2.21 ( - ) 0.30

TV9 4.75 4.55 ( - ) 0.20

GEMINI NEWS 0.42 0.15 ( - ) 0.27

NTV 2.22 2.02 ( - ) 0.20

TV5 2.97 1.73 ( - ) 1.24

TOTAL 12. 87 10.66 ( - ) 2.21

SOURCE : TAM data for the weeks 21st to 27th Dec 2008 and 19th to 25th April 2009
The table clearly explains that there is only 2 percent increase in the market share from 12.87 to
14.79 after the entry of 6 new news channels. This is a clear indication that the market was already
crowded / saturated even with 5 news channels. Have the new channels brought in the new
audience? If not where did the growth come from? The 2 % extra growths can also be attributed to
two important factors:

1. Election fever has gripped from January 2009 and naturally the news viewership increases
2. There is always ‘curiosity effect’ when new channels come up and non-news viewers also
tend to watch those channels just ‘out of curiosity’.

Mr. Ravi Prakash, CEO, TV 9 Group is rather optimistic in saying, “ This year the heartening fact
for the news broadcasters would be that the quantum of news telecast and the consequent news
viewing is expected to present a classical case of economics, wherein increased supply could be
matched by a rise in demand. With an increase in the number of news channels, the time spent on
news viewing is expected to increase.” But the situation is contrary to his optimistic view. After
the election fever is over, the market share of the Telugu news channels revealed an interesting but
inevitable development. The total market share of 11 Telugu News Channels for the week 26 th
April to 2nd May 2009 came down to 12.59 which is almost equal to the share of the five older
channels in Dec 2008 (12.87).

Under these circumstances, market is keenly observing the performance of the new news channels.
The managements of the loss making new channels are in a Hamletian dilemma ‘to be or not to be’
i.e., whether to continue or to wind up. Investment of Rs. 25 crores doesn’t matter now. Recurring
losses upto Rs. 1 crore per month not knowing when the situation changes, is the major challenge
before the investor.

What went wrong?

Most of the investment brought in is the real estate money. Sudden collapse of the real estate
business is said to be one of the major shocks to the news channels. They have also kept in mind
the 2009 general elections and expected huge amounts of revenues in the form of direct and
indirect advertising. But the channels have failed to get revenues as expected. Following reasons
may be attributed:

a) Each channel wanted to support one party or the other during the elections. Since it was
clearly known, the candidates of that particular party took it for granted and didn’t support by way
of advertisements. The owners also thought of taking benefits from the government, once it comes
to power after the elections. The situation after the elections was entirely different. Those who
supported TDP ( Mahaa and Studio N ) had to keep quiet. Supporters of TRS ( Zee 24 Gantalu and
HMTV ) could not get money since TRS didn’t spend much and later it launched its own channel
Raj News. Apart from Party advts, Sakshi could not get ads from the candidates for obvious
reasons. However, NTV is rumoured to have got a reasonable amount for publicizing pro-congress
poll survey results. TV9 and TV5 could get advts to some extent for their make-believe unbiased
stand. Even otherwise, their market share also supported to some extent.

b) News papers have District Tabloids and they offered various packages at reasonable prices
and the candidates preferred print medium to TV. News channels failed to offer attractive
packages suitable to the candidates for campaigning in their respective constituencies. This is
because of the fact that the satellite TV advts cannot be targeted regionally and the time is
restricted to 24 hours a day.

c) Among the electronic media, Cable TV managed to get reasonable amounts by way of
advertisements compared to Satellite News channels. Craig R. Evans in his book Marketing
Channels explained this phenomenon “ because of lower advertising costs, made possible by the
plethora of channels, cable TV could afford to inform and educate. To advertisers, it promised a
clear, low-cost, enormously efficient way to reach potential customers.” News channels felt
competition among them but failed to consider the potential threat from the cable.

d) Strict enforcement of law by the Election Commission is also one of the reasons since every
advertisement had to be approved by the officials before it is aired. The time required for
preparation of advertisement material and getting approvals is naturally more for the TV than the
print. This resulted in lesser time and there was distress sale during the last few days due to
competition.

The Survival Game and Indirect Revenues

One can come to a conclusion after seeing the channel boom in our state that starting a channel is
easy. In a short span of time 15 news channels have been launched in Telugu during the last six
years. Among them 10 hit the air during the last two years. This is the highest number in any other
Indian language besides Hindi. In some cases, shelving the project even before the actual launch
proved wiser (Satya, CBC and Asianet News proved it). But, closing down a channel after airing
for a few months is very difficult since the men and material cannot be put to a different use.
Unlike newspapers, channels cannot scale down the operations. Newspapers can cut down the
print order but channels have to continue with the 24 hour news and programming.

Having considered all these issues, the future of the Telugu news channels seems to be in
doldrums. Since most of the channels are branded as partisan, they have lost credibility.
However, most of the channels are hopeful of the future despite the fact that the road ahead is
hard and insurmountable. They have now started searching for indirect revenue options. In due
course, the priorities of Channels also started changing. This can be clearly seen from the change
in programming pattern. While the sole aim is to earn money, channels have decided to stoop
down to any level. Some of the observations:

1. Conducting surveys in favour of certain Political Parties : Most of the political surveys are
engineered. Many a time, an agency is engaged to do survey and if the result is not on the
expected lines ( of the channel or of the party sponsoring the survey), the numbers are
changed and presented. Different channels showing different surveys with different results is a
testimony to the fact that they are politically motivated. Mr. N. Bhaskara Rao, Chairman,
Centre for Media Studies, has clearly analysed the trend exposing the channels’ political
leanings in his book, “ A Hand Book of Poll Surveys in Media ”.
2. Advertisements and Politics: Political advertisements are different. Most of the political
parties try to give advertisements to almost every channel to see that they don’t show anything
against them. The other way of wooing channels is to see that the Industry/Business community
give advertisements. Politicians ask certain business houses to give advertisements to the media
houses favourable to them. This is some sort of indirect revenue with the help of political
parties.

3. Live Coverage of Yatras / Conferences of Political Parties / Leaders: Channels are also
trying to approach the political parties and political leaders with a proposal to cover their
yatras
and conferences. With the live coverage, the channel will help the party by allocating more
time than what is due. Apart from this, the channel agrees to provide the live feed to other
channels which can’t afford to allot a DSNG van for the coverage. Such channels use this feed
since they are getting it without any effort.

4. Increasing Non-News Content to get Ratings and Revenues : Since news is almost the same
in all the channels, every news channel is now trying to go beyond news. To be different from
others, the emphasis has shifted from news to non-news content. The Rating figures also show
that the non-news content is yielding numbers. This is a peculiar phenomenon that is observed
in Telugu news Channels.

5. High priority for Political News and Discussions : The common feature observed in all the
news channels is that they give top priority to political discussions. The sole aim of all these
discussions appear to be rather emotional than intellectual. Politics occupy more than 50
percent of the news and the interests of the common man are ignored. Developmental news are
very minimum and the periodical studies of Centre for Media Studies ( CMS ) reveal this fact.

6. Hidden cameras and forced collection: Hidden camera is a boon to the Telugu News
channels. This can be described as the greatest contribution of Tehelka expose. Corruption at
lower levels is caught on camera and is shown exhaustively while the big fish go scot free. The
channels have failed to prove that they expose the bigwigs in politics. This trend has resulted
in the people believing that there is nexus between channels and the corrupt.

7. Sex and Crime : To see that the content attracts audiences, channels have increased focus on
sex and crime. When one channel gets good rating for such a programme, the other channels
blindly follow it. This can be clearly established from the Ratings data and the new
programmes being launched on the news channels. Prominent among the categories are sex
and crime. The principle “ what people like” holds good here too.

8. Entertainment/Film Content : The viewers find no change in the channels’ content since
every channel is inclined towards one party or the other. Apart from this, there is no change in
the content. In fact, there is an observation that it is highly difficult to differentiate news
channels if their logos are removed. To be different, channels are trying to show some film-
based entertainment. This type of content is on the raise in all the Telugu News Channels.
9. Speed Vs Accuracy : In the race to be the first to break the news, channels are failing to
confirm /cross check the same. There is no mechanism for gate keeping. Internal
review /quality control measures are also conveniently ignored in news channels. Giving undue
priority to speed is damaging the accuracy ans as such credibility of the channels is going
down day by day.

Impact of the changing priorities

Due to the changing priorities of the Telugu News channels, people are able to get only
what is interesting to them and are missing what is in their interest. Channels are trying
to play on the emotions of the people and as such the educative role is missing. The
survival tricks of the channels, their partisan attitude, politicization, taking sides are
leading to loss of credibility in the society.

Space for a new channel?

Now the question is whether there is space for a 16th news channel in Telugu. Being the
second largest language spoken in India after Hindi, the answer is yes. Then comes the
question of market and revenues. Again this has to be seen from the angle “survival of the
fittest”. To be fit,
a) It has to be an unbiased channel.
b) It should not yield to political pressures.
c) The channel should maintain integrity
d) The staff should be non-corrupt
e) The image of the Heads should speak about the channel
f) The management’s first priority should be credibility
g) Financial discipline of the management should infuse confidence in the staff
h) The core group should take speedy and wise decisions
i) The management should involve, but not interfere in day to day activities.

If the promoter agrees upon all the points mentioned above, a good news channel is
possible. It is sure to leave its mark in the media industry. There cannot be a good
contribution to the society than a credible news channel.

( The present Ratings, Capital Requirements and Time Schedules are appended. )
24 HOUR NEWS CHANNEL
CAPITAL EXPENDITURE
Advances :
Satellite Transponder : 15.00 lacs
Rent advance : 20.00
Networking ( Reliance/Airtel ) : 15.00
Reuters : 15.00
Teleport : 10.00 75.00 lacs

Equipment :
Editing Equipment : 100.00 lacs
Cameras : 100.00
Graphics/Virtual Studio : 75.00
Online and PCR : 100.00
Studio Set Up and Equipment : 50.00
Server , MCR and Playout : 300.00
On Air Equipment / Scroll : 50.00
Computers,AC, UPS,Cabling : 150.00 925.00 lacs

DSNG Vans ( Live coverage ) 5 X 50.00 lacs 250.00 lacs

Vehicles :
News Vehicles : 50.00
Office Vehicles : 15.00 65.00 lacs

Furniture & Fixtures :

Office Interior : 75.00


Dist offices & Studios : 25.00 100.00 lacs

Pre-Launch Expenses :
Licensing & Other Expenses : 50.00
Salaries and Training Exp. : 50.00
Graphics & Look and Feel
( Consultancy Charges ) : 50.00
Publicity : 50.00
Carriage Fees : 400.00 600.00 lacs

TOTAL CAPITAL EXPENDITURE : 20.15 CRORES


WORKING CAPITAL

TECHNICAL EXPENDITURE

Transponder Rent / Uplinking : 7.00 lacs

News Gathering Exp (2 MB lines) : 5.00

Cassettes & Other Consumables : 2.00

Reuters Subscription : 5.00

Power Bills : 2.00 21.00 lacs

SALARIES ( As per Annexure ) 45.00 lacs

ADMINISTRATIVE OVERHEADS

Rent – 10,000 sft @ 40 : 4.00 lacs

Diesel/ Petrol : 4.00

Phone Bills : 3.00

Subscriptions (newspapers/cable)

Office Maintenance : 3.00 14.00 lacs

TOTAL WORKING CAPITAL PER MONTH : Rs. 80 lacs


SALARY BILL
REPORTING AND EDITORIAL
---------------------------------------------------------------------------------------

Designation Nos Salary Total Amount

---------------------------------------------------------------------------------------

Input Editor 1 50,000 50,000

Chief Reporters 7 25,000 1,75,000

( Political (3), General, Crime, Business, Sports )

Sr. Reporters 7 18,000 1,26,000

Reporters 7 12,000 84,000

Trainees 14 8,000 1,12,000

Sr. Cameramen ( News ) 5 18,000 90,000

Cameramen 10 12,000 1,20,000

Asst.Cameramen /Trainees 10 7,000 70,000

Vehicle Coordinators 3 10,000 30,000

Output Editor 1 50,000 50,000

Desk Incharge 1 40,000 40,000

Shift Incharge 7 25,000 1,75,000

Sr. Sub Editors 7 18,000 1,26,000

Sub Editors 7 12,000 84,000

Trainees 14 8,000 1,12,000

Scrolling Sub Editors 6 10,000 60,000

Prog &FeaturesHead 1 50,000 50,000


Sr. Script Writers 2 25,000 50,000

Script Writers 4 15,000 60,000

Coordinators 4 15,000 60,000

Programme Executives 4 25,000 1,00,000

Sr. Presenters 4 40,000 1,60,000

Presenters 6 20,000 1,20,000

Trainees 6 10,000 60,000

Voice Over 2 12,500 25,000

Chief Coordinator(Dists) 1 50,000 50,000

Reporters 22 15,000 3,30,000

Sr. Cameramen 4 9,000 36,000

Cameramen 22 5,000 1,10,000

Stringers 100 2,000 2,00,000

Library & Feed Recording 8 ---- 1,00,000

Editorial 30.00 lacs

CEO, Chief Editor,

Finance and Admn 6.00 lacs

Marketing ( Salaries, Conveyance and incentives ) 5.00

Technical 4.00 lacs

TOTAL SALARY BILL : 45 lacs per month.


REVENUE SOURCES
---------------------------------------------------------------------------------------------
PARTICULARS YEAR 1 YEAR 2 YEAR 3
--------------------------------------------------------------------------------------------
Spot Advertisements

Prime Time 75,000 1,00,000 1,


25,000

Non Prime Time 50,000 75,000 1,


00, 000

Scroller Advertisements

Rs 100 per scroll 40,000 50,000


60,000

Slot Sales
Rs. 15,000 per slot 30,000 45,000
45,000

GROSS RECEIPTS : 1,95,000 2,70,000 3,20,000

MONTHLY RECEIPTS ( In lacs ) : 58.50 81.00 96.00

LESS 15 %

DISCOUNT & COMMISSION 8.28 12.15 14.40

NET RECEIPTS PER MONTH: 50.22 68.85 81.60 lacs

Expenditure per month 75.00 75.00 75.00

Profit/Loss per annum (-) 2.97 cr (-) 0.74cr (+) 0.79 cr

Additional funds required to meet the working capital requirements : 3.71 cr.

TOTAL INVESTMENT : 20.15 + 3.71 =23.86 crores ( For 2 years )

• However, the Carriage Fees being demanded is arbitrary and hence 30 crores is
a reasonably good amount.
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