My dream to own a newspaper is dead

Updated: Sep 30 2014, 08:00am hrs
Exactly four weeks after their exit from Network18, Raghav Bahl and his wife Ritu Kapur were on their way to the Silicon Valley in the US on a learning trip. After having built a varied broadcast network of about a dozen TV channels, primarily in the news space, in a span of over 18 years, Bahl stepped down as the managing director of the group earlier this year after Reliance Industries wrested control of the group by converting the R4000-crore debt it had extended to it in 2012 into equity and thereby, taking majority control of it. Bahl, however, didnt walk out empty handed. He made a neat sum of R700 crore in severance. Flush with funds, he is now planning a second innings in the news space. Arguing that like in the West, newspapers will be dead soon in India, too, he is now planning to ride the digital wave. The visit to the Silicon Valley was meant to gather learnings from start-ups as well as legacy media companies in how to set up a disruptive digital news platform. On their return, Bahl and his wife set up a company called Quintillion Media Pvt Ltd, which is all set to launch what Bahl describes as a non-linear, new age, technology-driven multi-media content company.

Incidentally, Quintillion means 10 to the power of 18 and thus, Bahl continues his association with his lucky number 18.

In an interview with FE Brandwagon, Bahl recounts the mistakes he made in his previous venture and speaks about the viability of the already crowded and hugely fragmented digital news space. Edited excerpts:

What are the lessons you learnt from Network18 What are the mistakes you would like to avoid as you move forward with a new business plan

The biggest mistake we made was we got investors in at a very early stage in fact, as early as the first year

itselfof Network18s life cycle. In hindsight, it wasnt a great idea. Because if you give up equity too early in the life cycle of a business, then you are forced to play catch-up for the rest of your life. Equity is very difficult to claw back. It is the most expensive way of financing ones venture. When you are starting out with no cash in hand, you feel it is the cheapest way of raising money as someone is giving you money without the obligation of you having to pay it back. But as the value of your enterprise increases, the value of that equity you gave up also increases and it becomes more and more difficult for you to get it back. Finally, you end up losing that much control of your company.

As we begin our second innings, we have decided to fund our venture entirely by ourselves. We will look at investors at some stage but that will be more for the value and intelligence they impart than merely money.

In the digital space, there are dedicated venture capitalists with domain knowledge. They bring with them specialisation and relationships, thats the kind of investors we will be keen on bringing on board.

What kind of digital news business are you planning to build

News has always been my passion. Although Network18 went into several areas such as general entertainment and e-commerce, news and public policy have been my areas of interest. In todays time, if you look around you will realise that the future of news is in the digital space. When we say digital, we mean, of course, traditional web sites but also increasingly, the hand held devices, which is truly a multi-media deviceit contains a whole world inside it. This device is the single port of call for news, information and entertainment.

After our visit to the US, it didnt take us much to say lets build a legacy free, 21st century, modern, news and news-plus product entirely for digital. Once we had that clarity, the next question before us was where to make the beginning from. We did have some idea of the space because we had launched and earlier but we learnt a lot during our week-long trip to the Silicon Valley. The biggest learning we came back with was that a new age news and information company will have to be part technology and part content in todays non-linear, multi-media environment. It will have to be a technology intensive operation. Of course, it will have to have best content. That is a given but with this given we have to have a strong underlying base of technology to ensure that it is optimally delivered and consumed. Now, whether we will build this technological support in-house or we will partner with some strong technical support company is a decision we will take in a week or two.

We also learnt a lot about advertising technology which is very different from the way advertising is fed to print and TV. Digital advertising is extremely personalised. It is more targetted on the digital platforms. When we set out for the US, we had no idea about UI (user interface) and UX (user experience). Today, we know these are very important factors in determining the success of a digital product.

News as a product today is commoditised. Besides, there are too many players in the digital space. On the one hand, you have legacy companies building their digital presence and they have an edge over others in the sense that they get their content almost for free. Then, you have hordes of independent players creating their own niches and brand pull. We also see successful global brands such as making a play for audiences and advertisers. Do you think we have space for more players to jump in Especially, when we know that the digital audience is not too big in India and those who control ad budgets are also a bit cautious about the medium at least for now.

You are absolutely right but whenever disruption happens in a medium, there is a rush of players. We saw this in the case of television, now we are seeing this in the digital space. Whenever a new space gets disrupted, two things happen: Some of the legacy players, who are able to transform themselves, survive and a lot among them who are not able to catch up, fade away and that creates space for new players. Even among the new guys, 20 will rush in but only three or four who are able to innovate both on the product and technology front and on ways to monetize their final offering, will survive.

The mistake we are making today is looking at the rush and saying how will everyone survive. Everyone will not survive. In my mind, those with vision, capital and perseverance alongside a good techno product will only survive.

This is pretty much what observers said about the TV news space, too, when a lot many players started rushing in in the early 2000s. They spoke about the inevitable collapse of those with weaker DNAs and consolidation among stronger players. But today, we have more than 400 news channels and most of them are bleeding because of lack of a good business model.

If you look at the serious players, they are all doing well. The news players from legacy companies such as the Times of India group (Bennett, Coleman & Co. Ltd) are successful. Network18, which was a challenger, is also successful. If you look at Network18s last years numbers, on a revenue base of R700 crore, its operating margins were close to 30%. Sure, CNN-IBN was not making money but that was just one channel. There are 14 other channels and they were all doing well. CNBC-TV18 makes a lot of money.

But CNBC-TV18 is a niche product with an ad-centric business model. Besides, you had to raise funds from Reliance Industries because your own books were in bad shape.

Your question was most news channels arent making money and that assumption is not correct.Network18s news operations had healthy cash flows. Our losses were not account of news. They were on account of e-commerce and entertainment. The fact on the ground is different. NDTV may be an aberration but Aaj Tak, Zee News, ABP News are all making money.

The questions that are being raised about digital today are the same that were asked of TV in the early 90s Will you ever make money Look at the print guys, they are so strong, they have readers, they have advertisers, they have revenues. What will you TV guys do. Today, there are broadcasters who are making more money than The Times of India. So in every industry, there are moments of disruption. In those moments, a lot of players come in and when the tide recedes, the winners and losers emerge.

What is your view of social media Is it a rival or a facilitator

To my mind, social media is a partner. Look at it this way, if my news gets tweeted a million times, I am getting a new million readers who may not have come to me otherwise.

Those million tweets dont bring you any ad dollars. A news item getting tweeted a million times is good news for Twitters ad sales team, not you.

So sure, we need to find ways to monetize our content. But my view is that advertising follows wherever audiences are. Let the numbers build on the internet, let the audiences move in.

Buzzfeed, Huffingtonpost and several others are all successful ventures with strong revenue lines. In India, revenue lines are beginning to emerge. In the next three years, my hunch is that audiences will come in astronomical numbers. People are waking up to the power of a hand-held multi-media device now. The highways on which signals will move are coming up fast. When decent smartphones go from the current 40 million to 300 million in three years, the whole game will change.

When we launched CNBC-TV18 in 1999-2000, the revenue of the channel was less than R3 crore. Sceptics

would ask me then who was going

to watch a 24x7 markets and business channel. In 10 years, the same channel had built a revenue line of R400 crore and this is how the digital story will also transform.

Tell us more about the digital news platform you are planning

to launch.

It will be a general news and news-plus platform. We will have politics, business, sports, technology and the works. We will have general news as well as analysis and commentary.

And alongside good journalists, we will have excellent engineers, too.

So does all this mean your old dream of owning and running a newspaper is dead

That dream is over. Newspapers are dead. That story is over now. Now, only the existing players will thrive. Those with a digital presence will thrive more. In todays time, it just doesnt make any sense to launch a new print product. I feel what afflicts the newspapers in the West today will catch up with publishers in India, too.

Coming back to your digital platform, will you be tying up

with some specialist content partners like you did with your

TV channels

We certainly would. We certainly believe wherever we get good content or great learnings from, we will absolutely pursue such partnerships.

The new product should be in the market within the next six months. I am under no illusion that it will take less than three to five years to optimize and mature into a good product.

Any synergies you see with RIL in your new business

I dont see any synergy with them outside of a regular relationship between a content platform and a 4G services operator.