What was the idea behind remodeling NDTV profit into a dual business-news-cum entertainment channel
NDTV Profit had not been in good health the past three to four years. The group was incurring an annual loss of R40 crore on account of the business channel. We, therefore, had three choices to address the issue. We could either bring down the curtains on the channel or sell it to another company or try to fix the problems the channel was facing. We decided to go with the last option. We needed a solid business model, in other words, a steady flow of advertising revenue, to turn the channel around. Small or incremental tinkering wouldnt have done the trick. We also realised that a business channel is most watched during the day, mainly from 8 am till 5 pm, and after that there is very little interest. So we thought of doing something radically different after market hours and decided to turn it into a dual channel; wherein from 8am to 5pm viewers can watch NDTV Profita business channel and after 5pm viewers will get to watch dramatically different content on auto, property, comedy, etc.
Whats the revenue model for the new channel
We have been long-standing critics of the television ratings system in India and after pulling out from the ratings system, we had to find a new business model that wouldnt follow the advertisers-buying-eyeballs model. We decided to rope in sponsors for our shows right at the beginning and on a long-term basis instead of selling inventory on a daily or short-term basis. For example, the National Stock Exchange is the sponsor of Profit, while Micromax is the main sponsor of Prime with its logo being made part of the channel.
Interestingly, the revenue from the pre-sold sponsorship is more than the total revenue that Profit had made in the last two years. With the new model, we have been able to reduce the operating loss of NDTV Profit by 60%. We have been able to bring down the loss by R18 crore this financial year and expect the next financial year 2015-16 to be better. The next year, that is, 2015, should be an interesting journey for the group with its biggest liability converted into its biggest asset with just one step.
What is the nature of your deal with sponsors Critics say the deals smack of selling editorial space to advertisers.
That is not the case. Most of our rivals mainly telecast advertiser-funded programmes, which means either the advertiser entirely funds the production of the show or they produce the content themselves that is, then, aired on the channel. We do not like this model because of clear conflict of interest. In our case, we come up with ideas and editorial content. The content clearly belongs to the NDTV Group and then we approach sponsors to underwrite it. So instead of selling individual ad spots to advertisers, we get sponsors on board and that, too, for a longer duration. This helps them beat the advertiser clutter and also a longer association helps the name of the brand stick in the mind of the viewer.
But clearly, advertisers are winners in such deals because the content is tailored to their needs
Indeed, this model allows advertisers to speak directly with their target consumers. For example, MRFs association with the auto band allows the company to directly talk to auto enthusiasts who tune in for that particular show. Similarly, association with the property shows allows builders to advertise their new projects to prospective buyers, as the shows are mainly watched by people who want to buy a house. All our deals are long term, ranging from one to three years. For example, with Micromax we have a three-year deal. While much of the ad inventory has been assigned to our sponsors, a little bit has been kept aside for other advertisers.