The stock of NDTV has increased by 200 per cent, demonstrating how the company’s digital effort is anchoring its turnaround story

The stock of NDTV has increased by 200 percent, demonstrating how the company’s digital effort is anchoring its turnaround story

The chart-topping single Video killed the radio star by the British band Buggles in 1980 cemented their status as a one-hit-wonder. The song, which includes the phrase “Pictures arrived and destroyed your heart; put the blame on VCR,” traces the demise of radio as a medium of mass communication during the decades of the twentieth century. With the advent of the Internet, it is expected that traditional television media would follow in the footsteps of radio in terms of decline.

Some in the television news industry, on the other hand, are thriving as a result of the digital revolution. It’s even more impressive if it’s taken a stand that stands out in an otherwise busy environment. To judge from what has happened to NDTV, it appears that the channel has managed to gain from the pandemic by garnering an adequate portion of the digital market and by making cost reductions when necessary.

The stock has gained 200 percent in the last year and is currently trading at INR145, representing a gain of almost 170 percent, considering recent declines. TV Today has seen a 41% increase in viewership, while TV18 Broadcast has seen a 106 percent increase.

Following the market crash, the stock of NDTV increased by 73 percent between March 2020 and December 2020, compared to the Nifty 50 index, which increased by 80 percent during the same period. As a result, the bulk of the increase began last year. Not only that, but the company’s net worth, which had been declining since the beginning of the previous decade, appears to have reached a bottom and is now beginning to recover.

NDTV Ltd, the company’s television arm, reported a year-to-date profit of INR41.4 crore following the release of the third-quarter financial results. “This is an all-time high for the television industry… NDTV’s digital unit, NDTV Convergence Ltd, has recorded its highest-ever revenue in the third quarter,” the firm stated in a statement.

While NDTV claims that the third quarter of fiscal year 22 was it’s most lucrative in nine years, is the growth hype real, or can it be used to propel the struggling television-news industry into hyperdrive?

Recovery mode is activated

“The key drivers of growth over the last three years have been operational efficiency, consolidation at the group level, and a strong focus on raising digital income (by) leveraging premium content positioning in digital,” says Suparna Singh, president of NDTV.

While the digital strategy was successful, the most significant drain on the company’s resources was ineffective working-capital administration. This has always been a problem for media companies because customers are notorious for delaying payments. In such circumstances, cash is restricted, burdening the balance sheet. Things have, on the other hand, gotten better for NDTV.

The corporation is regaining its footing following the lows of fiscal years 2016, 2017, and 2018. Those were difficult times for the company since receivables were high and advertising was not paying on time. However, the number of debtor days has decreased over the last two years. In comparison to prior years, it appears that the corporation is receiving money from its advertisers at a far faster rate.

According to the report, “working capital days for 2018 were 27 days, which increased to 72 days in FY20, and then decreased to 10 days in FY21.” This is what is behind the increase in RoCE (return on capital employed),” according to an analyst studying the media sector for a prominent domestic brokerage firm. In comparison, TV Today has the same number of days, which is around 58 days. The yearly RoCE for NDTV in fiscal year 21 was 43.4 percent, compared to 24.5 percent for TV Today.

“When I look at liabilities, I see that borrowing and trade payables have decreased. ” Their receivables have declined from INR133 crore to INR88 crore throughout the course of the year. There is no need to be concerned that current liabilities are more than existing assets, argues the analyst, because external obligations (borrowing + other liabilities) have decreased. So there is no pressure in the traditional sense.

While the company’s revenue growth in the first nine months of the fiscal year 2021 was primarily due to liability write-backs, cost reductions, and a muted decline in ad revenues, the company has experienced strong revenue growth in both its television and digital businesses in the last nine months of the fiscal year 2021. The organization has established itself as one of the leaders in the digital market by focusing on information that is current and at the forefront of consumers’ thoughts.

A single month after airing its coverage of the farmer protest, the digital drive NDTV received more than 300 million views on YouTube for its coverage of the event. The channel also notified shareholders that, according to the track, on January 26, 2021, for the farmer demonstrations and Red Fort violence, NDTV 24×7 was the most-watched English channel on YouTube, with 60 million views.

Three television news organizations are represented in the mentioned space: TV18 Broadcast, TV Today, and NDTV. Its entertainment channel portfolio accounts for more than 75 percent of the revenues generated by TV18 Broadcast, the company that controls the News18 brand of stations. The company owns more than 20 news channels, including business and regional news stations.

In addition to television networks Aaj Tak and India Today, television today has newspapers and radio stations, although it is a more comparable competitor to NDTV in terms of reach.

It was revealed in the TV Today group’s fiscal year 2020 annual report that the company’s 27 digital channels had a “combined fan base of more than 51 million and over 8.5 billion (all 27 channels) combined views across social platforms” during the previous fiscal year. TAK channels have a devoted audience across several content genres such as sports, crime, business, lifestyle (such as astrology and fitness), and literature,” according to the company. It added that “New Tak, our national news channel that was founded on digital technology, has expanded to include nine additional regional channels.”

To put this in context, consider the case of NDTV, which has its most important digital assets under the brand names of NDTV and NDTV India. According to NDTV’s FY21 annual report, the channel received 5.5 billion views each year.

“Digitized news viewing does not necessarily correspond to television viewership.” It has more to do with the early adopters; therefore, those who got into digital news earlier had more traction than those who got into it later. For example, NDTV has high viewership numbers in English because they were one of the first broadcasters to go online… According to a spokesperson for an extensive advertising and marketing agency, “the need for news is quick, therefore maximizing presence is important, and having relevant and up-to-date material is important,” she says.

In addition, the channel secured a 10-year agreement with digital advertising provider Taboola in February of this year. NDTV expects the cooperation to aid in increasing online traffic and “allow revenue of INR750 crore or USD100 million for NDTV Convergence” during the term of the deal.

Digital is an advantage

According to the most recent data available, TRAI data shows that India has 906 private satellite TV stations, of which only 348 are pay-TV channels. In India, most news stations are not in the premium-subscription category and demand a monthly cost of INR1 or less. Advertising and live events are the two most important sources of revenue for these channels.

However, satellite or cable television as a medium has lost popularity among consumers in recent years. In 2019, the Telecom Regulatory Authority of India (TRAI) implemented a New Tariff Order (NTO) system for television, allowing consumers to choose and pay for the channels they want to watch. Simply put, consumers now have the option to select whatever channels they want to watch every month, rather than being obliged to purchase a bundle pack given by operators.

Things, however, did not turn out the way we had hoped. Following the implementation of the NTO, a large number of broadcasters, DTH providers, and cable TV operators saw a significant drop in their subscriber numbers as users stopped renewing their monthly subscriptions for a variety of reasons, including poor implementation and customer service, high network capacity fees, and increased monthly bills. According to a Ficci-EY assessment, the deployment of NTO 1.0 resulted in a 26 million reduction in the number of television subscribers.

The increasing level of uncertainty surrounding the new channel pricing and the Covid-19 lockdowns has had a significant impact on the subscription revenue of broadcasters. Several broadcasters have decided to phase out some of their specialty channels. Not only that, but commentators have also been losing subscribers to digital platforms, which are now available at lower prices than traditional platforms.

Apart from that, lower-cost access to 4G data and increased availability of low-cost handsets contributed to a significant increase in wireless data consumption year on year. According to the most recent TRAI report, as of September 2021, India has slightly more than 80 million wireless users, with an average monthly wireless data usage of 14.7 gigabytes per wireless data subscriber, according to the report. However, the overall number of pay direct to home and cable users is 7.3 crores as of December 2015.

While the transition to digital would be detrimental to DTH and cable operators, television news stations will benefit from the change since they have a valuable asset: content. Whatever content news stations make for traditional television can simply be posted in various formats to social media and YouTube, where millions will see people. This means that advertisers can profit from the same content across different channels without additional production expenditures.

While NDTV is leading the digital arena, its competitors are not far behind. Furthermore, NDTV’s balance sheet is still in the process of being repaired, whereas competitors such as TV Today and TV18 Broadcast are significantly larger, even in terms of market capitalization.

However, the rise in profits and the continued expansion of NDTV’s digital presence suggest that the company cracked the digital marketing code. It has been previously said that “social media is a highly polarised area” and that “content producers can employ algorithms to guide their content toward more favorable audiences.” According to the media expert who was previously quoted,

Creating a specialized market

In the current state of affairs, NDTV is seen as anti-establishment, and most of its competitors are digital-first small media organizations. Being the largest brand in this space, on its own, appears to have assisted the channel in capturing a good portion of viewership while the other side is being crowded out.

“The most important reason is that NDTV has shown to be a reliable channel in terms of performance and has built up a significant amount of equity in the market.” They aren’t overly dramatic, and they were not accused of any number-fiddling whatsoever. As the advertising and marketing agency spokesman explains, “They have proven to be a high-performing channel network.”

NDTV’s development is fueled by Hindi programming, which has a large and still-growing market and is mainly driven by its star anchor, who is both a strength and a risk for the company. However, the truth remains that the numbers are on their way, and profits, on the other hand, bring with their competition. It will be interesting to observe how things develop in this area in the coming future.

edited and proofread by nikita sharma