Sunday, November 13, 2011

India is news

The news business in India is certainly commoditized. Today, after long, I managed to reach home earlier than usual and switched on the television set for the daily news. I have read news articles and research reports that claim India has over 65-70 news channels. I had the pleasure of browsing through over 50 news channels focusing on different genres or interest groups. Even when the channels are dissected by genres you come up with ~12 hindi news channels (Aaj Tak, ETV, DD, IBN 7, India TV, Live India, NDTV, News 24, Press TV, Sahara Samay, Star News and Zee News) controlled by as many different owners, ~ 11 english news channels including business (CNN, BBC World, Headlines Today, NDTV 24 X 7, CNN IBN, Times Now, NewsX, ET Now, CNBC-TV18, NDTV Profit and UTVi) controlled by 8 different owners and a large list of regional news channels and so on and so forth for regional channels too. While I do understand the hype around regional news channels because I personally believe localized news is important and would receive interest from the local population. However, I cannot fathom the fact that a country with over 200 million households with a TV penetration of 68% and a much lower Cable & Satellite (“C&S”) penetration at ~ 49% can handle 12 hindi news channels, 11 english news channels and a number of regional news channels.

A country such as the USA with a population of 300 million and a strong television penetration is still serviced by a handful of national networks and a plethora a regional channels for a very long time. The presence of a network also means that the channels are offered as a bouquet thus providing economies of scale to the network.

Talking about economics none of the channels are making money today except for the leader in each genre! In India, independent business houses have commenced operations with single channels with the hope of making money by sensationalizing news or as a conduit for a person preferring anonymity.

Going forward, with the advertisement market expected to grow at a rate of 12% to 13% through 2014 prudent economic theory suggests that no more than 3 to 4 channels in each genre should survive with the remaining withering away or being funded purely for social or political causes. National news though dying will pave the way for regional news.

We are likely to witness tremendous innovation in this space with a lot of players offering news over the mobile, focusing on a network model. The ones who fail to keep pace with the changing times are likely to be acquired or close shop and focus on their core competencies!

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