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Business – Q&A;NDTV Group CEO KVL Narayan Rao

Two years back, Dr Prannoy Roy-promoted NDTV Ltd crafted a growth path in the entertainment business. Riding a bull run, the news broadcasting company launched NDTV Networks Plc to house subsidiary arms NDTV Imagine Ltd and NDTV Lifestyle.

NBC Universal invested a whopping $150 million for an indirect 26 per cent in NDTV Networks at a time when valuations were running high. Besides, NDTV raised $100 million in step-up coupon bonds.

The global downturn led to the exit of NBCU, freeing NDTV to scout for investors for its non-news verticals. US-based Scripps Networks snapped up 69 per cent stake in NDTV Lifestyle while Turner International agreed to take 92 per cent of NDTV Imagine.

So where does this leave NDTV? Are its growth wings clipped?

In an interview with Indiantelevision.com’s Sibabrata Das, NDTV Group CEO KVL Narayan Rao says at the end of a whole chain of transactions NDTV is left with a cash pile of $70 million to focus on its news business while retaining portions of the non-news business.

Excerpts:

What prompted you to get out of the entertainment business?
We wanted to focus on what we are best at: running news operations. We are a credible news organisation and there is enough scope to grow that. Besides, we will still retain 5 per cent stake (3 per cent post issue of primary shares to Turner) in NDTV Imagine. As for the Hindi GEC space, it was clear that a strong international strategic partner would bring in funding and global expertise. We are delighted that we have this deal with Turner.

Did the global downturn and the exit of NBC Universal spur the chain of events?
No. We bought out NBCU’s stake. As a result, we got the opportunity to find a good investor who would run the company.

NBCU had invested $150 million for the 26 per cent stake. Did you pay $25 million to buy back their stake?
The deal is confidential. I can’t comment on that.

Was the deal with Turner dependent on repurchasing the bond holders who would have held 20 per cent in NDTV Networks?
We had set out to do a few things. Buying back the bond holders was part of that process. We paid $72.4 million for that. This allowed us to pursue investors for our different verticals.

But wouldn’t the payout have been $115 mn (along with interest payments)?
There was a negotiation that took place. We bought out the bonds and that allowed our subsidiaries the flexibility for restructuring and financing the businesses including being able to access bank finances for working capital and other requirements.

‘We wanted to focus on what we are best at: running news operations. We are a credible news organisation and there is enough scope to grow that’

Did you decide to retain a higher stake in NDTV Lifestyle because it would involve less funding while NDTV Imagine would guzzle in more money?
We entered into an agreement with the US-based Scripps Networks which has experience in creating lifestyle brands. They took a 69 per cent stake and the transaction value was $55 million.

Will NDTV get $30 million while the balance go as investments into NDTV Lifestyle?
I can’t comment on the specifics.

Two years back, NDTV decided to expand because of a bull run. The market tanked and the scenario changed dramatically. Was it a mistake to expand into the non-news business?
We have completed a chain of transactions. But at the end of it, NDTV is a debt-free company and we are sitting on a cash of $70 million. Perhaps, we are the only TV news organisation that would be sitting on such a large cash pile. We will still have some non-news businesses running. We also have NDTV Convergence. We have a decent future to look forward to.

NDTV had posted a standalone net loss of Rs 731.8 million on a turnover of Rs 3.09 billion for the fiscal ended 31 March 2009. How do you plan to turnaround in the news business?
For FY’09, we had a one-time cost of around Rs 400 million. We have taken substantial cost-saving measures this year.

Do you have major plans to invest in NDTV Convergence?
It is one of our important properties. A lot, though, will depend on getting the right revenue model.

NDTV has shut down MetroNation Delhi. Do you have any revival plans?
It is too early to comment on this

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December 12, 2009 - Posted by | Uncategorized |

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