Friday, October 31, 2008


October has ended, or is about to end in a few hours any which way and it has been a rather surreal month. To quote my fellow Lewis-fan Shyam from his Twitter feed (yes, I'm a social media junkie too) - "If you were to short life, you would invest in a failed relationship using borrowed emotions." But then again, you can argue that we're constantly short-trading on life!
The problem is that one can't really short a media business, especially if you have invested a ton of money in 'license' rights which actually means that if you have bought the India rights to something, you will have to pay a ton of money to walk out. Unless you set up your own show, like Conde Nast India, but then, like General Motors, you might get fried because your main revenue-generating operation is sinking. And here we were hearing rumours that Portfolio was on the anvil in India. But seriously, a lot of plans are on hold - after the entire drama earlier this year with people leaving and no leaving, it seems the FT-18 venture might be on 'pause' as well as could 'Money Mantra'.
Accha, the organisations I spoke about in my last post are both up for sale, which rules out Bennett, HT Media and India Today Group and also DNA, which, despite putting off some launches and supposed simmering issues between Zee and Bhaskar is not on the block as yet. However, some new launches by even the healthier groups could be in trouble, because the chaos of the past two years had driven salaries to insanely high levels, particularly for loss making products.
I'm being pessimistic because of this, and organisations would rather hang onto their Rockstar's and Diva's rather than asking them to take 10 per cent cuts (and these are guys who recently got massive salary hikes) which means the 20-somethings will be out of jobs. And why am I being so pessimistic, because even though NDTV is profligate in its expenses, its results were shocking to say the least (OK, launches aside, but still - anyway, the markets have pummelled the scrip, down over 80 per cent from its highs, though TV18 has lost 86 per cent of its value and both scrips have sunk further while the markets have climbed today, is that indicative of something?) and the situation is as bad in several other places even though the losses might have been papered over with smart accounting. Some commodity prices have fallen, but distribution costs for TV channels and newsprint costs for newspapers and magazines haven't. There is an AIG type hole in the Indian media scene.
Wait and watch, this winter ain't gonna be fun.


Anonymous said...

1. INX paid salaries over 2 weeks late...huge cash crunch. The PE investors who plumped for Peter are now hopping mad, and are pushing him to approach other biggies for a merger / buyout.

2. Raghav Bahl has approached leading financial institutions for a sizeable loan to tide over cash crunches, and margin calls...if the slump continues the fear is that he may have to part with a slice of his overleverage, overextended empire. interesting that the same is happening with his jv partner's owner-mogul sumner redstone.

Anonymous said...

I'm at INX and we haven't completed 2 weeks yet, so it's slightly difficult to be two weeks overdue :)! We got paid early this month, on the 24th in fact, for Diwali. But woww, it is interesting, with what's happening in virtually all media organisations...very, very interesting!