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Zee group to shut Telugu news channel

Source : BUSINESS_STANDARD
Last Updated: Wed, Aug 29, 2012 04:02 hrs

Zee News Limited-owned Telugu news channel, Zee 24 Gantalu, has become the first casualty of the overcrowded regional news channel space in Andhra Pradesh. The 24/7 news channel from next month will cease to exist. It was launched just three years ago in the early 2009.

The company’s joint venture entity, Media Pro Enterprize Private Limited, which owns the satellite rights of the channel, on Tuesday issued a public notice stating it would not telecast from the midnight of September 20. The company, however, did not give any reason behind its decision.

Sources said financial losses, coupled with bleak prospects, had made it an unviable proposition. Ranked sixth in viewership among the 15 satellite news channels currently on air, Zee 24 Gantalu was making just about Rs 5 crore in revenues as against an expenditure of Rs 18 crore a year, according to sources in the company.

The closure would affect about 180 journalist and non-journalist staff .

However, the entertainment sibling of the news channel, Zee Telugu, run by Zee Entertainment Limited, continues to make profits.

“It is not possible to sustain the loss-making channel with the profits earned by the entertainment channel as they belong to two separate entities,” the sources pointed out. This clear demarcation has something to do with the division of businesses among the promoter family, they said.

The Zee media house had entered the south Indian market with 'alpha Telugu', an entertainment-cum-news channel, in 2004 and rebranded it as Zee Telugu the following year. After attaining financial break-even in 2007, the company had planned an exclusive news channel and launched the same during the election time in 2009.

The Zee management’s decision comes at a time when the local players have been undercutting each other to grab the limited revenue pie. The adspend too is shrinking partly due to dwindling viewership across the news channels, according to people in the media.

“A tariff of Rs 1,000 to Rs 1,200 per 10 seconds is required for the news channel like ours to achieve the break-even. As the top Telugu news channels themselves are settling for these rates others have to offer steep discounts to attract revenues,” a senior official of the company said on condition of anonymity. Many Telugu news channels were offering a 10-second slot for as little as Rs 400-500, sources said.

About 65 per cent of the current ad spend of Rs 800-850 crore, which forms the revenue base for the state's electronic media, goes to the Telugu entertainment channels while the remaining is enjoyed by the top 2-3 news channels only, according to KRP Reddy, a media marketing veteran and director - marketing of Sakshi media group. “On average, a news channel needs to generate Rs 20-23 crore revenues to achieve break-even. They are in a comfortable zone if their revenues are at the Rs 25-30 crore level,” he said.

According to industry estimates, the top Telugu news channel, TV9, alone garners almost 50 per cent of the ad spend followed by Gemini TV of Sun Network with 22-25 per cent share, leaving a very small portion for the other 10-odd ones.

Besides, the viewership has come down by almost half compared with last year as people now prefer entertainment channels, according to them.

News channels are doing well in major cities and towns but in small towns and rural areas they have to face intense competition from entertainment channels because of the political alienation set in among the people, according to Reddy.

Most Telugu news channels are now operating without any meaningful returns while some are finding it tough to pay even salaries to the staff.

“It is difficult to survive because there is a mismatch between the expenditure and revenues. In spite of the current difficulties, many continue to operate only in the hope of better prospects. In the end, you need a lot of determination to stay the course and serve people through a news channel,” said K Ramachandra Murthy, chief editor of HMTV, a Telugu television news channel, and Hans India English daily.



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