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This is the American way of doing business: If a venture is not working, try again. If it is still not working, shut it down and cut losses.
For Turner, Imagine TV's closure signals the end of its ambitions in India for a Hindi GEC, the most lucrative but expensive television segment. Turner's first attempt at a Hindi GEC was when it launched the channel Real TV as a 50:50 joint venture with Indian content producer, the Alva brothers in March 2009. The channel was shut down a year later.
Turner made a second coming by buying NDTV Imagine in 2009 from the Prannoy Roy-promoted network for about Rs 600 crore. With a few hit shows like Rakhi Ka Swayamvar, Rahul Dhulaniya Le Jayenge and the soap Bandini, Turner hoped to build a competitive channel. But that was not to be.
"While we cannot pin what went wrong to any single event or department, what we lacked was consistency of performance or a big hit," Jain said in an email reply to BW. After two years of operations, Imagine TV drifted to the bottom of the heap, just ahead of Sahara TV. "Turner follows a very strong financial discipline and is answerable to stakeholders. After a point, it was a business decision and we couldn't see a clear path of recovery," Jain added.
TV programming executives say running a Hindi GEC costs approximately Rs 2 crore a day or close to Rs 750 crore a year; of this, buying or producing content accounts for 60 per cent of the cost. This is three times more expensive than running a news channel or regional entertainment channel. Colors, which came in after both 9X and NDTV Imagine, proved it can be done; but even that channel continues to burn money to stay in the reckoning.
Is the Hindi GEC space over-saturated? Says Peter Mukerjea, former CEO of Star TV: "There is space for more but it needs companies with an appetite for stomaching losses. With the lack of transparency in the ratings business, no rise in the cost of advertising airtime, frozen cable earnings and rising carriage costs, there is no light at the end of the tunnel for broadcasters."
Says Jain: "GEC and sports are big bucks and the gestation period for turning around channels has changed, too. The barriers to success are going up and revenue sources are not growing in the same way as cost."
Turner may have deep pockets, but it has decided not to push its hand in too deep.
(This story was published in Businessworld Issue Dated 30-04-2012)