Television Eighteen India Ltd Merged Management Discussions

TELEVISION EIGHTEEN INDIA LIMITED ANNUAL REPORT 2009-2010 MANAGEMENT DISCUSSION AND ANALYSIS INDUSTRY STRUCTURE AND DEVELOPMENTS: The Indian media & entertainment industry, as a whole, has been estimated to be approximately INR 587 billion as in 2009. According to industry reviews and reports this sector has shown a CAGR of 10% during 2006-2009 and is forecast to grow at a CAGR of 13% over the next 5 years. The growth in media & entertainment has primarily been aided by Indias rapid economic growth amongst other factors. Indias Gross Domestic Product (GDP) grew by almost % in fiscal 2009 (Source: Economic Survey 2008-2009, RBI). M&E Industry 2009 2014P CAGR CAGR (INR Billion) (2006 (2009 -09) -14) Television 257 521 12% 15% Print 175 269 8% 9% Films 89 137 5% 9% Animation 20 47 18% 19% Outdoor 14 24 5% 12% Music 8 17 2% 16% Radio 8 16 9% 16% Gaming 8 32 38% 32% Internet 8 29 56% 30% Total Size 587 1091 10% 13% (Source: FICCI-KPMG Report 2010) Television, Print and Films are by far the largest segments of the media & entertainment industry today and as per industry reports will continue to remain dominant over the next 5 years. Internet segment has exhibited the fastest growth during the period 2006-09 and is projected to be the second fastest growing segment going forward. Television and Print segments derive revenues from both Advertising and Subscription whereas Outdoor and Radio only have an Advertising revenue stream. Films have a diversified revenue mix including theatrical ticket sales, home video, cable, satellite & DTH rights sales and other ancillary revenues. Animation & Gaming industries in India rely on outsourcing and domestic sales, whereas Music generates revenues from sale of songs across digital & physical media and broadcast & public performance licensing rights. Internet as an industry is evolving and companies are experimenting with different revenue models - advertising, subscription, transaction (revenues in the table above however include only advertising revenues for Internet) OPPORTUNITIES AND GROWTH DRIVERS: Media and Entertainment Industry: The Media and Entertainment Industry has shown structural shift due to digitization leading to convergence with consumers increasingly taking control of their media consumption. Knowledge of evolving consumption trends is a critical success factor in this scenario. The more one understands the habits of customers, the greater opportunities will be there to meet their information and entertainment requirements and generate revenues. The impact of digitization has been wide-spread and deep-rooted across all segments of the Media and Entertainment industry both globally and in India. The companies that have embraced this change as opportunity and adapted and evolved as a result have shown tremendous growth whereas those resisting the change have perished. This section highlights the dynamics in which the industry operates Digitization and Convergence - Digitization has been a huge trend in the global media industry deeply impacting TV, print, music and films. From an enhanced consuming experience for the end-user to greater address ability & monetization potential for the content provider, digitization has proved to be a great value creator across the value chain. Many digital platforms, ranging from digital cable, DTH, IPTV to digitization of films, print and online sales of music have come into existence. DTH is leading the digitization wave in India, with approximately 30 million subscribers projected by the end of 2010. With the increase in DTH, mobile & broadband penetration and the expected 3G roll out, the market for other digital distribution platforms such as VoD, Pay Per View, Online streaming and downloads is likely to improve considerably. Convergence of content across screens - TV, computer and mobile is a direct result of the digitization revolution. Consumers as well as content providers have ensured that the same content is increasingly deployed across platforms available to consumers at the time and place of their convenience. Whether its e-papers or online streaming of shows or mobile based applications, all content is now available at a click across devices. My time is the new primetime. Growth of the Indian Consumption Story - Significant increase in private domestic consumption accompanied with a shift of the share of wallet from essentials, such as food, clothing and shelter to discretionary items such as recreation, education, healthcare etc. has been the key macro-economic theme in India over the last few years. This is largely a result of 2 factors - (a) the favorable demographic composition of the nation, commonly termed as the Demographic Dividend, which essentially means that a large proportion of the countrys populace is young and in the working age group, thus allowing for greater consumption upside and (b) rapid economic growth which has corresponded with the influx of foreign capital and brands as well as stronger integration with the global socio-economic environment. The above factors have led to the emergence of an ever increasing large consuming class, with rising disposable incomes, which is globally aware and acquisitive in nature. This consuming class is highly brand aware and willing to spend money on goods and services of value. Subscription led revenue models - Traditionally, advertising revenues have had a strong hold in the M&E industry, but increasingly, subscription revenues are becoming important with consumers paying for media services. The media business models in India are undergoing a change with audiences becoming more willing to pay for content and value added services. Technology has brought about convenience and offered superior quality to consumers who have responded positively. The growth in ticket prices of movies at multiplexes, increasing number of Pay-TV subscribers, increasing penetration of DTH with its user-friendly interface and technology, and introduction of Value Added Services (VAS) by telecom players are some examples of pay markets gaining importance. Increasing importance of regional markets - No longer can media owners apply the single content for all audience strategy. From providing regional versions or feeds of national media brands to launching local content driven titles and channels, regionalization and localization have been growing rapidly across media. The regional film, music and print industries have always been a large part of the media milieu and their importance has only grown in the last few years, extending now to television and slowly to the web. This has been caused by the percolation of media consumption in cities apart from the large metros and the gradual increase in income & awareness levels in Tier 2 & Tier 3 cities. From the launch of regional newspapers to city & region/language based channels to special shows, this trend is spurring growth in multiple ways. Consolidation -Another key trend with respect to how the industry has been organized is the rise of the media conglomerate in India. Due to traditional benefits of size & scale from the diversification of capital risk to cross-leveraging of audiences & promotional opportunities to managing volatility in consumption patterns, media owners are realizing the importance of presence across the value chain and moving towards large conglomerate forms. This is completely opposite to stand alone operations which may not be able to withstand environmental exigencies or intense competitive pressures. The M&E industry is growing rapidly due to entry of newer players and newer customers and regions getting added. These trends are giving rise to increasing competition and are expected to give way to consolidation of operations. Some of this has already started happening, with last year being a tough year seeing some of the smaller players finding it difficult to survive. The players which were able to weather the downturn are likely to look at enhancing their market shares. This could help in the emergence and growth of players with superior product, marketing, distribution, technological and innovation capabilities. In turn, this is likely to aid the growth in the overall market size and reach for the industry. 360 Degree Connect with Consumers - Players are looking beyond just the traditional mediums by reaching the consumers across multiple platforms in order to establish a stronger connect. They are taking the help of multiple touch points simultaneously to communicate to the consumer across platforms like TV, Print, Radio, OOH, Films, Internet, Mobile and Retail. Regulatory enablers -important factors such as gradual de regulation in industry policies, easier availability of institutional capital for funding growth and the opening up of global markets for Indian media content have facilitated the growth of the industry. Television industry: The television industry, which is by far the largest component of the Indian Media and Entertainment industry, is expected to grow from strength to strength, doubling its revenues over the next 5-6 years. It recorded a growth of rate of around 12% on an average during the last 3 years and as per estimates accounted for almost 44% of revenues of the M&E industry. The industry growth has been nothing short of phenomenal given that private television industry commenced its operations only in 1992, when the Government authorized privately owned cable and satellite televisions. Starting with 2 privately owned television channels in 1992, there are currently over 450 television channels with TV1 8 being one of the nations leading broadcasters. TV18 operates the two leading business news channels viz. CNBC TV18 and CNBC AWAAZ. Through the CNBC Channels, your Company operates Indias premier news services in business news & information. With over a decade and a half of unparalleled leadership between CNBC-TV18 & CNBC AWAAZ, we inform and enable Indias core news viewers across a spectrum of areas. Key Growth Drivers for Television News Industry: The Companys channel offerings address business news and current affairs. Apart from the secular macro-economic growth factors and media industry trends, the television news industry is impacted by the following specific factors: News relevance: News viewership is directly related to the occurrence of expected as well sudden news events that impact political, social, economic environment and are relevant to viewers. India is today closely integrated with the rest of the worlds economy and any change there has an almost direct impact in India. Additionally, there is significant quantum of domestic news flow given the rapid growth strides being taken by the economy. This is resulting in a significant flow of news that appeals to a wide and diverse base of Indian viewers. Immediate availability of news: An important parameter that differentiates television news industry is its ability to break news as it happens rather than report it at the end of the day. This has increasingly become the critical success factor in the industry given the audiences interest in being the first to know. Viewers have come to expect television news to help them stay upto date about their environment - local, national and international across all areas of interest. Quality of news content: News broadcasters have focused on delivering news as fast as possible to viewers and presenting news in an interesting manner. Several factors such as extensive news gathering networks, use of advanced news gathering technology, effective editing and production systems are facilitating the rapid and interesting dissemination of news content to viewers. Extensive reach: High absolute reach of news channels offers an attractive platform for advertisers to build reach. SEC profile of viewership: News channels, especially in the English language, have a higher proportion of viewership among SEC A and SEC B households. These households typically have higher purchasing power and are attractive targets for advertisers. Increasingly, your Company and other industry players in this genre are targeting other revenue streams through (a) enhancing domestic subscription revenues through new distribution platforms which reach out to consumers directly such as DTH and IPTV; (b) exploiting potential to syndicate their content to domestic and international broadcasters or other parties interested in news content; (c) delivering news over mediums such as Internet and SMS and (d) international subscription revenues from the Indian diaspora in regions such as the US, UK, Middle East and South Africa. The Indian print and local search market: Your Company forayed into print media and local search business through acquisition of Infomedia18 Limited in 2007. Infomedia18 is Indias leading special interest publishing major with a well diversified fortfolio of titles across the 132C & 13213 space and significant competencies in the local search business. The print media industry primarily comprises magazines and newspaper publishing. The Indian print media industry has shown impressive growth over the last few years, far in excess of the growth witnessed in most other countries around the world. In fact all the developed economies are reporting shrinkage of their print sector every year as increasingly viewers and content moves online. Advertisers too have followed suit and substantially reduced print media spends. On the contrary, print continues to dominate the advertising market in India, comprising 47% of the total advertising pie in 2009. Even subscription revenues have been on the upswing with several almost all key newspapers and magazines reporting healthy increases in their circulation. As per industry estimates, the Indian print media industry is expected to grow further in the range of 9- 10% during the next few years - while advertising revenues are expected to grow at 11.6%, the subscription revenues growth is pegged in the range of 5% during the next few years. The newspaper segment has historically dominated the print segment in India. However, the sector has witnessed significant developments in the last few years with the increase in the number of special interest publications (including B2B and 132C magazines), launch of niche newspaper supplements as well as aggressive portfolio and geographic expansion by print companies both in the national and regional space. These developments have benefited consumers due to increased availability of choices and better product quality as well as the advertisers, providing them with the media to reach a broader target audience and also much more accurately. In addition to the special interest publications, the print media industry in India also includes publishing of directories (including yellow pages, exporters guides and home/office/city guides), custom publishing and providing printing solutions. Local search business comprises providing consumers and businesses local information on the media of their choice - internet, mobile, on the phone and in physical yellow pages. Globally, it is a very large segment and the market in India has also witnessed significant growth and expansion in the last few years. The industry as expected to boom substantially in the near future as local searches constitute 25-30% of the total web searches. This is being driven by the increasing interest of people searching for local information using mobile phones and Internet. The growth will also be driven by small businesses getting better organized and being able to directly co relate spending on local search media and increase in revenues. Key growth drivers for the Indian print media industry: Rising literacy levels and readership: Literacy has been on the rise for the last several years across India and the growth has been faster in the semi-urban and rural areas helping increase penetration of print products. Additionally, there are significant numbers of literate people in the country who do not read any publication, which further provides an opportunity for improvement in the penetration levels. The reach of print media in urban India is 85% and is less than 50%in rural areas. The rural areas are constrained primarily by the low literacy and readership levels. Though the reach of print media is currently lower than television, due to improving literacy levels and readership in India, it is witnessing a faster growth in reach than television. Reach is an important parameter as advertisers use that as one of the key metrics to take decisions on advertising budget allocation. Aggressive marketing: Penetration of print media is also improving due to growing income levels as well as aggressive marketing by print media companies in India. Through aggressive marketing, penetration levels have significantly improved especially in the English and Hindi markets. Further discounted cover prices and aggressive marketing of subscription schemes has accelerated penetration and has also helped push multiple dailies into homes. Evolving tastes and need for niche information: Changing lifestyles and diverse interests of people has led to a spurt in demand for special interest publications, newspaper supplements and directories which focus on specific needs of particular segments of the population. Increasing sophistication in the way businesses are conducted has led to the growth of B2B magazines and directories targeting specific audiences. Advertising by non-traditional segments: Increased spending by new emerging sectors in India such as organized retail, education, telecom, insurance etc has provided a lot of revenue impetus to the print industry. Indian internet industry: Internet usage in India has been on the rise over the last few years with a greater number of users being able to access the Internet. Increasing focus on literacy, PC education and vernacular content on the web is expected to generate an increase in online penetration in the country. What is likely to be unique about internet growth in India is that a significant majority of the new internet users will experience the web on mobile and hand-held devices rather than on the fixed line PC. The recent auction of 3G spectrum and broadband wireless access (BWA) is likely to go a long way in helping further the growth of mobile internet in India. Internet audiences in India are approximately 47 million users (Source: Juxt Consult India Online 2009). As broadband penetration & mobile based consumption grows (3G), Internet audiences will grow especially from smaller towns, who are discovering how the Internet can be used to surmount barriers of distance and time. While Email and Information Search remain the top activities on the Internet, online banking, ecommerce transactions, gaming, Video/ Music downloads have been on the rise. (I-Cube 2008 - IAMAI and IMRB). Another key factor in spurring heightened interest in the online medium has been the relative affluence and empowered nature of internet users. This was corroborated by a recent survey of cyber cafe audiences by Nielsen and also Juxt Consults Online Report 2009, which showed that more than 50% of the audience was from the aspiring class and large proportion from SEC A&B. This makes the online audience significant from an advertiser point of view. As per industry estimates the internet advertisement revenues are expected to grow at a much faster rate as compared to most other segments in the media industry over the next few years. Also, the large number of mobile Internet users in India which as per a recent Google report is the second highest in the world after US, is a positive indicator of potential Internet audience growth through mobile based solutions. A Nielsen Report as of April 2009 also states that online video consumption is growing complementary to Television rather than as a substitute for the same and Web18 as one of the largest servers of video content in India is well placed to drive this revolution. As detailed above, India already has some of the worlds largest user bases - 51h largest Internet user base and 2nl largest Mobile user base (as per Internet World Stats and ITU respectively) in terms of absolute numbers, which is projected to increase even further. However the market has witnessed a lag in terms of monetization of the large user base metrics. This has been due to low yields, inadequate importance to the medium, piracy and under monetization of existing opportunities. There is now cause to believe that with the internet user base reaching critical mass and becoming comparable to the reach of TV and print, value catch up will happen sooner rather than later. Source: Nielsen Mobile. Mobile Internet penetration amongst mobile subscribers. Latest estimates (US, February 2009; EU, Q1 2009; Canada Q4 2008; BRIC Q1 2008. Juxt Consult India Online 2009) Key growth drivers for Indian Internet industry: Rapid growth in mobile internet users: This segment has seen a rapid increase with the number of internet users increasing by five times in the last five years. This segment will get an enormous fillip with operators likely to launch 30 services within the next 8-10 months Increase in computer literacy: The Government of India has in recent years taken several initiatives to promote the penetration and literacy of personal computing. For example, the Government of India has established the Universal Service Obligation Fund which seeks to finance the provision of basic telecommunications services throughout India, statewide area networks and common service centers, to promote the use of the Internet for business, educational and home use across the country. Growth of online advertising: Indias online advertising market is relatively under-penetrated compared to other high growth countries. Internet advertising is projected to grow by 32% over the next five years and reach an estimated Rs. 2,900 cr in 2014 from the present Rs. 800 cr in 2009. The share of the online advertising too is projected to grow from 2.3% in 2008 to 5.5% in 2013 of the overall advertising pie. Expanding online content: Internet content targeted for the Indian market has expanded significantly with new websites now offering national, regional and local information and news, online shopping, gaming, travel services and other interactive features and services. Additionally, increase in the Hindi and regional language content and services has brought many non English speakers into the internet fold G & Wireless Broadband: Another major impetus to online industry could be the platform advantages offered by the introduction of 3G & Wireless broadband services in India. The Union Govt.s recent auction of spectrum will help telecom operators launch these services within FY 2011 and this is expected to increase internet usage. A ecosystem of stakeholders including operators, application developers, content owners and service providers is expected to develop new specialized services to drive this growth. BUSINESS OVERVIEW - SEGMENT WISE PERFORMANCE: Television Eighteen India Ltd (TV18) [BSE: 532299, NSE: TV18] operates Indias leading business news television channels, CNBC TV18 and CNBC Awaaz. It also runs one of Indias largest Internet players - Web18, as well as one of Indias leading real time financial information and news terminals - Newswire18. TV18 entered publishing & local search market with the acquisition of Infornedia, rechristened as Infomedia18. Infomedia18 is Indias leading special interest publishing and local search player. 1. BUSINESS TELEVISION: - CNBC-TV18-Indias No.1 business medium. - CNBC AWAAZ-Indias leading consumer focused business channel 2. PUBLISHING & LOCAL SEARCH: - INFOMEDIA18 - Indias leading special interest & 13213 publisher. Publishers of Yellow Pages, Overdrive, Chip magazine amongst others. 3. CONSUMER INTERNET: - WEB18 - Portals across the content, transaction, subscription & mobile spectrum - CONTENT - In.com, Moneycontrol.com, Ibnlive.com, Cricketnext. com, Tech2.com, Compareindia.com, 52622 Mobile - TRANSACTION - Yatra.com, Bookmyshow.com, Easymf.com - SUBSCRIPTION - Poweryourtrade.com, Commoditiescontrol. com, Indiaearnings.com 4. REAL TIME DATA & INFORMATION: - NEWSWIRE18 - Indias leading provider of real-time market data and news for participants in the financial markets. BUSINESS TELEVISION: CNBC-TV18-INDIAS NO.1 TV BRAND & INDIAS NO.1 BUSINESS MEDIUM: The undisputed leader in business news and information in India, CNBC-TV18, is trusted by business leaders for its analysis, insight and real-time market coverage. Since 1999, CNBC-TV18 has been the platform for thought leaders across India, giving Indias decision makers unparalleled news, analysis and perspective facilitated by one of the largest and most comprehensive television content libraries in India. Not only has the channel revolutionized business programming in India, helping viewers to understand and profit from the markets and from their businesses, it has also built loyal communities, by interacting with people of all ages through non markets programming, special on-ground events and a series of awards that have set the standards for industry benchmarks. VIEWERSHIP PERFORMANCE: For the year ended March 31, 2010, CNBC-TV18 led the news genre and emerged as the nations most preferred news source amongst the core audiences. Its leadership in the business news space was undisputed PROGRAMMING: Content & Programming Strategy: CNBC TV18s programming strategy is aimed at delivering the latest and highest quality business content to its audiences yet also broad-base the universe of such audiences with programs of wider appeal. CNBC TV18s benchmark coverage extends from corporate news, financial markets coverage, expert perspectives on investing and management to industry verticals and beyond. CNBC-TV18 has been constantly innovating with new genres of content that help make business more relevant to different constituencies across India. CNBC TV 18s expansive and engaging programming along with various innovative formats introduced such as industry events, investor camps, vertical focused series and so on provides a diversified offering to viewers and adds tremendous value addition to all stakeholders. News leadership - Throughout the year, CNBC-TV18 continued to be the medium of choice for all major business and policy news, whether national or global. From coverage of key policy moves of the govt., especially fiscal decisions intended to manage the impact of the slowdown and those of major regulators like RBI and SEBI to major corporate news ranging from corporate actions to mergers & acquisitions, from markets news to sectorial news, CNBC-TV18 continued to be at the forefront. Moreover, when it came to major global news such as the Dubai & Greek economic arises, CNBC-TV18 partnered with the CNBC Global Network to get Indian audiences real time coverage. From breaking news to insightful analysis, CNBC-TV18 programming was aligned to evolving needs of the viewers and the business environment. Content Differentiation - During the period, CNBC-TV18 continued to strengthen its position as Indias No.1 business medium, by conceptualizing & delivering a wide portfolio of special programming & marketing initiatives. From topical specials to exclusive with top news makers, from interactive properties to landmark events, CNBC-TV1 8 further enriched its content portfolio. Especially noteworthy were the channels initiatives around its 10 Year anniversary in Dec 2009, its launch of new primetime shows like Tycoons with Vir Sanghvi, India Inc Gen Next and as always, the channels benchmark coverage of the 2 union budgets in the fiscal (July 2009 Interim Budget & February 2010 Union Budget). The channel further strengthened its offerings with interactive initiatives such as the CNBC- TV18 Linkedin Polls, an exclusive marketing alliance with the Worlds No.1 Professional Networking brand and a series of other indices & polls that gauge emerging business trends and consumer confidence levels in the economy. Innovation & Value Creation in Programming - At CNBC TV18, Focus is the customized innovation solutions division within the network that has grown from strength to strength. The fundamental ideal behind the genesis of Focus was to deliver sustainable value to partners & audiences rather than restricting the channel to traditional content delivery model of media brands driven by regular advertising and shows. Focus aligns itself with the strategic objectives of partners and after mapping that with viewer needs, develops a comprehensive mix of programming and promotions to achieve value addition for viewers as well as the partners. With the use of new distinctive formats, both on air and on ground, Focus engages stakeholders of the partners & viewers of the channel at multiple touch points. In the last year, CNBC TV18 Focus has continued to grow with benchmark events such as the Emerging Awards, India Business Leader Awards, Investor camps, Art camps and so on. Formats include awards, camps, on pair special series etc. - Special Properties - CNBC-TV18 continued to engage with key stakeholders, viewers & investors as well as the industry through its multiple benchmark properties such as the India Business Leader Awards (IBLA), Auto Awards, CFO awards etc, special formats such as Investor Camps, media partnerships and other special properties. On its 10th anniversary the channel launched an investor empowerment initiative called Informed Investor in association with the National Stock Exchange, the initiative focuses on strengthening financial literacy & providing a platform for comprehensive investor education in the country. - Platform diversification & Affiliate Growth - Brand CNBC-TV18 continued to expand its platform footprint through high impact promotional initiatives in the online and mobile domains besides retail level engagements - its BESTSELLERS DVD & books title range is available in Indias leading retail stores. This emerges from the channel philosophy that it must be communicate to its stakeholders across platforms and be true to the fast emerging Convergence reality amongst Indias business audiences BRAND PERFORMANCE: CNBC-TV18 continued to strengthen its decade old leadership as Indias No.1 business medium and a pioneer of business news during the period. Despite intense competitive activity in the business news genre, the channel sustained its leadership through its innovative programming, marketing & distribution efforts. The performance of the channel was further evident through its undisputed market leadership amongst core news audiences and through several industry accolades. CNBC-TV18: INDIAS NO.1 TV BRAND: CNBC-TV18 added another feather to its cap, by being VOTED INDIAS NO.1 TV BRAND by the nations media & marketing decision makers in a survey conducted by Pitch magazine from the exchange4media group. Ahead of all channels, across genres and competition,CNBC-TV18 achieved this accolade on account of its exemplary performance across key decision making criterion including media delivery, innovation, professionalism, servicing ability etc. This is a significant affirmation of the trust & faith thatour key advertising partners have reposed in the channel over the years. CNBC-TV18: INDIAS NO.1 BUSINESS NEWS CHANNEL: CNBC-TV18 has been widely recognized as the NO.1 BUSINESS NEWS CHANNEL in the country over the years. As in the earlier years, for 2009-2010 as well, CNBC-TV18 has been awarded the Best Business Channel at the nations leading television awards such as the Indian Television Academy awards & the Indian Telly Awards. This is apart from the numerous other accolades received by the anchors, programming & production teams for shows, promos and special properties. CNBC AWAAZ-INDIAS NO.1 HINDI BUSINESS NEWS CHANNEL: We launched CNBC Awaaz in 2005 as a news channel targeting the Hindi speaking consumers, retail investors and businessmen to provide information on areas such as stock markets, commodities, consumer products and financial planning. It caters to the new progressive Hindi speaking Indian who is globally aware, enjoys a high propensity to consume and seeks value in life. Its focus on consumers, retail investors and small businessmen has helped us expand the business genre remarkably over the last few years PROGRAMMING: Content & Programming Strategy - CNBC AWAAZs content strategy is dedicated to the consuming, investing and financial planning needs of the new emerging middle India. A large cross section of business audiences in the Hindi speaking regions of the country and Hindi speakers across the nation, tune into CNBC AWAAZ as the trusted channel of choice. CNBC AWAAZ programming ranges from various investing verticals such as perquities & commodities to shopping trends, new launches, financial planning, personal taxation and so on. With a mix of industry relevant analysis & macro coverage as well as news that you can use type of content, CNBC AWAAZ seeks to be the answer to all financial & business information needs of the progressive middle class India. Benchmark Programming - CNBC AWAAZ launched a spate of new shows which answered the evolving needs of the Hindi speaking business consumer & investor. Shows & properties such as Responsibility aur Rupaiya, Financial inclusion summit, Super 20 advised viewers on investing choices and financial planning Audience expansion & engagement - CNBC AWAAZ added to its line up of benchmark initiatives which engage with audiences and stakeholders. A key highlight was UTTAR UDAY, a pioneering initiative that provided a platform to the youth, the SMEs & other industries from across northern Indian states to voice their issues and concerns that are hindering growth. CNBC AWAAZ also launched Chotta Business Bade Sapne, a unique corporate reality show saluting the entrepreneurial spirit of Indian Small and Medium Enterprises (SMEs). Special Properties - CNBC AWAAZ continued to deliver on its leading brand properties such a Pehla Kadam, Indias foremost investor education initiative, CNBC AWAAZ Consumer Awards, real Estate Awards & Travel Awards. BRAND PERFORMANCE: CNBC AWAAZ has emerged as business viewing choice of millions in middle India claiming the largest reach within the business genre. In the past couple of years, CNBC AWAAZ has won numerous accolades for its various shows and properties including Best Hindi News Anchor, Best Hindi Business Show at leading industry platforms. Out of Home: Do note that the existing TV viewership measurement mechanisms though essential do not project the actual delivery for a media platform like CNBC TV18 & CNBC AWAAZ. The CNBC TV18 & CNBC AWAAZ services attract a great amount of viewership out of home (OOH) especially in corporate offices, institutions, business areas, markets etc. This viewership is not captured in the commonly used TV measurement mechanisms and thus CNBC TV18 audience reach is actually much higher. The Network 18 group has a news-gathering network comprising of 23 news bureaus (including in London and New York), providing latest corporate and financial news from Indian and global markets. STRATEGIC OBJECTIVES: To consolidate our position further as the most preferred choice of all business viewers in the nation through best in class content, innovation in programming and an uncompromised focus on the highest quality of editorial coverage. To ensure that the channel viewers are engaged with actively and consistently, through a variety of platforms ranging from on-ground events to online & mobile initiatives. To strengthen our relationships in the market and build long-term value creating partnerships with advertisers, distributors and other alliance partners. To develop reasonable traction for value added content from CNBC channels through new delivery mechanisms such as DVDs, content syndication etc. To diversify our revenue streams and increase contribution from subscription revenues overtime WEB18: INDIAS LEADING WEB NETWORK: Web18, Indias leading Internet player continued to build on its leadership in the online space through strong traffic sustenance on its web portals, growth in its WAP services portfolio and continued innovation in its features & offerings In.com: In.com further strengthened its leadership position during the year and cemented its No.2 position among Indian horizontal portals. In.com unveiled a new avatar in December 2009. The new intuitive interface facilitates user interactivity on the site. This includes significant additions to the content and features available on the various sections of the portal. From a new music player in its Listen section to a careers sub-section within Read, from a beefed up Find page to more options within the Download section, the enhancements have further augmented the user experience on the site. In.com launched an anti-Piracy Campaign on 5th January, 2010 which supported the movement against destruction of music IPR and this has been well appreciated by the music industry Moneycontrol.com: Moneycontrol celebrated its 10th year anniversary in November, 2010, marked by a host of celebratory online initiatives. Business leaders such as Anand Mahindra, Kumaramangalarn Birla, Steve Forbes shared their vision on the site. Moneycontrol.com also formally announced the partnership with Intuit Inc. on its site, to bring to its users the Intuit@ Money Manager, an innovative personal finance tool that offers consumers a smarter way to plan, track and grow their money for the future. Furthermore, Moneycontrol launched its news offering - Newscentre, which is a repository of the latest news from Moneycontrol partners (Forbes India, magazines from the Infomedia18 stable such as Entrepreneur, Overdrive, Chip etc, and Newswire18), providing comprehensive business news, including softer aspects of business like leadership, management, corporate lifestyle etc. Moneycontrol.com launched MoneyControl MYTV in February 2010. This is an innovative service that allows the user access to TV on Demand. Moneycontrol MYTV provides for custornizable stock tickers, on-demand business news from CNBC-TV18, Live TV and real-time market updates. Industry experts & Moneycontrol.com teamed up, yet again, for Budget 2010, unleashing a host of exciting activities and features including exclusive interactions with Ramesh Damani, Riddham Desai, etc..,. IBNLive.com: In Dec. 2009, IBNLive provided a new social networking platform to CNN-IBN & IBN7 anchors, thereby improving the interactivity between viewers & IBN news channels. This initiative is infact a part of a larger long term focus on social networking for the site. In March 2010, IBNLive developed dedicated sections within the portal that aggregate and deliver the latest news & web content focused on key areas of mass interest through ibn politics, ibn sports, ibn movies & ibn trends. It was recently named the News Website of the Year at the Digital Media Awards, 2010. Cricketnext.com: Cricketnext.com launched the Fastest Online Scorecard in March, 2010. This exciting product allows the user instant access to ball by-ball updates, with the scorecard page refreshing almost every few seconds, to update scores of the ongoing match Bookmyshow.com: Bookmyshow.com continues to be the leading remote movie ticketing service (online, IVR, mobile, telecalling) in India Bookmyshow.com was the Official ticketing Partner for Mumbai Indians, Delhi Daredeviis and Kings XI Punjab for the recently concluded IPL Season 3 Investment in Yatra.com: We hold 16% stake in Yatra Online Inc. (Yatra). www.yatra.com is one of Indias leading travel websites providing travel related information pricing, availability and reservations for airlines, hotels railways, buses and car rentals across many cities and rural areas throughout India STRATEGIC OBJECTIVES: Our objective is to become the destination of choice and the gateway for the web for Internet users in India and for the global Indian community. We intend to pursue the following strategies to achieve this objective: Continue the breadth of our content, applications and services. Strengthen our relationships with the rapidly growing base of online advertisers in India. As we continue to expand our network, we focus on delivering content and applications that appeal to a broad spectrum of Indian Internet users. With special reference to key brands at Web18, following are the imperatives: In.com: We will continue to add innovative features, applications and also social networking feature on in.com to make it the leading horizontal portal in Indian internet. Moneycontrol.com: We will continue to hold on to the leadership position on moneycontrol.com amongst the financial sites in spite of burgeoning competition. We will add more applications in personal finance and investments to attract new users and retain existing users. Ibnlive: We will make it the most authoritative news website in India and continue to champion all Indian newsworthy events cross the globe for million of users. Bookmyshow.com: We shall to continue to retain the leadership position in movie ticketing and expand its offering by leveraging the recent success of IPL ticketing service Mobile: We will make all our applications and services available on Mobile and also develop new applications and services in the local search and information space. INFOMEDIA18: Infomedia18 was acquired in 2007 as part of our strategy of being an integrated player in the media and publishing space. The two key pivots of Infomedia 18s growth are the local search business and the special interest publishing business. The company is the market leader in the local search business providing consumers and businesses local information on the media of their choice - internet, mobile, on the phone and in physical yellow pages. Infomedia18 is also Indias largest publisher of special interest publications, which target both mass and niche audiences. Infomedia18 also provides various printing solutions to its customers. We have been successful in leveraging our strengths in the television and internet businesses to establish synergies and further expand the local search and publishing segments. Here are the key developments for the year under review at Infomedia18 BUSINESS EXPANSION: INFOMEDIA18 YELLOW PAGES: The new look print directory Infornedia Yellow Pages (IYP) has been well received by the users: - KNOW YOUR CITY: During the Year Know Your City product was launched in Mumbai, Delhi, Hyderabad, Jaipur, Bangalore and Goa. - Infornedia Yellow Pages has launched new customer loyalty programs. ALIBABA PARTNERSHIP: Our partnership with Alibaba.com, to sell memberships to SMEs in India has gone from strength to strength. During the year, the partnership has delivered new contracts with 3,800 SMEs. ASK ME: The acquisition of Askme.com was completed during the Year. Askme.in beta site was successfully launched during the year. EVENTS: The Engineering Expo promoting the 13213 print segment were held in 4 cities including Pune, Ahmedabad, Chermai and Indore. OVERDRIVE MAGAZINE India leading auto magazine, from the Infomedia18 B2C stable, went through a re-vamp with a new refreshed look to enhance reader experience. LAUNCH OF ENTREPRENEUR MAGAZINE: During the year, Infomedia18 launched Entrepreneur, one of the worlds leading magazines for small businesses & business owners, for the Indian market. The local edition focuses on Indias small businesses, start-ups, venture funds and financial institutions. The magazine offers an in-depth understanding of what an entrepreneur wants and needs: information, tools and resources to conquer their daily business challenges PLATFORM DIVERSITIFICATION: Better Photography magazine introduced the acclaimed Wedding Photographer of the Year awards BRAND PERFORMANCE: Infornedia Yellow Pages was conferred the Superbrand status during the year Overdrive magazines TV offshoot, the Overdrive TV shows on CNBC TV18 won many accolades and was adjudged the Best Automotive show at the News Television Awards 2010. STRATEGIC OBJECTIVES: Rapidly build scale in the local search business: - Grow the online and voice platform leveraging Ask me and burrp acquisitions. - Strengthen the print directory business with the launch of the Ask me voice services. - Strengthen partnership with alibaba.corn as we enter the third year of operations. Expand the special interest publishing business by launching large titles and leveraging the Groups expertise in the events business and in electronic media NEWSWIRE18: Newswire18 is Indias leading real-time news and data terminal services provider and the only domestic player with an integrated platform. The Newswire 18 News & Data platform is a state-of-the art market data platform providing custornizable views and several analytical tools structured to meet unique Indian customer needs. The platform has news on India, Indian exchange data, Indian OTC data, Global Newsfrorn several sources including DowJones, Global exchange data, and Global OTC data, along with news, financials of companies and data histories. Newswire18 has operated in an extremely challenging macro economic environment for the last two years given that its core customer base, the financial services industry has been the most adversely impacted by the financial and economic downturn. In spite of the banks, financial institutions and the other key clients canceling / deferring purchases, Newswire18 has recorded robust revenue growth for FY2009-10 and has also been able to turn in a positive EBITDA for the year. BUSINESS EXPANSION: Market expansion: Newswire18 has been able to successfully expand the real time information and data terminals market during the year and made sales in several non traditional customer segments. This was accompanied with geographic expansion to new cities and towns. Product development: Newswire18 restructured its product portfolio and launched an aggressive program to target sales from trials that had earlier not converted to sales. The product restructuring is also expected to save costs. A host of new products and service value-adds launched have already started boosting sales. Segment leader: Newswire18 has emerged as the largest vendor in the fixed income segment besides having the largest number of terminals in most of the PSU banks. INVESTMENT IN DEN NETWORKS LIMITED: TV18 indirectly holds 7.55% stake in DEN Networks Limited which went IPO in December 2009. The value of the stake is about Rs 193 crat the closing price ofthe stock as on March 31, 2010 (against an investment of Rs.20 cr) INDUSTRY OUTLOOK: Globally, media businesses do not operate in standalone segments of the media industry or with a single property. As players expand their portfolio ofservices and revenue streams, their presence across the value chain further strengthens their competencies. The most attractive aspect of media businesses is their ability to leverage. Players either leverage their core competencies in a particular content (filmed, news, music, gaming, etc) and extend presence across distribution formats or leverage presence in a particular value chain - film, television, print, etc. In India as well, integrated models have emerged in a much larger way. TV1 8 has consciously built its portfolio of businesses with convergence & across the value chain presence as a key goal. Today, it is perhaps amongst the few media houses in India with such an integrated value chain, engaging with consumers at multiple touch points & delivering value to all stakeholders. TV18, with its current strong presence in television news, publishing and the internet and new ventures in other media, is well positioned for further growth and expansion. Competition in News: The competition in the television business news broadcasting industry is intense. We believe that competitive advantage is based principally on connectivity and the ability to attract and retain viewers and advertisers. Our ability to compete successfully depends, in part, on our ability to anticipate and respond to competitive factors affecting the Indian news broadcasting industry, and more specifically, the Indian television business news broadcasting industry. Strengthen our market leadership - Innovation & Leadership in Television programming. We intend to continue to produce and broadcast television programming that enables us to maintain our market leadership in the television markets we serve. We seek to continue to be a market innovator in content differentiation, programming formats and scheduling by continuously enhancing the news gathering, programming and presentation of our television channels. Building strong strategic partnerships: Partnerships, alliances and joint ventures are great value drivers with significant synergy upsides through collaboration and sharing of strengths. Our Company has established partnerships and alliances with other leading media establishments and has been instrumental in initiating and creating several strategic partnerships and alliances entered into by the Network18 group. We believe that we have a reputation in the media industry as a reliable partner which has enabled us and the Network18 group to build and maintain relationships with other leading global and Indian media entities, including NBC Universal, CNN (Time Warner), Viacom. We believe that we derive substantial benefits from the brand name and extensive network of our partners and that our partners recognize the value we bring to the ventures, which is demonstrated by the willingness of our partners to collaborate with us for extended periods. We believe that our partners and alliances provide us with greater market visibility, significant synergy upsides through sharing of strengths, reputational benefits and will assist us in continuing to build our market share in India and internationally. Establishing & growing new businesses: Our Company has in the past successfully conceptualized and established new businesses in niche spaces. We entered the internet space in 2000 and have since then successfully established, through both organic and inorganic growth, several leading internet websites in India. Websites such as vvww.moneycontrol.com and vvww.ibnlive.com attract and engage a large and growing user base. We also acquired and re-launched Crisils market wire service, as Newswire 18 - a real time financial information and news terminal operation. Moreover, we believe our ability to successfully establish new businesses further strengthens our ability to attract and retain leading industry talent and leverage existing skills and synergies from the Network 18 group to grow our business. Positioned to capitalize on online & mobile growth: With the advent of 3G services, wireless broadband & WIMAX, value added content, secure payment gateways and enhanced backend logistics, the internet & mobile are slowly growing to be a preferred media for consumers in India with substantial revenue potential. We seek to expand our internet & mobile portfolio through organic and inorganic growth and leverage our existing customer relationships to expand penetration and geographic coverage. For example, we believe that the recent launch ofvv,(vw.in.com will provide relevant and personalized content from across the internet and enable us to take advantage of the opportunities created by the proliferation of user generated content to provide innovative web publishing and social networking tools. Additionally, the Network18 groups strategy to house investment opportunities in internet properties in our company further enables us to leverage the broadcasting viewership of our company through a wide content offering of internet websites. As consumer media consumption continues to change, leaning towards more internet and mobile usage and interactive environments, we believe that the internet will become even more relevant as a branding medium and that interactive media companies, like our Company, should benefit from these trends. Regional focus: Given Indias linguistic diversity, we believe that regional language news channels will continue to be important players in the industry. Our Company believes that strategic investments, both through organic and inorganic routes, in other regional language news channels and other local channels, may act as an enabler to grow our business. As part of the strategy, we intend to launch new regional business news channels in India depending upon prevailing market conditions. Looking forward: We believe that advertising spending in India will increase substantially with the general growth of the Indian economy and the increased purchasing power of consumers in the country. If we continue to maintain our strong brand recognition and market share for our television channels, internet websites and other properties, we believe we will be well positioned to benefit from such economic factors, thus enabling us to generate greater revenue from advertisers. In addition, we believe that the expansion of digital cable and satellite television will help address the currently prevalent under-reporting of subscribers, which would have a positive effect on our subscription revenues from viewers. We also intend to be present on emerging distribution platforms with a potential to deliver additional subscription revenue. Further, our channels are a part of the Star-DEN distribution bouquet of channels, which includes leading channels from the Star group such as Star Plus, Star One and Star Gold. We believe that as a result of being a part of a strong distribution bouquet our subscription revenue will increase in a market with increasing addressability of the cable and satellite market. We intend to leverage on our strength in the television broadcasting and internet businesses in India to consolidate our presence in the publishing and print sector. Thiswould allow us to offer a wider advertising footprint to our customers and extend our reach. We have an internal evaluation system for all acquisition or investment opportunities based on identified parameters of financial performance, operating parameters and infrastructure. Each opportunity will be evaluated by a cross functional team of senior management, before being referred to our Board for further evaluation and approval. BUSINESS STRATEGY & FUTURE PLANS: Television Eighteen (TV18) has a leading presence in the financial news, information and transactional space in India through its television, online & new media and data terminal businesses. Moreover, TV18 is strongly placed to capitalize on the new opportunities in the publishing and local search space through Infornedia18. Going forward, TV18 will continue to consolidate its existing offerings and create & launch new initiatives that cater to the evolving finance, investing and consuming needs of audiences in the country. Strategically, the following are key for TV1 8: Deliver across the financial information & specialty need spectrum - Considering the return of strong economic momentum post the global slowdown, rising consumerism, growth in the financial needs of Indian consumers and deepening of retail finance markets, increasing global assimilation of India Inc. and the overall importance of the Indian economy, our presence across a the spectrum of business & financial information as well as the specialty B2C & B2B space is critical. Through our channels, online services and other offerings, TV18 delivers content ranging from markets to personal finance & investing choices, from policy to management intelligence, from corporate news & information to financial education, from benchmark initiatives to industry verticals, from special interest to niche infotainment. TV18 shall continue to add to its content and service repertoire to meet all evolving information & transactional needs of the financial and business audiences in the country. Exploit content & platform synergies- TV 18 will also focus on leveraging cross platform synergies both in terms of content, media as well as audiences. The focus will be on ensuring content availability as is required, with a high degree of ease of use and also as much custornization as possible. Moreover, TV18 shall focus on providing sustainable value to advertisers and partners by delivering audiences at multiple touch points across platforms. Addressability - With the growing addressability emerging on the Indian media landscape, TV18 will endeavor to develop competent offerings on addressable platforms satisfying relevant content needs of Indias business audiences. Consolidation & Diversification - Web 18, a key part of TV18 stable, shall continue to focus on emerging as a leader in the online content, transaction & communication spaces and thus strengthen TV1 8s existing presence in new media. With the rapid proliferation of online media in India due to better IT infrastructure, broadband & 3G penetration and secure payment gateways, internet user base in India is expected to grow exponentially and growth in online advertising is forecast to be robust at a 30% expected CAGR over the 2009-2014 period. Clearly, Web 18 with its wide variety of offerings will be best positioned to monetise these megatrends both from a user as well as advertising standpoint. Infomedia18 will continue to build on its presence as a specialty publishing major and one of Indias leading local search players. TV18 will continue to establish & exploit synergies with the publishing business of Infornedia18, including the B2B & B2C titles and at the same time attempt to strengthen its services portfolio. RISKS AND CONCERNS: The following are the areas of concern Lack of transparency in sharing of revenues by distribution - The lack of transparency in case of analog cable systems has traditionally been a challenge for the broadcasters. Local cable operators (LCOs) still garner almost 75% of the subscription revenues due to under declaration of the subscription numbers, broadcaster gets around 15-20% and MSO gets around 5%. There is a possibility for this scenario to change to a more equitable sharing norm, with higher penetration of digital platforms. Carriage Fee - As per industry estimates, carriage fee in 2009 was around INR 1000 to 1200 Crores. The fee depends on the pull factor of broadcasters in terms of the kind of content produced, overall popularity of the channel and the bouquet that the broadcasters provide. The bargaining power of broadcasters is limited due to the shortage of bandwidth. However, it is expected that the onset of digitization will make more bandwidth available. Advertising Environment Risks - Due to the global economic crisis, the macro advertising environment has been adversely impacted for the last two years, though recovery momentum has begun. This risk of sudden macro- economic changes, leading to cuts in ad spending, can be substantial for broadcasters. Content costs for channels - As a result of the clutter and competitive pressures in the market, there has been a high degree of volatility in content costs which is a cause for concern. Regulatory concerns - The Indian broadcasting, especially the news and current affairs genre, is subject to significant Government regulations. License to uplink channels from India provides broad discretion to the Government to influence the conduct of business by channels by giving right to modify, at any time, the terms and conditions of licenses granted. Any adverse change in regulatory environment can negatively impact the business of channels. The Telecom Regulatory Authority of India (TRAI) has also implemented a series of additional regulatory measures, including a standardized template that fixes the commercial terms between broadcasters and cable operators. Emergence of large number of channels in the market has lead to fragmentation of audiences. Also, advertisements in India are regulated by applicable guidelines issued by the Government of India, with the discretion to determine the display or broadcast of any particular advertisement on the basis of public policy, general interest of society and such other factors. Increasing regulation(s) and government intervention in the news broadcasting space could impact news broadcasters. The broadcasting industry is subject to rapid changes in technology. The Company strives to keep in line with the latest international technological standards. The cost of implementing new technology significantly influences the financial condition of the Company. Slow growth of broadband internet users - The rate of growth of broadband internet users has been slow in the recent past in spite of policy announcements by the government. INTERNAL CONTROL SYSTEMS: Your Company has put in place a proper system of internal controls that ensures the effectiveness and efficiency in all its operations and compliance with applicable laws and regulations. As a part of its internal control measures an independent Internal Auditor scrutinizes the financials and other operations of the Company. Even the slightest diversions from set standards are reported to the Board through the Audit Committee and appropriate remedial measures are taken. The Internal Control Systems are periodically reviewed and strengthened to meet the requirements. HUMAN RESOURCES AND DEVELOPMENT: Your Company recognizes that a significant part of its success depends on the quality of its human resources. This intellectual capital is reflected in the quality of our programming and broadcasting, our business strategy, our excellent customer relations and our financial health. Your company is focused on attracting, developing and managing talent. Robust Human Resource systems & processes have been implemented to provide an enriching work experience to employees. A culture of incentives and pay-for- performance has been inculcated to ensure excellence in deliverables. Network 18s Human Resource team continues to make a concerted effort to cultivate Companys image as an employer of choice at leading campuses across the country. Network18 Group has been judged by the Great Place to Work Institute and the Economic Times as the Best Workplace in the Media Industry two years in a row - 2008 and 2009. This, coupled with the Network 18 Groups strong brand equity, continues to attract the best talent in the industry. The comprehensive Performance Management System continues to help employees recognize their strengths and areas of improvement. Your Company has created a dedicated Organization Development team which aims to create a Learning Organization in the coming years. In our efforts towards building a High Performance Work Culture, a set of 5 Values have been deployed along with the Mission statement. The Reward & Recognition Program continues to identify and reward the outstanding performers for their contribution and excellence. Embedded HR teams are working closely with different businesses so that there is rigor in the Reward & Recognition Program. As on March 31, 2010 814 employees were on the payroll of the Company. DISCLAIMER: Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimate, expectations may be forward- looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could influence the Companys operations include economic developments within the country, demand and supply conditions in the industry, input prices, changes in government regulations, tax laws and other factor such as litigation and industrial relations. Information regarding the Employees Stock Option Schemes/ Employees Stock Purchase Plan as on March 31, 2010 in terms of Regulation 12 and 19 of SEBI (Employees Stock Option and Employees Stock Purchase Scheme) Guidelines, 1999.