NDTV Group CEO KVL Narayan Rao

NDTV Group CEO KVL Narayan Rao

Subsequent to NDTVs announcement of financial results for the year ending March 31st 2008, wherein the company announced plans for a 20% reduction in workforce and costs, we spoke to KVL Narayan Rao, Group CEO for NDTV about the layoffs, performance of NDTV Convergence, impact on the launch of Metro Nation (Chennai), and carriage fees:

How much of the manpower reduction has already been achieved?
Quite a large number. Earlier in the last quarter, we put NDTV MetroNation Delhi into…we just do an uplink of a repeat channel; there’s no live programming. Approximately 100 people in two tranches – of 36 and around 65 – were requested to go. Then at NDTV Ltd, over the last month or more, around 65 people have left. The overall cut will be approximately 250 people. We can’t be very clinical about this – we’re a compassionate organization, so when we take an exercise like this, it goes completely against our grain – it’s not something that we like doing. It has to be done in a humane and gentle way, keeping in mind the other persons needs and the psychological impact of the communication.

What sorts of costs has the company incurred on account of the layoffs?
Under personell costs, we have something close to Rs. 7.83 crores, which is a provision towards severence payment. As we go through the severence, people will be paid out of this number. Moving forward, the impact of people going will be approximately Rs. 10 crores per year. We’ve already brought into effect a pay cut from the 1st of March – Therefore it’s only there for the month of March for the last fiscal. That and NDTV Standalone itself will amount to another 10 crores.

What will be the impact of the cost cutting on Metronation Chennai?
There is no impact. MetroNation Chennai has been launched – we’re just doing our technical checks, and anyday now you’ll see the channel.

What would be the impact of the layoffs on news reportage?
Not at all – in a good year, you do tend to pick up a little bit of flab, and that’s one part of it. The other is right sizing – we’re doing better efficient methods of news gathering and reporting. You’ve seen our coverage of the elelctions – that has been as outstanding as ever.

You’ll be looking for a new CEO for NDTV Convergence – will that be an internal or external appointment?
That will be difficult for me to share that at this moment, but yes, Sanjay Trehan has decided to move on. There’s not really a timeline – Convergence has got a good team, largely created by Trehan, who continue running the operations.

How has Convergence performed in this fiscal?
It’s done well. There was a stretched target of revenue, which they have achieved. They have earned revenues which are about 120-130% more than they had in the earlier year, and growing. I’m quite happy with them, and if the present trend of their weekly and monthly run rate continues…of course, some of the efficiency measures that we have brought in have been on that side of the business as well. I hope that at the end of the year, we see them in an EBITDA positive mode. There are about 90 people there.

Your plans post the separation of the news and non-news business?
We talked about the rationale of the demerger in the past. News is a highly regulated business in this country, in terms of ownership, foreign equity etc. Other businesses are not. I think it was important to separate the two. Also, in order to unlock the true value of these companies, and allow shareholders of NDTV Ltd to benefit from the unlocked value of that equity.

Would you be looking to raise funds for the news business? The non-news business already has investment from NBCU…
Actually, on the news site, post demerger, is where quite a bit of the money is at the moment. So the news is reasonably comfortable. And with the kind of revenue and cost management that I’m undertaking over the year, it would be nice to have that as a cushion, and not something that I intend to spend in any way.

Do you see costs coming down on the carriage side? Is there any move from broadcasters to try and bring down Carriage fees given that advertising has dropped as well?
If you look at the numbers, you will see that I’ve got a reasonably healthy number from subscriptions this year. That’s one good feature in my results. So far as carriage is concerned, we’ve been extremely tight on carriage. We’ve been far better in terms of spends than some of the other broadcasters, and utilize the budgets in an optimum way. As an industry, we keep talking to each other, but for me to specifically talk about bringing down carriage fee would be a little difficult. We’ve explained that the cable industry understands the economic climate today, and that’s where it is.

Related:
—  Q409 Results: NDTV Plans Over 20% Job Cuts; Standalone Loss At Rs. 731.8M
— Exit Interview: Sanjay Trehan On His Two Years At NDTV Convergence
— NDTV Q2-09 Revenues At Rs. 128 Crores; NDTV Convergence FY08 Loss At Rs. 5.5 Crores