India: All News, All the Time

Competition is reaching a frenzy in the country's cable-TV business

Indians have long been known for their passionate interest in politics and world affairs. But starting in April, they'll be plugged into the global village as never before. At least four new domestic news channels -- double the current number -- are expected to be available that month to the 43 million households subscribing to cable TV.

The TV news explosion is partially triggered by the breakup of a five-year partnership between Rupert Murdoch's Star TV and Indian production company New Delhi Television (NDTV). Star pays NDTV $20 million a year for newscasts in a contract that expires on Mar. 31. After that, Star plans to go it alone with a 24-hour, Hindi-language news channel. NDTV will in turn launch channels in English and Hindi. Around the same time, the Zee TV network and broadcaster Aaj Tak plan to start English cable-news channels -- just in time for a possible war in Iraq and elections in seven Indian states. TV set maker Videocon also wants to enter the fray.

The lure is one of the world's biggest future media markets. Some 200 million Indians now watch cable, vs. 110 million four years ago, and subscriptions grew 40% last year, says UBS Warburg Securities (India) Research Director Sandeep Bhatia. Fees of just $3 a month for 75 channels make cable affordable. News programs grab less than 3% of the $2 billion in advertising and subscription revenue in India. But news viewership has surged by 250% since the September 11 attacks. Annual ad spending on news shows has leapt from $8 million to $50 million in two years -- and should double by 2005, predicts Anurag Batra, managing director of exchange4media, a Web portal for the media industry.

To grab viewers' attention, broadcasters are opening their wallets to expand news operations and snare top talent. Star alone has hired 300 reporters in the past six months from local newspapers and Hindi channels like Zee for its 21 bureaus across India. Rival NDTV bagged Star's top sales executive and has hired away news anchors and reporters from Aaj Tak's broadcast station. Monthly salaries for TV reporters have doubled, to about $1,250, in the past six months. Stodgy state-owned broadcaster Doordarshan, which reaches 400 million viewers, is sending its own reporters to the Middle East should war erupt. Exchange4media figures channels are pouring $100 million annually into studios, equipment, satellites, and staff. "Everybody is looking forward to the battle for the news," says Kunal Dasgupta, chief executive of Sony India, which will distribute NDTV's new channels.

Indian bureaucrats remain an obstacle to some of these plans. Star still lacks government permission to become the first wholly foreign company to transmit satellite signals to India, though analysts expect approval will come. The government also is mulling a change in its investment rules to force Star to sell some of its 100% stake to Indian investors. Star declined comment.

Another industry headache is the Cable TV Network Amendment Bill, passed last year. It requires Indian subscribers to buy their own set-top boxes, which cost an average of $150, and to pay different rates for different programming packages. Now they get all channels for the same price. The new law could double monthly bills, meaning "it will take another two or three years before India has enough paying households to make cable a solid investment," says Ashutosh Srivastava, managing director of media buyer MindShare India.

Not every channel is likely to survive. Analysts predict the field will consolidate and be led by Aaj Tak, Star, NDTV, and Zee. "It will be a fight and struggle, but we are prepared for it," vows NDTV President Pranoy Roy. The biggest winners will be Indian viewers, who will be able to gorge on all the news that is fit to air -- and then some.

By Manjeet Kripalani in Bombay

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