CASE – 2    The Troubled Soap Opera

IIBMS – The Troubled Soap Opera

Doordarshan (DD) is India’s public service broadcaster (PSB) with 1,000 transmitter covering 90 per cent of the country’s population across an estimated 70 million homes. It has 21,000 employees managing its metro and regional channels.

Recent years have seen growing competition from private channels, now numbering more than 60, and the cable and satellite (C & S) operators. The C&S network reaches nearly 30 million homes and is growing fast.

DD’s business model is based on selling half-hour slots of commercial time to the programme producers and charging them in minimum guarantee. For instance, the present tariff (i.e., in 2001), for the first 26 episodes of a programme, is Rs 42 lakh plus the cost of production of the programme. In exchange, the producer gets 720 seconds of commercial time that he can sell to advertisers and generate revenue. Break-even point for producers, at the present rates, thus is Rs 70,000 for a 10-second spot in order to break-even. It is at this point that advertisers face a problem: the competitive rate for a 10-second spot is Rs 50,000. Producers are cagey about buying commercial time on DD. As a result, DD’s projected revenue growth is just 6 to 15 per cent as against 40 to 50 per cent for the private sector channels. Software suppliers, advertisers, and audiences are deserting DD owing to its unrealistic pricing structure.

Clearly, DD has three options if it is to survive. The first is to privatise and the other is to become a pure PBS. In between is the third option of a middle path.

The SWOT factors of DD, analysed by Business World in its issue of March 19, 201, are as below.

Strengths	Opportunities	Weakness	Threats
§ Its 1,000 transmitters cover90 per cent of the country’s population across an estimated 70 million homes against C & S’s tally of 30 million homes.	§ Cable distribution along with MTNO and DoT § Leasing infrastructure, time blocks to other broadcasters like Channel 9 § Digital terrestrial transmission § Syndicating programming	§  Too much political interference §  Muddled programming and commercial strategy §  Low credibility §  Gross over-staffing §  Little stability	§  Producers and advertisers are deserting DD in droves §  C & s Continues to attract a larger portion of advertising, and now pay revenues

            Privatisation could fetch the government a tidy sum and solve many of the managerial and operational problems of DD. Yet, no government can be expected to let go the reins of mass media owing to its political ramifications. If DD is to be a pure PSB, then it needs to have just a news-focussed channel letting its metro and regional channels become autonomous entities. The middle path would mean that DD tighten up its management by reducing its bloated workforce, diversifying into other media, creating marketing function, and overhauling its programming function.

            The challenge seems to be to leverage DD’s immense potential and emerge as a formidable player in the mass media in India.

Question:

Analyse the SWOT factors and the options before DD. What in your opinion is the best strategic alternative before DD? Why do you think the proposed alternative to be the best?

IIBMS – The Troubled Soap Opera

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