Network18 (NW18), one of India’s biggest TV-driven media conglomerates, is in the midst of a major transformation.

The challenge confronting group CEO Sai Kumar is tapping the value in fluid business structures, and striking a balance between current momentum and long-term scale and ambition.

“We have moved from a large news TV network to being one of the top broadcasters in the country,” Kumar says.

“That was a tectonic shift. Now we are learning the importance of patience as we deliver greater value over the next few years.”

At the heart of Kumar’s vision is a profitable but future-ready company that meets the expectations of advertisers, consumers and investors.

Strong partners

Founder promoter Raghav Bahl built the business with strong partners such as Viacom before entering into a landmark agreement with Mukesh Ambani’s Reliance Industries Ltd (RIL) in January 2012.

The deal, which completed in the second half of 2012 through a Rs40 billion (US$744 million) rights issue, helped improve NW18’s balance sheet by bringing new broadcast assets into the mix (i.e. regional network Eenadu) while reorienting NW18 around three verticals, strengthening the company structure.

The first consists of wholly owned operations, principally news-focused TV and online assets such as CNN-IBN and CNBC-TV18, as well as Moneycontrol.com, Firstpost.com and IBNlive.com.

The second largely comprises JVs where NW18 has operational control including: Viacom18, a 50/50 JV with Viacom; IndiaCast, an increasingly successful pay-TV distribution tie-up with Viacom and Disney; AETN18, a partnership with A&E managing the History Channel brand in India.

The third covers “value” investments and digital commerce ventures such as a 40% controlling stake in online ticketing service BookMyShow, which processes 3 million transactions a month, or a minority stake in Yatra, an online travel platform, as well as a majority stake in home shopping business HomeShop18, where it has operational control.

“New media is our bet, and while we exit non-core new media assets, core new media will be our long-term bet,” Kumar says.

NW18 has also sold some non-core assets since completing the RIL deal, such as Askme, Webchutney and Newswire18, further shoring up its balance sheet.

Fiscal year 2013 revenues for the core broadcast business (TV18 Broadcast) reached Rs17 billion, while Ebitda swung from a Rs623 million loss to a Rs1.12 billion profit.

“We’ve come through a phase of rapid expansion, and our focus is now on sustained profitability,” Kumar says.]

Bigger game

“We want to take the profit line to north of 5 billion rupees over the next few years, though we don’t want to lose out in the bigger media game – where we are well-placed, because we are the only company with a true blend of broadcast and digital assets.”

NW18 oversees a strong collection of brands, but these seem to be undervalued by the Indian market, currently in a bearish mood.

A large portion of NW18’s digital portfolio, plus some recently launched niche channels, have yet to break even but these assets, claiming a significant share of revenues in their respective segments, still have significant intrinsic value, suggests Mihir Shah, India-based vice president of Media Partners Asia (MPA), publisher of Media Business Asia.

“The company’s management has done well to clean up house by deleveraging, diversifying, divesting and restructuring,” Shah notes.

“When the economy recovers, we believe the network’s true value may well be realized.”