Doordarshan's Problems

Details

Themes: Brand Management
Period : 1994-2001
Organization : Doordarshan
Pub Date : 2002
Countries : India
Industry : Media, Entertainment & Information

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Case Code : BSTR012
Case Length : 8 Pages
Price: Rs. 200;

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"DD needs an owner."

- Meenakshi Madhvani, CEO, Carat, media-buying agency.

Doordarshan's Problems: Is DD Dead?

After years of falling revenues, in 1999-2000 Doordarshan (DD)¹ had a revenue growth at 50%. In 1999-2000, DD earned revenues of Rs 6.1mn compared to Rs 3.99 mn in 1998-99. DD showed signs of revival with the launch of DD World (a channel for NRIs) and had relative success with some of its regional channels (Refer Table I for different DD channels).

However by the end of 2000-01, DD's honeymoon with success seemed to be over. In 2000-01, DD's revenues were projected to grow at 6-15% while private channels such as Zee TV, Star, Sony had projected 40-50% revenue growth². Analyst's felt that DD's sagging revenues were only tip of the iceberg.

DD was plagued by multiple problems, which found their roots in the mismanagement of affairs. By the late 1990's the private producers, advertisers and audience had deserted DD. Not even one car company advertised on DD and even two-wheeler manufacturers kept a low profile³. Ads of Pepsi and Coca-Cola were found only during sports telecasts.

Only FMCG companies stuck to DD because of its terrestrial network to reach the rural and semi-urban audience⁴. In spite of having over 21,000 employees⁵, DD outsourced 50% of its programmes from the private producers. In late 1990's DD faced number of allegations of large-scale scams and irregularities. Under utilized infrastructure, improper investments and poor financial management plagued the performance of DD. In 1992, when the Government opened airwaves to private players, DD faced the heat of competition from private satellite channels.

In the Cable & Satellite (C&S) homes it was found that there were hardly any viewers for the DD programmes. The depleting Television Viewer Ratings (TVRs)⁶ of the DD programmes was also a cause of concern as advertisers deserted due to its low viewer ratings. Analysts felt that DD would need a budgetary support of Rs 5 bn during the fiscal 2000-01 to sustain itself as its revenues would not be enough to meet its expenditure. Analysts questioned the capacity of the Government to own DD and many felt that privatization would be the only solution.

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1] DD is the State owned TV broadcaster in India. DD has one of the largest broadcasting networks in the world. It is funded by the government and is aimed at spreading knowledge and information about social, economic and governmental issues.
2] Business World, March 19, 2001
3] Business Today, August 6, 2001
4] According to the Census of India, the following criteria were adopted for treating a place as urban: All statutory towns, i.e., all places with a municipality, corporation, cantonment board or notified town area committee, etc. All other places which satisfied the following criteria: A minimum population of 5,000; At least 75% of the male working population engaged in non-agricultural pursuits; and a density of population of at least 400 per sq. km. (1,000 per sq. mile). Apart from these, the outgrowths (OGs) of cities and towns have also been treated as urban. All areas not identified as 'Urban' are classified as 'Rural'.
5] By 2000 DD’s employee strength was 21,000
6] Television Viewer ratings indicate the highly viewed programmes which help in measuring the popularity of a programme or channel.