In TV, you need to bet your company everyday

Peter Mukerjea, 29 April, 2009

Mumbai

How many people in the media / advertising industry deal with financial investors on a regular basis? I’m not thinking here of clients but of investors in your business.

Not many - I imagine and its a bloody good thing too.

I’d say that because, apart from a few, the bulk of ‘ investment bankers’ don’t have a clue about how a TV media business works. They believe that the TV media business is like any other manufacturing business or a service where you buy at x and sell at y. The delta is the upside.

Sadly, it doesn’t work like that in a broadcast business as there are several other factors that govern the result.

TV is about being prepared to continue to invest in the service until you decide you can’t anymore or until you find a hit show and then build around it.

It’s like the oil exploration business where you’ve got to put in the heavy investment up front and oil may or may not come much later.

That’s why large media companies and media barons invest knowing that these investments will bring healthy returns one day.It took STAR almost 330 programs before they hit on KBC and then they built a business around that show!

Many PE investors, on the other hand, not only have limited understanding but also a myopic view. They lack two critical ingredients - patience and patience. They don’t care what business it is - it’s about short term gains and a pre determined exit strategy. Very quickly you realise that you should never have got the PE guys into the game.

So if you’re planning to venture out on your own with PE partners, my one word of advice is - don’t.

Find a strategic partner instead.

The guys who work in these outfits are slick dicks and never seem to have enough time as very often they’ve over stretched themselves: rushing from one meeting to another and even when attending the board meeting of one, they’re on their Blackberries working on another. Clearly an undisciplined lot. Some also fall into the category of being compared to a pair of nun’s knickers - very thick, despite being MBAs from the IIMs.

Here’s why - they’re mostly untrained and unfamiliar with the media business and they just love the sex appeal of being invested in TV. Bit like kids who join the TV business thinking they’ll get to hang out with cute VJs and the glam babes.

They simply don’t have what it takes.

Conrad Black (then owner of The Telegraph) once said - “I bet my company once, he (Rupert) bets his company everyday !

Do you know any PE guys like that? Doubt it.

Peter Mukerjea can be contacted at pm@inxglobal.com