Blue Screen Of Duds

Where the alter ego of codelust plays

The weird concept of diversification in media

with 2 comments

Shashikant raises some interesting questions about BCCL’s investments in companies whose interests span a really wide spectrum. While the Times Group gets a lot of flak for doing things don’t exactly enhance its integrity, the practice is more widespread than anyone would ever like to admit. Most media companies these days take the ‘barter’ route for a variety of deals and it is not an unknown thing to include media exposure as a part of the deal.

But what I actually wanted to write about was not the shady parts of the media landscape. I don’t have any illusions about it, so I accept it pretty much as part of something that comes with the territory. The problem for most media organisations, especially for the successful ones, is to somehow stick on to the growth path even after they’ve been on top for a long time.

After a certain point in growth, you don’t get single or double digit figures quarter-on-quarter. The advertising money and circulation/viewership start flatlining and no additional amount of money you can throw at the problem will fix it, because there’s just no growth opportunity left for that particular product, other than stupid silly strategies like throwing bundles of newspapers in the rubbish bin or giving them away for free at toll-booths. At the same time, especially for a publicly listed company, you need to show growth, or at least intent to grow to keep the investors happy, the media buzzing/guessing. How in the world do you do that?

So they end up starting newfangled companies to diversify their interests, most of the time within the sector, but at times outside the sector too, for lack of viable investments within the home territory. It is strange, but there is no other way to look at it other than to think of the company as a very weird mutual fund in such circumstances. How else do you explain a media company investing in the airline business, garment retailing etc?

Written by shyam

January 8, 2007 at 12:45 pm

Posted in Media

2 Responses

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  1. So…BCCL isn’t a public-listed entity; they’re free to operate as a private equity firm…and they are. From what I’ve heard – 75 deals in the last two years and mostly barter. There’s an issue if any only if one of the entities they’ve invested in is listed on the exchanges – wherein they should publish a disclaimer. Now, if BCCL takes up a significant holding (I don’t know the exact number), SEBI has to be informed.
    Anyway, BCCL doesn’t need to diversify investments to please investors, does it? I mean, do they even know what to do with all that money? So they’re just looking at taking a few risks, and hoping for greater returns…

    Nikhil

    January 10, 2007 at 11:10 am

  2. Yep, they are not a listed entity, but the same pressures apply to them if you want to keep growing at the rate you’ve been growing.

    Nobody’s happy with money sitting idle, it begs to be invested, but where do you invest is the question.

    shyam

    January 11, 2007 at 10:17 am


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