Friday, December 9, 2011

Case Study with Solution


DD is the India’s premier public service broadcaster with more than 1,000 transmitters covering 90% of the country’s population across an estimated 70 million homes. It has more than 20,000 employees managing its metro and regional channels. Recent years have seen growing competition from many private channels numbering more than 65, and the cable and satellite operators (C & S). The C & S network reaches nearly 30 million homes and is growing at a very fast rate.
DD’s business model is based on selling half-hour slots of commercial time to the programme producers and charging them a minimum guarantee. For instance, the present tariff for the first 20 episodes of a programme is Rs. 30 lakhs plus the cost of production of the programme. In exchange the producers get 780 seconds of commercial time that he can sell to advertisers and can generate revenue. Break-even point for producers, at the present rates, thus is Rs. 75,000 for a 10 second advertising spot. Beyond 20 episodes, the minimum guarantee is Rs. 65 lakhs for which the producer has to charge Rs. 1,15,000 for a 10 second spot in order to break-even. It is at this point the advertisers face a problem – the competitive rates for a 10 second spot is Rs. 50,000. Producers are possessive about buying commercial time on DD. As a result the DD’s projected growth of revenue is only 6-10% as against 50-60% for the private sector channels. Software suppliers, advertisers and audiences are deserting DD owing to its unrealistic pricing policy. DD has three options before it. First, it should privatise, second, it should remain purely public service broadcaster and third, a middle path. The challenge seems to be to exploit DD’s immense potential and emerge as a formidable player in the mass media.

Questions:
(i) What is the best option, in your view, for DD?
(ii) Analyse the SWOT factors the DD has.
(iii) Why to you think that the proposed alternative is the best?


Answer
(i) For several years Doordarshan was the only broadcaster of television programmes in India. After
the opening of the sector to the private entrepreneur (cable and satellite channels), the market
has witnessed major changes. The number of channels have increased and also the quality of
programmes, backed by technology, has improved. In terms of quality of programmers,
opportunity to advertise, outreach activities, the broadcasting has become a popular business.
Broadcasters too have realised the great business potential in the market. But for this, policies
need to be rationalised and be opened to the scope of innovativeness not only in term of quality
of programmes. This would not come by simply going to more areas or by allowing bureaucratic
set up to continue in the organisation.
Strategically the DD needs to undergo a policy overhaul. DD, out of three options, namely
privatisation, public service broadcaster or a middle path, can choose the third one, i.e. a
combination of both. The whole privatisation is not possible under the diversified political
scenario. Nor it would be desirable to hand over the broadcasting emotively in the private hand
as it proves to be a great means of communication of many socially oriented public
programmers. The government could also think in term of creating a corporation (as it did by
creating Prasar Bharti) and provide reasonable autonomy to DD. So far as its advertisement tariff
is concerned that can be made fairly competitive. However, at the same time cost of advertising
is to be compared with the reach enjoyed by the doordarshan. The number of viewers may be far
more to justify higher tariffs.
(ii) The SWOT analyses involves study of strengths, weaknesses, opportunities and threats of an
organisation. SWOT factors that are evidently available to the Doordarshan are as follows:
S – Strength
Cost Academy Strategic Management-94
More than 1000 transmitters.  Covering 90% of population across 70 million homes against only
30 million home by C & S. More than 20,000 employees.
W – Weakness
 Rigid pricing strategy. Low credibility with certain sections of society. Quality of program’s is not
as good as compared to C & S network
O – Opportunities
 Infrastructure can be leased out to cable and satellite channel. Digital terrestrial transmission. 
Regional focused channels. Allotment of time, slots to other broadcasters.
T – Threats
 Desertion of advertisers and producers may result in loss of revenues. Due to quality of program
the reach of C & S network is continuously expanding. As the C & S network need the trained
staff, some employees of DD may switchover and take new jobs. Best of the market-technology
is being used by the private channels.
(iii) It is suggested that the DD should adopt a middle path. It should have a mix of both the options.
It should economise on its operational aspects and ensure more productivity in term of revenue
generation and optimisation of use of its infrastructure. Wherever, the capacities are
underutilised, these may be leased out to the private operations. At the same time quality and
viewership of programmes should be improved. Bureaucracy may reduce new strategic initiatives
or make the organisation less transparent. Complete privatisation can fetch a good sum and may
solve many of the managerial and operational problems. However, complete public monopoly is
not advisable because that denies the government to fully exploit the avenue for social and
public use. The government will also lose out as it will not be able to take advantage of rising
potential of the market.




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