Deepak Shourie | Dancing with the idea of change

MARCH 26, 2011
What prompted the director of BBC Worldwide Channels in South Asia to bring a single, mixed-genre channel to India
Supriya Nair
The director for BBC Worldwide Channels, South Asia, and their television channel BBC Entertainment, is a newspaper junkie. “I read seven or eight newspapers every morning— that’s where I get my fix,” says Deepak Shourie. It may be a clue to how, or why, over the last 15 years of his media career he’s started or headed as many media outlets himself.
If you read seven newspapers a day, the idea of competitive co-existence clearly exists. That can only be a good attitude for someone spearheading a relatively new entrant into a TV market that is already fiercely competitive. “I also watch all the news channels,” he says. That’s once he’s already got the headlines off the Internet.
Tee-totaller: Shourie is a passionate golfer, which he says is ‘good for health and business’. Jayachandran/Mint
Tee-totaller: Shourie is a passionate golfer, which he says is ‘good for health and business’. Jayachandran/Mint
“Your generation won’t even need to read newspapers,” he says. “In the US, no one under 35 reads them any more.” I write for one, I protest, and he laughs, something he does often during our conversation.
You don’t get to be channel head without a sense of humour.
Shourie, 61, took charge last year, coming to his new project at a moment of transition in the subcontinent’s history with the British Broadcasting Corporation (BBC). In January, the BBC announced that it would shut down BBC Hindi, a radio news service that has run for over seven decades in India, on 1 April. In February, BBC Worldwide began its first major marketing drive in India for BBC Entertainment, its non-news-based television channel that airs the channel’s entertainment, lifestyle and factual programming.
Adverse reactions over the announcement about BBC Hindi indicated the standard of credibility associated with it. “It’s an amazing brand,” Shourie says. “I remember a time before instant news took over, when it was the only radio news channel that you relied on to get your world news and reporting. But things have changed—the media has changed.”
Shourie should know. In 1988, when he got a call from India Today’s editor-in-chief Aroon Purie, asking him to work for him, Shourie initially demurred. “I said to him, ‘I’m not the journalist, my brother is’” (his brother is writer and politician Arun Shourie). “Aroon said, ‘I’m not looking for a journalist, I’m looking for a general manager.’”
In 1994, Shourie left to start Outlook, a news magazine that would become a competitor to his old publication. Outlook and its competition with India Today would make history. “I used to say, a fortnight in news doesn’t work. I remember (former Union minister) Jaswant Singh coming to one of our meetings and saying, ‘This would be exciting to read—but it’s too late!’ That’s how we made the weekly pattern the norm.”
Later stints included managing Hindustan Times (Mint is published by HT Media Ltd, which also publishes Hindustan Times), Zee Publishing, Discovery India and their lifestyle channel, Travel and Living (now called TLC). Evidently, Shourie is a great believer in change—which is not a word habitually associated with BBC in many parts of the world. Tuning in to BBC’s news services in any language, listening to announcers and journalists report on world affairs in their famously unruffled, measured tones, may fool listeners into thinking precisely the opposite—that some things never change. But, of course, they do.
“Indian TV right now is basically hooked on American content,” Shourie says. “Everybody’s running Friends, or CSI. But British programmes haven’t been seen. So we asked, if you’ve not seen a lot of the British content—why not?”
BBC Worldwide alone produces 20,000 hours of programming every year, which is huge. Most of this may be unheard of, or at least unseen, in India, but Shourie and his team have the advantage of instant recognition—at least every English speaker in the country knows about BBC.
Taken together, the TV audience today stands at 72.5 million people. “If you do the math, that’s about 18 million homes,” Shourie explains. There’s also the power ratio to consider—an old statistic had it that English newspapers made up 15% of the country’s circulation, but hoovered up 55% of the advertising. “That’s changed a bit—but I’d still put the advertising figure at not less than 48%,” Shourie says. “It may not be true that the English viewer is more affluent, more outgoing, more willing to spend, better travelled—but that’s perception for you.”
Into this advertising market, worth almost $200 million (around Rs 904 crore) annually, and currently packed near-exclusively into India’s major urban areas, BBC Entertainment will beam its revamped programming through its single mixed-genres channel. For fans of the sort of vintage television that made British comedy legendary, a word of caution—brand new BBC does not indicate perpetual re-runs of Blackadder and Monty Python sketches. “We need to change associations,” Shourie says.
A new season of the already-famous Dancing with the Stars began to air on 24 February; publicity for the always-popular Top Gear, as well as Human Planet, an eight-part documentary on human interaction with the environment, has begun in force. “Three programmes that highlight three categories we’re focusing on,” Shourie says, “entertainment, lifestyle programming and factual content.”
He chuckles. “I know. Dancing with the Stars! How many people sit up and think, ‘Wow, what happened to the BBC?’”
With its content mix, the channel seems to combine the experience of TLC and Discovery, Shourie’s former channels, with a British variant on Star World. While studying their target audience, Shourie says, they realized the viewers of these channels and their own occupied the same geography. So instead of being splintered into niche channels, those three categories melded to add texture and variety to their single channel. “The viewer for each kind of programme is of the same demographic..”
“I realized something when I worked at Discovery,” he says. “Globally, they were tanking at certain points of the day because they were blasting the channel with a single kind of programme that had started out well—tattoo television, like Monster Garage, Monster House. But people won’t watch one full episode of that sort of thing. It’s television you snack on.”
Nor is BBC Entertainment all about tigers killing deer at family-friendly hours either (“you watch that for about 5 minutes at a time too”). Among its new shows, says Shourie, “BBC Earth and Monarchy at Work will both excite people. But there’s also Spooks, Sherlock Holmes, Doctor Who—an amazing mix.”
But will it lure his demographic away from its remarkable affection for those Friends re-runs? “I don’t think you need to lure a viewer away,” he says, after a diplomatic pause. “People would welcome a choice.”
There may be no BBC Entertainment Hindi for a while yet, but India-specific content may come not too far into the future. “It’s always a good idea,” he says. “Particularly in lifestyle programming—you’d rather see an Indian home, not a British one.” More immediately exciting, however, is the thought of the storehouse of India-specific programming sitting buried in the BBC’s massive libraries, stretching back decades. “A new BBC look has to rely on the best it has to offer,” he says.
Is there any time in the day left to watch the competition? Shourie won’t say. “I must be one of the few people in the country who watches DD Bharati,” he replies. “I do it because I love classical music.”
We pause to contemplate an alternate universe, one in which India’s own official television channel plays a role similar to the one BBC does for Britain. “If it were packaged well, it could be India’s ambassador of culture to the world,” Shourie says, contemplatively, and then smiles. “What more can I say?”
supriya.n@livemint.com
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Buffett set to meet Indian insurance holders

By James Lamont in New Delhi

Published: March 24 2011 18:35 | Last updated: March 24 2011 18:35

Warren Buffett, the chairman of Berkshire Hathaway, will on Friday meet his new insurance policy holders in the Indian capital following his company’s entrance into one of the fastest-growing retail markets in the world.

Berkshire Hathaway, the financial services-led US conglomerate, has entered India through the insurance distribution business in a tie-up with Bajaj Allianz general insurance products.

Bajaj Allianz is an insurance company controlled by Bajaj Finserv, a local financial services group, with Allianz, the Munich-based financial group, as a minority partner.

Caps on foreign investment in India’s insurance sector prevent foreign insurance groups from owning more than 26 per cent of a company.

Raising these caps was a priority of successive governments and viewed as a way to help meet the financial needs of India’s 1.2bn people and deepen India’s financial markets. But financial reform has stalled in parliament and frustrated would-be investors.

The insurance sector is dominated by Indian institutions such as the state-owned Life Insurance Company, Oriental Life Insurance, ICICI Lombard and Bajaj Allianz. It has yet to attract widespread foreign investment from the US or Europe to target a growing middle class and rising incomes.

While the arrival of Berkshire Hathaway is an important signal to other US insurance companies, Mr Buffett has hinted he is scouting for opportunities to support an innovative and well-managed Indian company seeking to list its stock in the US.

Ajit Jain, the head of Berkshire Hathaway’s reinsurance business, made it clear his group was not prepared to “do all the work” and take a minority shareholding in any business venture in India.

He viewed the tie-up as a “small step” but one that would help his group understand India’s operating and legal environment better. “I hope it leads to something big, fairly quickly,” Mr Jain told NDTV Profit television.

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Essar Energy rises after Goldman points to growth potential

By Bryce Elder and Neil Hume
Financial Times
Published: March 23 2011 08:53 | Last updated: March 23 2011 20:14

Essar Energy showed its biggest gain in eight months on Wednesday on the back of a recommendation from Goldman Sachs.

The Indian power group rallied 4.2 per cent to 468p, having fallen sharply this week after it pushed back plans to build two electricity plants. The delays and concerns about rising coal costs have led Essar to underperform its European sector by 30 per cent so far this year, which had discounted the risks, Goldman said.
Meanwhile, the Indian environment ministry will meet in the next few weeks to decide whether Essar can clear forests and develop two coal sites.

“This could be a materially positive catalyst for the company, which is not reflected in the price,” Goldman said. “Furthermore, the company is organising a site visit to its power and refining assets in India next week, which we believe could refocus market attention on the company’s growth story.”

Goldman added Essar to its “conviction buy” list with a 610p price target. Regulatory approval of both coal projects would raise the valuation by a further 16 per cent, it said.
The wider market ended higher after a choppy day, with the FTSE 100 rising 0.6 per cent, or 33.17 points, to 5,795.88.

Miners provided the main source of support. ENRC, which delivered in-line earnings, rose 3.5 per cent to 929½p and Kazakhmys gained 4.5 per cent to £14.31.

Ferrexpo was up 4.6 per cent to 421½p after the Ukrainian iron ore group beat 2012 forecasts and retained production guidance.

Among the fallers, ITV dropped 5.2 per cent to 80¼p after Nomura analysts said the UK television advertising market appeared to be cooling. “If the media buyer information is correct, this could lead to a short-term loss of momentum for advertising for ITV,” it said.

J Sainsbury lost 5.4 per cent to 335¼p after missing forecasts with its weakest quarterly sales in six years.

Wm Morrison lost 0.7 per cent to 274½p in response, and Tesco was little changed at 380p. “While estimate revisions are not substantial, Sainsbury still does not yet look low-rated compared to UK peers,” said Credit Suisse.

Marks and Spencer rose 1.5 per cent to 345½p as strong results from Inditex, owner of Zara, helped support clothes retailers.

North Sea explorers such as Enquest dropped after the chancellor unexpectedly announced an increase in the overall tax rate on upstream profits, from 50 per cent to 62 per cent.

“Premier Oil and BG Group are the most exposed, with 40 per cent and 24 per cent of production respectively coming from the UK North sea,” said Barclays Capital.

“On a provisional basis we estimate the impact on consensus EPS for Premier Oil will be 10 per cent and for BG Group 4 per cent.”

Enquest tumbled 12.5 per cent to 137½p. Premier fell 4 per cent to £19.11 and BG lost 2 per cent to £14.75.

Centrica, which in 2009 bought North Sea producer Venture Production, retreated 2.6 per cent to 317½p. Analysts put the cost to Centrica’s earnings at about 1.2p per share.

Coal-fired power station owner Drax Group slipped 4.3 per cent to 322¼p in response to the Budget measure to set a price floor for carbon credits.

Housebuilders were up on the back of the Budget’s measures aimed at helping first-time buyers and accelerating land sales by local authorities.

Redrow took on 3.3 per cent to 129¾p, Taylor Wimpey was up 2.5 per cent to 42p and Barratt Developments added 2.7 per cent to 109¼p.

Mitchells & Butlers was up 0.6 per cent to 303¾p after Elpida, the investment vehicle of JP McManus and John Magnier, raised its stake in the pubs group to 20.14 per cent with the purchase of 4.3m shares.

Punch Taverns lost 7.1 per cent to 70p as analysts took a cautious view of demerger plans announced on Tuesday. Espirito Santo downgraded the group to “hold”, while Morgan Stanley, BarCap and Deutsche Bank all repeated “sell” advice.

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Buffett Says India Insurance Ownership Limit Deters Investment

By Pooja Thakur and Jay Shankar - Mar 22, 2011

Warren Buffett, visiting India for the first time, said the country’s 26 percent foreign ownership limit of insurance companies deters his Berkshire Hathaway Inc. (BRK/A) from making an investment in the industry.

“India would be more attractive if we could buy more than 26 percent,” Buffett, Berkshire’s chairman and chief executive officer, said at a media conference in Bangalore yesterday. “That is a factor in the decision of not investing.”

Buffett, 80, is seeking deals in the U.S. and abroad as earnings climb at Omaha, Nebraska-based Berkshire. He agreed this month to pay about $9 billion for engine-additive maker Lubrizol Corp. (LZ) and last year bought railroad Burlington Northern Santa Fe for $26.5 billion. Berkshire’s cash holdings rose to $38.2 billion as of Dec. 31, prompting Buffett to tell investors two months later that his “elephant gun has been reloaded.”

The billionaire is seeking to expand into India to tap growth in Asia’s second-fastest growing major economy. India’s $1.3 trillion economy may expand by as much as 9.25 percent in the year starting April 1, the fastest pace since 2008, the finance ministry forecast last month.

“We hope we spend some money here,” Buffett said. “I don’t consider India as an emerging market. We tend to look at larger countries like India, China, U.K., Brazil, Germany. Those all fit us.”
Selling Insurance

Berkshire, which started selling insurance to Indian consumers this month after forging an agreement with Bajaj Allianz General Insurance, will keep doing business in India in that form for the foreseeable future because of the foreign ownership cap, he said.

India aims to raise the limit in the insurance industry to attract companies in the $41 billion market, Montek Singh Ahluwalia, deputy chairman of the nation’s Planning Commission, said in December. He didn’t give a timeframe.

Allianz SE, Aviva Plc and ING Groep NV are among global insurers that will be able to invest in their Indian ventures if the limit is raised in an industry that the Life Insurance Council forecasts is expanding 34 percent annually.

Nippon Life Insurance Co., Japan’s biggest life insurer, on March 14 agreed to buy a 26 percent stake in India’s Reliance Life Insurance Co. to boost business overseas.

Buffett, whose largest non-U.S. acquisition was the 2006 purchase of Israel’s Iscar Metalworking Cos., is traveling in South Korea and India to visit Berkshire’s operations and look for opportunities. Iscar, purchased for $4 billion, makes cutting tools. A stop in Japan was canceled after the March 11 earthquake and tsunami. He visited China in September.

Buffett will meet customers of berkshireinsurance.com, its venture with Bajaj Allianz, on March 25.

To contact the reporter on this story: Pooja Thakur in Mumbai at pthakur@bloomberg.net; Jay Shankar in Bangalore at jshankar1@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net
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Biggest Debtor Tata Steel Experiments With Hybrid Financing: India Credit

By Anurag Joshi and Shelley Smith - Mar 22, 2011

Tata Steel Ltd. (TATA), India’s most indebted company, raised 15 billion rupees ($333 million) in bonds without adding the full amount to its balance sheet liabilities.

The company, whose debt exceeds equity by 2.3 times, sold notes with no fixed maturity priced to yield 11.8 percent, according to a stock market filing. The securities, which can be redeemed after 10 years, yield 1.8 percentage points more than its 6.5 billion rupees of 10.4 percent senior unsecured bonds due in 2019, according to prices from the Fixed Income Money Market & Derivatives Association of India.

Tata Steel’s so-called hybrid perpetual notes show companies are seeking unprecedented ways to raise money with Indian bond sales down 42 percent this year to 274 billion rupees and the nation’s Sensitive Index falling 13 percent to become Asia’s worst equity benchmark. Central Bank Governor Duvvuri Subbarao raised interest rates eight times since March 2010 to curb inflation, pushing the 10-year government bond yield to 8.01 percent, more than double China’s 3.85 percent.

“Tata Steel can’t raise equity because the owners get diluted, and it can’t sell too much debt because its debt-equity ratio is bloated,” Rakesh Arora, head of research for Macquarie Group Ltd.’s India unit, said in a phone interview from Mumbai yesterday. “This is an in-between product.”
Accounting Criteria

Hybrid securities have features of both debt and equity, including often having no stated maturity. That allows the securities to be counted as debt for tax purposes and as equity for ratings, Standard & Poor’s said in a 2008 guide.

Perpetual hybrids typically pay a higher coupon than bonds with a fixed maturity because they rank below senior and subordinated debt in the repayment obligations of a company.

Tata Steel is the first non-bank Indian corporate to sell hybrid perpetual securities and has $18.3 billion of bonds and loans due through 2031, the most of any issuer in the South Asian nation, Bloomberg data show.

The Mumbai-based company is India’s third-biggest steel maker by market value after Steel Authority of India Ltd. (SAIL) and Jindal Steel & Power Ltd. Tata Steel’s debt-to-equity ratio compares with 0.5 times for Steel Authority and 0.8 for Jindal Steel, Bloomberg data show.

More companies may sell hybrid perpetuals “once acceptability and liquidity improves,” Suresh M. Hegde, group finance head for Videocon Industries Ltd., India’s biggest consumer electronics maker, said in a phone interview from Mumbai yesterday.
‘Better Liquidity’

“They are costlier because holders do not enjoy the same rights like voting that shareholders have, but are attractive to investors because of better liquidity” than on conventional debt, Hegde said.

Yields on India’s 10-year bonds have risen to 469 basis points more than similar-maturity U.S. Treasuries from this year’s low of 439 on March 3. Indian bonds have returned 1.8 percent this year, HSBC Holdings Plc indexes show. Taiwanese notes earned 1.9 percent and Singapore’s securities fetched 2 percent, the most in the region, according to 10 Asian local- currency debt indexes tracked by HSBC.

The Reserve Bank of India’s latest rate increase on March 17 contributed to the rupee’s 0.2 percent advance last week. The currency was at 44.98 per dollar at 10 a.m. in Mumbai today from 45.01 per dollar yesterday, according to data compiled by Bloomberg.
Bond Risk

The cost of credit-default swaps insuring the debt of State Bank of India, which some investors perceive as a proxy for the nation, fell 10 basis points to 178 basis points this month, according to CMA prices. Default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements. A basis point equals $1,000 annually on a contract protecting $10 million of debt.

Tata Steel’s 11.8 percent notes pay the highest coupon of all perpetual notes issued by non-financial companies, according to data compiled by Bloomberg. Ahlstrom Oyj, the world’s biggest maker of engine filters, held the previous record after selling 9.5 percent securities in November 2009.

“The issuer universe for this kind of instrument will be limited to a narrow set of top-quality issuers,” said Piyush Gupta, a Mumbai-based managing director at JPMorgan Chase & Co., which managed Tata Steel’s sale alongside ICICI Bank Ltd. “The blue-chip profile of Tata Steel, and the relative value available to investors on account of the subordination and hybrid nature of the instrument, were the main reasons behind the success of the issue.”

Tata Steel Group Chief Financial Officer Koushik Chatterjee announced a 70 billion rupee fund-raising plan in November. The perpetuals will add to 3.53 billion pounds ($5.8 billion) of loans the company obtained last year and 34.8 billion rupees raised from a share sale in January to replace debt used to buy Corus Group Plc in 2007.

“As Tata Steel continues to develop and execute its significant and earnings accretive growth plans, this innovative long-term funding with equity features but without the associated economic dilution, helps diversify our financing options,” Chatterjee said in a March 18 statement.

To contact the reporters on this story: Anurag Joshi in Mumbai at ajoshi53@bloomberg.net Shelley Smith in Hong Kong at ssmith118@bloomberg.net

To contact the editor responsible for this story: Will McSheehy at wmcsheehy@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.