Case Studies in Strategic Management
CA/CWA, MEC/CEC, B.Com & B.Sc.
Master Minds
CASE STUDIES IN STRATEGIC MANAGEMENT
May 2007 – PCC Exam
DD is the India’s premier public service broadcaster with more than 1,000 transmitters covering 90% of the country’s population across on 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 Rs.30 lakhs plus the cost of production of the programme. In exchange the procedures get 780 seconds of commercial time that he can sell to advertisers and can generate revenue. Break-even point for procedures, 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 procedures 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. Procedures are possessive about buying commercial time on DD. As a result the DD’s projected growth of revenue is only commercial time on DD. As a result the DD’s projected growth of revenue is only 610% 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 options before it. First, it should privates, second it should remain purely public service broadcaster and third, a middle path. The challenge seems to be exploit DD’s immense potential and emerge as a formidable player in the mass media. i. What is the best option, in your view, for DD? (20
Master Minds
CASE STUDIES IN STRATEGIC MANAGEMENT
May 2007 – PCC Exam
DD is the India’s premier public service broadcaster with more than 1,000 transmitters covering 90% of the country’s population across on 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 Rs.30 lakhs plus the cost of production of the programme. In exchange the procedures get 780 seconds of commercial time that he can sell to advertisers and can generate revenue. Break-even point for procedures, 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 procedures 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. Procedures are possessive about buying commercial time on DD. As a result the DD’s projected growth of revenue is only commercial time on DD. As a result the DD’s projected growth of revenue is only 610% 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 options before it. First, it should privates, second it should remain purely public service broadcaster and third, a middle path. The challenge seems to be exploit DD’s immense potential and emerge as a formidable player in the mass media. i. What is the best option, in your view, for DD? (20