The company is planning to raise up to Rs 400 crore through private equity. To know more about the plans and strategy ahead, Capital Market conducted a face to face interview with Asheesh Chatterjee, CFO, Reliance Broadcast.

Q1: Kindly explain the company's business model and key operational and financial performance of different subsidiaries. What is your take on their financial position and capex for the current fiscal?
RBNL is India's Youngest & Fastest growing Multimedia Conglomerate with established brand equity & reach. Our business areas include:

• India's largest FM network 92.7 BIG FM with 45 FM stations, reaching 37 Million Indians across 1200+ towns & 50,000+ villages. 92.7 BIG FM continues radio listenership dominance in Bangalore & Kolkata with significant strides in a highly competitive Mumbai market, breaking into the No 1 spot.

• A TV network which includes landmark JV's with CBS Corporation and the RTL Group, bringing world class entertainment to Indian audiences. Our television network also includes BIG MAGIC is one of the leading channels in Hindi in the Regional entertainment genres.

• India's largest Live Entertainment creator, BIG LIVE, executing large scale patented entertainment formats.

• India's fastest growing OOH company, BIG STREET with marquee out of home inventory including Digital media like Digital pods.

• BIG Productions which develops and produces high quality software for leading national and regional channels, having created over 400 hours of TV content.

Q2: At consolidated level, the company continues to report losses. What are the various strategic initiatives to steer the consolidated results into positive terrain. What kind of growth in demand is visible at the industry and company level. Factoring this, when will the company report profits at the consolidated level.
We endeavor to build India's largest media conglomerate, by fortifying our media presence, and by leveraging opportunities within the Reliance Group.

Our way forward strategy would focus on:-

92.7 BIG FM: Actively participate in Phase III expansion of FM Radio, adding greater reach to the existing network

BIG Television: RBNL's television business strategy is to target the top end audiences in metros through focused offering and mass audiences in India through locally relevant channel offerings while seamlessly integrating our other business verticals. RBNL would pursue phased growth for Television Broadcasting, in sync with the Reliance Group's expansion plans in distribution and media infrastructure.

BIG Live: Build IP across various markets, entertainment platforms & consumer segments. Significant scale-up plans by leveraging content production capabilities of BIG Productions.

BIG Productions: Broadcaster's gateway to the most compelling fiction and non- fiction or reality formats, creating concepts and formats on the basis of a strong understanding of the broadcaster's needs as well as a clear focus on the Indian viewer's sensibility, preferences and insights.

BIG Street: Grow on the back of long term contracts, exclusive marketing rights, Public Private ventures & opportunities emerging from Reliance Infrastructure projects. And also drive mall space acquisition & marketing.

Q3: What was the impact of launch of BIG CBS Spark and BIG Magic? When do you expect Television broadcasting to turnaround at operating and net level?
Reliance Broadcast Network Ltd., one of India's youngest entertainment media conglomerates marked its entry into the television business with its joint venture with US' No. 1 television broadcaster CBS Studios international, launching 3 premium entertainment channels beginning November 2010. In quick succession, in April 2011, the Company also launched its first Indian language channel BIG MAGIC exclusively catering to the core Hindi heartland- UP,MP, Bihar & Jharkhand. This 4 Channel bouquet, in a very short span of time, has already seen 3 of its Channels - BIG CBS Prime, BIG CBS Love and BIG MAGIC emerge as market leaders in their respective genres, with the youth channel BIG CBS Spark growing at a significant pace. The 3 BIG CBS Channels also consolidate their position and stand as the No. 1 English General Entertainment Network.

A summary of the channels as below:

• Striking success of BIG CBS PRIME as it emerges as the market leader, with highest market share, amongst CS 25-44 SEC A males, Wk 36

• All Women Love BIG CBS Love! The Channel captures highest market share amongst CS 15-34 SEC A Females, Wk 36.

• BIG CBS Spark is the hottest destination for youth and amongst SEC A young women stands at 57% market share - CS 4-24, Wk 36, when compared to its closest competitor VH1. With shows like Jerry Springers, Cheaters, Spark HITZ, Spark LIVE, 90210 and Hawaii 5O, the programs have caught on with their target audience like a house on fire!

• BIG MAGIC is already the undisputed leader in the heartland delivering 1.4 cr unduplicated audiences over 4 weeks across the markets of UP, MP and Bihar, amongst CS 4+, audiences

Television broadcasting turnaround

It depends on how things pan out. We are hoping it pans out faster than we expect. The CBS channels are a 50:50 venture; so the impact on RBNL is limited. The big one for us is BIG Magic (Hindi), and we are hoping it will turn itself around very quickly. It is already the number one channel in the Hindi heartland and is an opportunity for us to get into uncharted territory. With BIG Magic, we compete with regional players like Sahara Samay and Mahuaa TV. BIG Magic has unique lexicons and socio-cultural threads that are relevant to that market. Unlike Hindi GECs we believe that when you have an offering which is from a particular geography, the take-off in that market is far better.

Q4 : The quarter saw the Company sign a joint venture with the European Entertainment Network, RTL Group to launch two thematic television channels in India through an equally owned joint venture Company, What is the timeframe you are looking to launch, will there be any investments involved and what impact do you see on financials?
Reliance Broadcast's joint venture with, RTL, brings the European leaders into India and we're proud to be at the core of creating a revolution in the Indian English entertainment space. We are committed to offering audiences unprecedented international television content, and RTL Group's, extensive library and lineage compliment the partnership perfectly. The synergies, values and visions that both Companies share, will allow this joint venture to offer value to audiences and marketers alike.

With RTL we will launch two English-speaking thematic TV channels; a reality channel with international content, mainly from RTL Group's production arm FremantleMedia, and a channel primarily targeting male viewers with action-oriented content. Unlike the CBS channels, the RTL channels will have language feeds.

We plan to launch one of these channels in Q3 of the current fiscal and the second in FY13.

There is very little capex requirement in the television business. It is primarily a content related capex business.

Q5: What are challenges and opportunities you see on Radio broadcasting side? Any plans on the capex front?
Our radio business is at a mature stage and has delivered good results, continuing to demonstrate the confidence of advertisers in the brand. The business recorded revenue of Rs. 175 crore, a growth of 15 per cent over previous fiscal. Radio remained EBITDA positive at Rs 28 crore, a growth of 732 per cent.

Phase III rollout will be an exciting time for the Company which has already built a robust radio network , and will get an opportunity to further increase its reach with the opening up of over 200 new towns. The opening of news and sports will be an impetus to further growth for the category. Multiple frequencies are also a booster and will enable category expansion, improving reach, effective rates and bringing higher share of media spends to radio. Growth will come from the Company's ability to leverage networking in a significant way, allowing for low cost expansion in Tier II / Tier III locations.

Q6: The unsecured loans came down to about Rs 119 crore in March 2011 from Rs 304 crore in September 2010. How were they funded?
RBNL raised Rs. 283 crores of funds through preferential allotment in September 2010. Around Rs. 233 crores out of this were utilized towards repayment of debts and interest.

In the long run RBNL would like to operate as a debt free company.

Q7: Does the company has any foreign exposure in terms of earnings or expenditure? If yes, what impact do you see and how do mitigate any risks? If no, will there be any exposure going forward?
No. None currently.

Q8: The operating cash flow of the company worsened and remained negative during FY11. What are the reasons and whet do you expect it to be going forward?
RBNL is currently in a phase of growth and investments. Radio Phase III expansion and television businesses launched in the last 6 – 9 months would usher company's next phase of growth. The company is committed to focus on:

• Improving operating leverage and cost efficiencies
• Continued aggressive growth
• De-risked and bottom line driven strategy
• Improved viewership & listenership ratings through product innovations
• Integrated offerings, thus increasing effective rate (ER) and ticket size

Q9: What is the debtors position and how do you plan to mitigate risks associated with it?
Debtors ended 31^st March 2011 - Rs. 82 Lacs & as on 30^th September 2010 - Rs. 66 Lacs, increase aligned with the corresponding growth in revenue.

The company adopts industry best practices for credit management & collections to manage debtors under the industry benchmarks.

Q10: Are you looking at raising funds? If yes, then how much and how does the management plan to meet its funding needs?
We are currently in process of raising funds for phase III and our television expansions. We are in talks with a bunch of players both private equity and strategic investors to raise upto Rs 400 crore we hope to conclude the deal by the mid of next year.

Q11 : Where do you plan to utilize the funds, how much funds will be allocated in the coming fiscal year 2011-12 and what proportion do you plan to spend on radio auctions, marketing and branding?
The funds will help us expand our radio business and this is one area where most of our fund requirement and fund infusion will go into.

Q12: How do you stand to benefit from increased in FDI cap and increase in license period from 10 to 15 years?
The FDI cap increase from 20-26% is a good move and has been a long standing demand, allowing for more elbow room for investment. It will allow for more strategic investors in the sector and it will see an increased foreign player participation in the radio growth story.

We have had several players evince interest and we could explore in the future

Q13: What is the expected growth and sustainable margins?
The radio business is stable and the opportunity to grow the business lies in innovation in content as well as product offerings. One of the key focus areas is offering integrated multi-media properties to clients as well as creating our own IPs which will become a key part of the radio operating plan.

Radio as a category has been undervalued by the market. A recent RAM baseline study shows a 50 per cent jump in listenership across the four metros. This means that advertisers are increasingly seeing the value and radio should get the price it deserves – given its high reach and high engagement.

Radio has a very high operating leverage. As soon as radio scales up with phase III, the PAT margins will drastically improve. Additionally, resolution of music royalty dispute will further add to the margins

Q14: What is the current geographical distribution of revenues and how do you see contribution across geographies during FY 11-12?
For Reliance Broadcast, it is a healthy mix of both national & local advertisers. While the earlier trend was of national advertisers, it has now balanced, with more advertisers coming in from the tier II and III cities. Radio is a local medium, and with more and more advertisers understanding the strength and power of this medium, are using it effectively. National advertisers continue to increasingly integrate radio into their plans.

The metros are critical to growth, but there are key tier II cities which are important markets from the revenue point of view.

We will not just focus on a metro, but also the adjoining cities which share the same socio-cultural background. This will enable, content innovation, localization and the ability to offer advertisers focused and differentiated reach.

Q15: What's the USP of your television business?
We are very young television network and are making rapid progress towards increasing market share. With television, our aim is to service under-served market segments, under-served target audiences and under-served entertainment options. One segment that we felt was under-served was the upper socioeconomic classification (SEC) segment. With a burgeoning HNI (high net worth individual) audience there is a huge potential for a channel like ours. The current crop of English GECs is not targeted at any particular audience, compared to Hindi GECs that have defined target audiences. The strategy for our channel is to segment the market with an offering for every audience segment. So we have BIG CBS Love skewed towards women audiences, BIG CBS Prime for men and BIG Spark for the youth. Each one is sharply defined.

Q16: How does the company stack up with its Indian as well as global peers in terms of efficiency, size and scale of operations? In that, can you point out for starters anything that differentiates Reliance broadcast from its global peers?
Our joint ventures with leading global broadcaster's is a clear testimony of how RBNL compares closely with the best in the world. Both CBS Corporation & RTL Group have seen value in collaborating with a company with similar media footprint, vision & aspirations which clearly differentiate it from the clutter.

Q17: How do you see advertising spends coming across and how do you plan to take advantage of it?
Advertising as a percentage of GDP is only less than 0.5% in India. Internationally, this is more like 1-2%. This itself indicates a huge potential for the advertising pie to grow, which radio phase III will optimize on.

As radio enters hinterland of India, marketers and media planners would further see potential as a mass media reaching out in pockets. where other mediums cannot. Hence it will attract a greater share of media spends.

Radio stations, like the size of RBNL, service around 1200 brands a month. Large majority of which are local advertisers which promises to further fuel once the radio footprint grows. Moreover, more and more national advertisers will choose radio as its reach expands exponentially, covering 95% of India's population.

Advertisers today have options of television channels that do not have a clearly segregated audience, resulting in high audience spill-over. With our channels, we have a more focused and clearly identified audience base which results in advertisers benefiting far more.

Q18: What are your biggest challenges and how do you tackle them?
Phase III rollout will be an exciting opportunity for us. We believe we have built a really good network for radio and once the regulation from the government comes through, we will have the opportunity to enter the hinterland of India. In our network, we have tier 2 and tier 3 towns and we can use the networking clause, which the government is evoking to build feeder radio stations across some of the smaller towns.

Our second big initiative in the radio space will be a focus on news and sports. We have the ICC rights and we want to exploit them on radio. We believe there is an opportunity to do multiple frequencies in radio. We also want to enhance local content through ground properties that we do through BIG Live. Radio actually fronts these properties, working excellently and hence it becomes a co-marketing initiative between BIG Live and BIG FM. On the digital side, we have launched Net Talk Radio. We have also launched a mobile radio service and we want to explore how to deploy more content on the mobile space.

Q19: How do you engage customers in new ways that increase interest and loyalty to generate new demand and revenue sources?
The interplay of mobile and radio penetration will see a host of new applications, content and engagement with audiences across the demographics. RBNL foresees radio to emerge as a medium of ‘education' in the future along with entertainment and information.

Mobile Radio will benefit a lot with 3G coming in. With the quality of reception and sound improving, more subscribers will take on mobile radio to get the experience they want. It is similar to what HD television has done. 3G audiences are discerning and you need to build relevant content around them.

The Private Radio FM industry's annual turnover is poised at Rs 2,000 crore. With phase III reforms, the doors to this growth have now been opened and we will see an era of 30 per cent year-on-year growth for the radio industry.

With expansion of FM radio deeper into the country, it will become truly - a common man's medium.

For television industry, we think digitization will be the key revenue driver in the English channel space. The upper SEC is a discerning audience and will be the first one to pay for the content that it is looking for. With direct-to-home (DTH) growing as rapidly as it is, subscription and pay per view will be a good revenue driver.

Q20: What is your long-term goal and what is your outlook for the coming fiscal year 2011-12?
We are ushering Reliance Broadcast into its next growth phase with its broadcast business. With a clearly articulated road map for each vertical, we are confident of them delivering to expectations, with radio and television paving the way for an augmented broadcast success story. We are currently growing at the rate of 30%+ and we intend to maintain this momentum, over the next 5 years, making us one of the largest entertainment media conglomerates. We are committed to offering greater value to investors and shareholders, as we turn to a new chapter of the Company's growth curve.