Who owns your media: How the closely held Times Group is caught in a whirlwind

At Mumbai’s busy DN Road, the Barista coffee shop inside the historic Times of India building used to be an island of peace. The cafe, operated from a mezzanine floor, stood in stark contrast to the loud and audacious music retail shop on the ground floor, run by PlanetM. The smell of freshly-brewed coffee wafted around at all times, making it a favourite hangout for senior company executives. The low-salaried scribes barely made it to its revered clientele though.

The coffee shop downed its shutters many years ago. The music retail shop that pulled Gen Next with its pounding music and funky posters was sold off to the retail arm of Videocon, and shifted out. Times Bank, which harped on “convenience banking” and operated on the ground floor on the other side of the main entrance, had already been sold off to HDFC Bank.

For Samir Jain, vice-chairman of Bennett, Coleman & Company Limited (BCCL), better known as the Times Group, the media giant that produced the largest English newspaper was a laboratory for experimentation. The billionaire media baron attended office in Mumbai or Delhi whenever he was not on a pilgrimage. He dexterously juggled corporate deals like an astute investment banker.

The extremely sharp but reclusive Jain revelled in simplicity.

In 2005, soon after Reuters signed a deal with Times of India, Tom Glocer, the then chief executive of Reuters, met Jain at the latter's sprawling bungalow in New Delhi. The courtesy meeting at 2.30 pm stretched beyond the stipulated time, making the Reuters executives waiting outside on the lawns jittery as they were getting late for a 5 pm meeting with then prime minister Manmohan Singh at 7, Race Course Road (now rechristened Lok Kalyan Marg). The delay was because Jain was busy imparting some basic yoga lessons to Glocer. The Reuters team finally landed at the prime minister’s residence nearly 20 minutes late.

Glocer was mightily impressed with Jain.

The turnaround man at Reuters – who later guided the company’s sale to the Canadian publisher Thomson Corp in 2008 and laid a strong foundation for the merged entity Thomson Reuters – looked cheerful. He had sunk $19.8 million in equity and $8 million in debt in Times Global Broadcasting Company (TGBCL) for a 25.8 percent stake, says an old hand who witnessed the deal-making from close quarters. Glocer thought the investment would build a strong foundation for the alliance in the TV news ecosystem.

But that was not to be. In two years flat, they fell apart. Following an absurd valuation game played by BCCL’s merchant bankers, Reuters decided to call it quits as it went ahead with merger talks with Thomson Corp. In any case, the merger would have triggered a clause that mandated additional fund infusion by Reuters. When Reuters eventually exited the joint venture in 2007, it made a cool $55 million in the bargain, thanks to the bloated valuation of TGBCL then. Reuters happily distributed among its key employees a massive bonus cheque as a parting gift.

BCCL's plan was to sell the stake to some private equity firms at a higher valuation. But it fell flat after Lehman's collapse in 2008 and the financial crisis that ensued. PE firms scooted away and company valuations, akin to castles built in the sand, caved in.

Even after a decade, the stake sale in TGBCL has remained a mirage for TOI's television division.

Another significant alliance that the Times Group forged was with the UK-based BBC Worldwide. In 2004, the two media behemoths set up Worldwide Media, a 50:50 joint venture. BCCL preferred to call it a “marriage” then.

At a crowded press conference held in Mumbai, Vineet Jain, Samir's younger brother and managing director of BCCL, was waxing eloquent: “The fact that BCCL changed its bachelor status after staying single for decades signals its belief in the potential of the magazine business.” Peter Phippen, managing director of BBC Magazines, looked pretty excited. He hoped the alliance would see significant growth in India.

But in August 2011, it ended in divorce. BCCL bought back the stake from BBC Worldwide, to make it a wholly-owned subsidiary. Worldwide Media continues to be wholly owned by BCCL, as per the company’s latest regulatory filing.

Yet, Jain’s experiments continued unabated.

Over the last three decades, the group launched several newspapers and magazines; some lasted for a while before they finally folded up, some others were short-lived. The Illustrated Weekly, the Independent, Metropolis on Saturday, Science Today, Dharamyug, TOI Crest and Mumbai Mirror are among those that fell by the wayside. On the flip side, with its enormous financial clout, marketing muscle and a near monopoly in Mumbai and many other markets, the group made regular attempts to steamroll its rivals.

The Mughal-Gothic building, popularly known as the “Old Lady of Boribunder”, stood in diminished splendour as time passed. The marketing tagline – “The leader guards the reader” – nearly lost its appeal.

A look at the group’s financial statements of the last couple of years tells us that the group has spread its wings far and wide into sectors that are only remotely connected to the traditional media businesses. It diversified into sectors completely off the media landscape: movie production and digital/technology, music, real estate, education, healthcare, manpower consultancy, advertising, e-commerce, telecom and finance, to name a few.

As per the regulatory filing for 2019-20, the company has 96 subsidiaries and step-down subsidiaries and 20 associate companies, apart from JVs in insurance and digital media, with their ownership buried under a web of promoter-owned companies with cross-holdings, typical of family-owned companies in India.

The Jains hold 47 percent stake in BCCL through three companies: Bharat Nidhi Ltd (24.41 percent), Camac Commercial (13.3 percent), and PNB Finance & Industries (9.29 percent). They also directly hold another 1.09 percent stake.

The remaining stake in the company is held by other group companies, indirectly held by the family.

Both Camac Commercial and PNB Finance are listed on the Calcutta Stock Exchange. PNB Finance is a non-banking financial company owned by the Jains. Some of its major investment companies are BCCL, Jacaranda Corporation, Camac Commercial and Ashoka Viniyoga which are, in turn, shareholders in BCCL. Two subsidiaries of BCCL – Bennett Properties Holding and Times Internet – also hold stake in PNB Finance.

‘Ads for equity’ deals

Some of the group’s forays into unrelated sectors were accompanied by “ads for equity” deals, casually called private treaties, through an arm called Brand Capital. The group used what a Mumbai-based media watcher called “the might of its newspaper network” to help companies build big brands in the country. It is a pretty long list with marquee names such as Thyrocare, Lodha, and BigBasket.

Over the past decade, BCCL built a fortune in stock market valuations, only to see the valuations slip away.

The Kishore Biyani-owned Future Retail Ltd, which was recently in the news for a potential fire-sale to Reliance Industries (RIL), is a classic example. Biyani, the king of retail in India, was among the first big advertisers to go for a private treaty.

As per the latest BSE filings, Brand Equity Treaties Ltd, an entity under Brand Capital, holds 2.02 percent stake and BCCL 5.63 percent stake in the Biyani company as on March 31, 2021. BCCL bought shares worth Rs 241 crore from the open market in September 2019 at an average price of Rs 406 per share, to add 1.2 percent to its kitty.

BCCL is staring at a huge loss as the stock tumbled to Rs 65 per share (as on July 1, 2021) as Biyani failed to navigate through a sea of debt and negative ratings⁠⁠ in the pandemic era with most of his stake being held in pledge.

Though the stock market has climbed back to a new peak after a deadly fall in 2020, most of the BCCL’s stars have lost their lustre, according to insiders.

BCCL has also picked up minority stakes in an array of digital giants such as Flipkart, Yatra, Uber and Quikr, apart from several other brick-and-mortar companies, under its “ads for equity” schemes. This is what once prompted Samir Jain to proclaim during private conversations that BCCL is not really a media company but a private equity company with substantial holdings in the media.

As per BCCL, the National Company Law Tribunal in Mumbai cleared the merger of Brand Equity Treaties Ltd with the company as per an August12, 2020 order.

Cut to 2021.

BCCL – which claimed to be “in the advertising business and not in the newspaper business” – is staring at a huge loss as advertising and circulation revenues continue to shrink in the pandemic.

The last two financial years – 2019-20 and 2020-21 – have thrown up some nasty surprises for the group. The economic slowdown in the country, later exacerbated by the pandemic and a long national lockdown in 2020, the more alarming second wave, accompanied by a near destruction of the advertising market, have all created an unimaginable mess for BCCL. For the group that reported a massive monthly employee expense of Rs 214 crore in 2018-19, cutting employee costs was a quick fix available to sail through the sudden drop in revenues and profits. Over the past year, it went through several rounds of layoffs, salary cuts, and shutdown of editions.

As per data from business intelligence platform Tofler, BCCL posted a consolidated net loss of Rs 451.63 crore for the fiscal year ending March 31, 2020, compared to the net profit of Rs 484.27 crore of the previous fiscal. On a standalone basis, it clocked a net profit of Rs 76.8 crore, substantially down from Rs 152.8 crore posted a year ago. On a consolidated basis, its net worth fell to Rs 10,067 crore as on March 31, 2020, down from Rs 13,034 crore.

The company is yet to file financial numbers for 2020-21.

BCCL’s revenue from the print segment is on a steady descent. The print and publishing sector continues to be the highest turnover contributing product/service for the company, but revenues have plunged to Rs 5,815 crore in 2019-20 from Rs 6,259.89 crore in the previous year.

Over the years, BCCL’s return on capital employed has steadily dropped to 14.3 percent in 2019-20 from 46.3 percent in 2015-16. Return on equity has fallen to a paltry 0.76 percent from the healthy 12.23 percent during the five-year period.

There have been concerns over massive expenses reported in its balance sheet, probably in unproductive or sluggishly remunerative sectors. In 2019-20, BCCL’s total expenses jumped to Rs 9,911 crore from Rs 9,552 crore, with a higher employee benefits expense of Rs 2,767.55 crore, vis-à-vis Rs 2,562.93 crore a year ago.

The pandemic-induced lockdown in 2020 was like a rare window of opportunity for BCCL. Despite the government’s directive to private companies not to lay off employees, the group became one of the first movers in the media industry.

In May 2020, it announced “with a heavy heart” on the front pages of its Kerala editions that it was shutting down two editions while retaining the other two. Several journalists and non-journalists were laid off in the process.

That was just the beginning. The group went on a massive staff rejig in cities like Mumbai, Delhi and Bengaluru, rendering many journalists and other executives jobless overnight.

In an internal mail dated April 23, 2020, S Sivakumar, chairman of the executive committee of the Times Group, said the unprecedented situation had called for tough calls in the short term to ensure their long-term future is protected. He went on to explain why the group was forced to reduce salaries by 5-10 percent effective April 1, and move 10 percent to a special performance incentive pool for employees earning salaries above Rs 6.5 lakh per annum.

Murmurs of protest at the Times Group, once the most profitable media house in the country, were drowned in the sea of uncertainty.

Power shift

Sources close to the group suggest that a passive power shift is clear on the ground. The passing away of Indu Jain, BCCL's chairman, on May 13 this year, hasn’t made any visible change in the group, which prefers to remain fiercely reticent. Of course, the powers have now shrunk into the hands of her two sons.

Samir Jain, who is fondly called “VC” (the acronym of the post he holds), divides his time between the US and Delhi and his regular temple visits. He, however, keeps a tab on the day-to-day affairs. After Samir consciously stepped out of Mumbai's corporate hubbub a few years ago, Vineet began spending more time in Mumbai, the centre of action for the group.

But a former editor in the group said Vineet started taking a keen interest in the group many years ago. “A decade ago, our salary increments used to be discussed and finalised by him," he said.

What is also palpable is a swing in the group's focus to non-core sectors, leaving the well-established media brands in the hands of a battery of senior editors. Sivakumar recently announced the setting up of a TOI editorial board headed by editorial director Jaideep “Jojo” Bose. The board will facilitate greater integration between print and digital.

Everyone knows that the profits from the newspaper business, a cash-cow for many years, are on a steady decline, and that it is unlikely to peak once again in the current mayhem. Experiments with new businesses and alliances are still on, but senior executives and editors are repeatedly reminded of their only mantra: profit. The basic operating principle is simple: if a business unit struggles a day longer than what they had anticipated, count out the rotten eggs and move away.

As a leading advertising agency head put it, the publisher of the world's largest circulated English newspaper has always been drunk on profits and, surprisingly, not so much on power.

Times Internet Ltd

Two decades after BCCL was forced to scale down Times Internet Ltd’s operations and laid off hundreds of employees post the dotcom bust, it is in the process of rebuilding the empire. In its new avatar, TIL has assumed gigantic proportions but is struggling to fly.

The group holds 88.8 percent stake in TIL, an umbrella for all the Internet-related companies within the group. BCCL has two other subsidiaries too – Times Internet Inc., USA and Times Internet (UK) Ltd – holding similar stakes in them.

People closely watching the group are unanimous in their opinion that TIL, headed by Samir Jain's son-in-law, Satyan Gajwani (married to Samir's only daughter Trishla), has a long way to go.

TIL has been a cash-guzzling venture. The loss before tax from the internet business has swelled to Rs 837.72 crore in 2019-20 from Rs 550.66 crore a year ago.

As BCCL bets heavily on the internet economy, there are whispers that the group is spinning the lucky wheel at the expense of its core business. “The plan was to build some unicorns using the might of the newspapers before it withers off,” said a Mumbai-based editor, adding that the time is running out for BCCL.

Gajwani, vice chairman of TIL, is optimistic. He had earlier claimed that his dream is to have one billion monthly users across its product ecosystem by 2023.

But growth needs a powerful push.

As per the Times Internet 2020 report released by the group, it has reported a five percent growth in audiences to 106 million daily users. Gajwani said in a company presentation that TIL revenues grew 24 percent in FY20, closing at Rs 1,625 crore.

“Our three revenue lines are growing well, despite a weak year-ending, due to the Covid-19,” the presentation said. “Advertising revenue grew 22 percent, with faster growth in music and video. Overall subscribers to Times Prime or our individual underlying products grew 62 percent, and we crossed two million subscribers last year. Our annualised GMV in transacting businesses grew 68 percent, with net revenues growing 75 percent. Revenues for our emerging transaction businesses have grown significantly – Qureka has grown 8x, Gradeup 4x, and Dineout 2.4x.”

It claims to be the largest Indian digital consumer platform, its media assets spanning news, sports (Cricbuzz), lifestyle (Indiatimes, MensXP, iDiva), music (Gaana), and video (MX Player). Its enablement platforms serve users across personal finance (ETMoney), real estate (Magicbricks), education (Gradeup), food (Dineout), and more.

The big question is, when will the group encash its investments in the online space?

The pandemic seems to have hijacked two consecutive financial years (FY20 and FY21) from BCCL’s growth calendar. The V-shaped growth for 2020-21, predicted by many economists, has ended in a whimper and similar projections for the current financial year look far-fetched amid mounting uncertainties over a third wave of the pandemic and the slow growth in vaccinations.

Will the giant bring down its unusually huge expenses? Will it once again go for the easy route: another round of layoffs and pay-cuts?

Given its obesity, divestment may be the only way out for BCCL. More than a decade later, it's time for wedding bells, once again.

Graphics by Gobindh VB

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