The

Fashion Channel
GROUP 3

Abhishek Tandon | Arsheen Kaur Chugh | Bikash | Gaurav | Jigyasu | Roma | Srikanth
 TABLE OF
CONTENTS

Stakeholders 01 04 SWOT

Problem
Summary 02 05 Quantitative &
Qualitative Analysis
Competitor
Analysis 03 06 Recommendation
 PROBLEM SUMMARY

The Fashion Channel had become a prominent name in the cable TV industry with fashion centric content, revenues
forecasted for 2007 were $300M. It now needed to up its game and introduce modern marketing and a new STP.

NICHE SEGMENT STRONG LOW CABLE TV WHAT NEXT?

TARGETED COMPETITION APPEAL
- It had to decide
- TFC was creating niche - Strong competition
- Not the most preferred on a new STP.
content from CNN and
medium for TV ads. Segment , target
- Targeted towards fashion Lifetime. They had
- Attractiveness to and position well
only. better ratings and
viewers was less and it to catch more
- Motto: “Fashion for more versatile
hadn’t caught up eyeballs.
everyone” content.
.
 TFC’c Ad Revenue Model
• Target by 2006-$230M
SOURCES OF REVENUE • 11 Lakh Viewers(Male and Female)
• TFC sold Ad spots to consumer marketers
(designers , makeup and automobile mfg companies)
• 2016 minutes/week was the total ad time and
marketers had spent a Billion across networks to buy.
• Advertisements were now directed through agencies
optimising finding spots across networks.
• Advertising placement portfolio programmers were
used to see best spot and network for a campaign

Cable Affiliate Fees

• Target by 2006-$80M.
• TFC was positioned as a BASIC Channel
• It targeted a niche which was very small making it less
popular.
• It got $1 per subscriber per year whereas other players
could demand high prices due to high demand.
• It was at the low end of the industry and wanted to
maintain a balanced relation with all suppliers.
• Limited opportunity to raise fees, full penetration reached
 COMPETITOR ANALYSIS

Type Consumer Perceived Awareness Average Screening Time

Interest Value Viewers

TFC Fashion news and 3.8 3.7 4.1 1.1 M 24X7

features

CNN: Fashion Fashion news a 4.3 4.1 4.6 4.4 M Monday to Friday; 8-9PM
Today with celebrities Sat and Sun; 10-11 PM
focus, Men were
target
Lifetime: Fashion news , 4.5 4.4 4.5 3.3 M Monday to Friday;
Fashion younger women 9-11 PM
Tonight target
 SWOT ANALYSIS
STRENGTHS WEAKNESSES
1. Strong Brand equity and Brand 1. Customer dissatisfaction
Awareness 2. Not efficiently managing
2. Successful go to market track inventory and cash cycle
record 3. managers keeping
3. Only dedicated Network to fashion
24*7 S W information close to their
chest

THREATS T O OPPORTUNITIES
1. Government regulation and
Bureaucracy 1. Increase in customer
2. Threat of new entrants due to disposable income.
reducing cost and increasing 2. Can grow market share
inefficiencies by entering international
3. Lifetime and CNN with new programs markets
attracting new and new customers.
 Quantitative Analysis

Ad Revenue Calculator
Current Scenario 1 Scenario 2 Scenario 3 2007 base
TV HH 110,000,000 110,000,000 110,000,000 110,000,000 110,000,000
Average Rating 1.00% 1.20% 0.80% 1.20% 1%
Average Viewers (thousand) 1,100 1320 880 1320 1100
Average CPMa $2.00 1.8 3.5 2.5 1.8
Average Revenue/Ad Minute $2,200 $2,376 $3,080 $3,300 $1,980
Ad Minutes/Week 2,016 2,016 2,016 2,016 2,016
Weeks/Year 52 52 52 52 52
Ad Revenue/Year $230,630,400 $249,080,832 $322,882,560 $345,945,600 $207,567,360
Incremental Programming Expense 15,000,000 20,000,000

Inferences from the above data

Base Year 2017 Scenario 1 Scenario 2 Scenario 3

The (Avg revenue/Ad minute) The (Avg revenue/Ad minute) The (Avg revenue/Ad minute) The (Avg revenue/Ad minute)
decreased to $1980 increased to 2376$ increased to 3080$ increased to 3300
 Exhibit 5 TFC Estimated Financials for 2006 and 2007

2006 Actual 2007 Base Scenario 1 Scenario 2 Scenario 3 Assumptions

Revenue

Ad Sales $230,630,400 207567360 249080832 322882560 345945600 Insert scenario results from revenue calculator
Affiliate Fees $80,000,000 $81,600,000 $81,600,000 $81,600,000 $81,600,000 Grows 2% per year with population

Total Revenue $310,630,400 $289,167,360 $330,680,832 $404,482,560 $427,545,600

Expenses
Cost of Operations $70,000,000 $72,100,000 $72,100,000 $72,100,000 $72,100,000 Grows 3% per year with inflation

Cost of Programming $55,000,000 $55,000,000 $55,000,000 $70,000,000 $75,000,000 Add incremental programming expense
Ad Sales Commissions $6,918,912 6227020.8 7472424.96 9686476.8 10378368 3% of ad sales revenue

Marketing & Advertising $45,000,000 $60,000,000 $60,000,000 $60,000,000 $60,000,000 Reflects increased spending of $15M
SGA $40,000,000 $41,200,000 $41,200,000 $41,200,000 $41,200,000 Growing with inflation 3%

Total Expense $216,918,912 $234,527,021 $235,772,425 $252,986,477 $258,678,368

Net Income $93,711,488 $54,640,339 $94,908,407 $151,496,083 $168,867,232

Margin 30% 19% 29% 37% 39%

Base Year 2017 Scenario 1 Scenario 2 Scenario 3

● Increased spending ● Increased spending of ● Increased spending of $15 mn in ● Increased spending of $15 mn in
$15 mn in marketing & marketing & advertising marketing & advertising
advertising ● Increased spending of $15 mn in cost of ● Increased spending of $20 mn in cost
programming of programming
 RECOMMENDATIONS
Scenario 1 Scenario 2 Scenario 3
● The revenue from ad ● The revenue from ad ● The revenue from ad
sales stood at $249 mn sales stood at $322 mn sales stood at $345 mn
The net income stood at The net income stood at The net income stood at
$94.90 mn with a margin $151.49 mn with a margin $168.86 mn with a
margin of 39%
of 29% of 37%

TFC should target 2 segments: Fashionistas and Shoppers & Planners

Reasons
Largest financial return in all 3 scenarios
Neither Generalised for all Nor Specific to one [Differentiating Factor]
Greatest Margin and Net Income than other scenarios
THANK YOU