Just by taking one illustration of Indian TV channel, we shall try to understand the economics of running a satellite channel.

In the year 2000, human resources accounted for 5 per cent of Zee TV’s total cost. In 2009, they account for 9 per cent, but the cost is still lower than that in other channels. Programming cost is worked out on the basis of thumb-rule. It should be one third of the advertising revenue it can generate. If the advertising revenue is Rs 100, the programming cost should be Rs 33. Another 33 per cent is for other expenses. The EBITDA ( earnings before interest, taxes, depreciation and amortisation ) is 33 per cent. Therefore, after paying taxes, 15-20 per cent is saved for the channel. Thus for a 20-lac programme, one has to earn Rs.60 lac in advertising.In Zee TV, the serials made are 30-40 per cent cheaper than the serials on the other channels.