S. Sivakumar, CEO, Times Private Treaties, says the only prism they look at a client is from an advertiser prism.

Publishing group Bennett, Coleman and Co. Ltd’s, or BCCL, controversial ad-for-equity business model, Times Private Treaties, is changing the way it does its business of exchanging ad space for a stake in a client company. For one, the company has started taking 40% cash and the balance in equity on new deals since cash flow is the primary concern now. BCCL, the publisher of newspapers such as The Times of India and The Economic Times, aims to keep revenues from Treaties clients in the 15-20% range of the total company revenues.

In an interview with VCCircle, S. Sivakumar, Chief Executive Officer, Times Private Treaties, talks about the concept of Treaties, how it has evolved over the last five years, and if the model is indeed working. Edited excerpts:

How has the slowdown affected Times Private Treaties?

Slowdown has really been a testing time. Our idea was to grow the advertising market, and get as many clients as possible. The challenge for media houses has always been “how do you increase the universe of advertisers?” In (the) Indian context, it’s far more challenging because India has for long been a market of cost plus players.

Treaties comes at the highest stage of risk for us. If there were a better way of raising capital (such as debt), an entrepreneur would have done that instead of parting with equity via Treaties. Somebody who has capital will obviously use his cash for his business—for advertisements, capital expenditure, machines, and so on. So we are the first point of leverage for him. If the market turns the way it has turned now, leverage and equity go out of fashion.