|
Rajasthan Royals recently grabbed media attention for a reported $200 million offer from Kolkata-based Jain Group of Industries to acquire majority stake. The deal failed to fructify and the Indian Premier League (IPL) franchise is busy working out its future growth plans.
Amid controversies over shareholding issues, Rajasthan Royals has furiously pursued its low cost model and is one among the few franchises who have broken even. It has kept its costs under control even as revenue from central pool and team sponsorship has grown year-on-year.
Despite being profitable, the franchise has had its fair share of challenges, the biggest one being the termination of franchise agreement by the BCCI. While the franchise was reinstated into the IPL after winning the legal battle, the arbitration with the BCCI is still on.
In an interview with Indiantelevision.com‘s Ashwin Pinto, Rajasthan Royals CEO Raghu Iyer shares the franchise‘s journey and its plans to become a successful sporting franchise.
Excerpts: |
|
|
Q. Is it true that Rajasthan Royals was offered $200 million for diluting majority stake?Are you now waiting for the BCCI‘s permission before cashing out? |
|
|
Q. Has Rajasthan Royals broken even? |
|
|
Q. Does the arbitration process with the BCCI make it harder to plan long term? |
|
|
Q. Are Lachlan Murdoch and Suresh Chellaram silent investors or are they active in the team‘s functioning and operations? |
|
|
|
|
Q. What impact has the IPL had on the business of cricket and sports marketing?
The most important part is that the domestic cricketers have a platform to perform and also an opportunity to earn a very decent living. You can earn between Rs 1-3 million which is a decent amount of money for somebody who five years back would have struggled to make good money. Next comes the broadcaster Max who is very happy and has really raked in the moolah. Sponsors have been happy like DLF.
The franchisees bought into the league and did not think that it would grow so much. The growth has been helped by the investment that each franchisee has put in. The paying public are also happy. One thing that is significant for this year’s IPL is that all the stadiums are pretty much full. Our home matches have been sold out. Barring one odd match here and there, most matches are full. |
|
|
Q. But the ratings this year are showing a downward trend. Is this because the IPL has lost some of its novelty sheen and matured as a property?
I wouldn’t say that the IPL has matured as other leagues have been around for 40-50 years. The IPL is still a baby. The fact of the matter is that with so many ups and downs, it is still delivering ratings and advertisers are coming in for the teams, Max (the official broadcaster) and the BCCI. This shows that the IPL is heading in the right direction. |
|
|
Q. In hindsight was adding two more teams a possible mistake as a longer tournament means increasing the danger of viewer fatigue? |
|
|
Q. Do you feel that it might be a mistake to hold an auction every few years which leads to confusion among fans regarding who is playing in their team?
That is the challenge that is not unique to us. It is present for all teams. Our motto is find a way to win from anywhere. We did this under Shane Warne. This character was shown in the match against the Deccan Chargers when we chased down an almost impossible score. We want fans to remember our brand of cricket rather than this being Shane Warne’s team or Rahul Dravid’s team.
The underdog story was something that people identified with. People thought of us as underdogs. We have built on this story. We have romanticised the story of us winning from nowhere. Over the last four years from research, we realised that fans remember that we have the X factor that is mercurial at times and can surprise the opposition. This is something we want to build on. |
|
|
Q. Is it fair to say that Chennai and Mumbai are at an advantage in terms of fan following because they have managed to retain the nucleus of their sides? |
|
|
Q. Does the IPL Governing Council need a franchise representative? |
|
|
Q. One thing that is plaguing the IPL is the lack of fan engagement activation being done by franchisees during the off season. It is just about two months and then it is forgotten. Why isn‘t more being done
Then in January we tied up with the Jaipur Marathon. Ideally it would be great if we could have Rajasthan Royals B and C teams playing cricket. This would keep the younger boys well oiled. Bit cricketers have commitments. They either play in the Ranji Trophy, Duleep trophy or the national side. It is not an IPL issue; it is a cricket issue. Franchises try to get around this. Delhi Daredevils has a soccer tournament. KingsXI Punjab does a talent hunt. |
|
|
Q. What marketing initiatives have the Rajasthan Royals been doing to boost fan loyalty this season?
In terms of above the line we always look at support from our sponsors. There is an HDFC ad which is about the values that Rajasthan Royals brings to the table. It is about promoting youth, it is about Dravid increasing the challenges to the youth within the team. It is about how the youngsters rise to the challenge. We are a team that promotes youngsters. We have 19 partners, up from 17 last season. Each one activates it in a different manner. TCS is doing a different activation for instance. |
|
|
Q. What was the brief given to FoxyMoron?
We are number four among IPL teams in terms of social media. So for a Mumbaiite if the first most popular team isMumbai Indians, the second is Rajasthan Royals. FoxyMoron’s role is to ensure that content remains fresh. |
|
|
Q. Has this been a challenging season in terms of mopping up revenues due to the economic slowdown? |
|
|
Q. How do you break through the clutter to offer maximum returns to sponsors?
Another important thing is that four local brands have tied up with us which is something that was not there last year. This shows the penetration that the IPL and Rajasthan Royals give. Bikajee is with us as a snack partner and it was a matter of prestige for them to tie up with us. They are doing good stuff in the interiors of Rajasthan which will in turn grow our brand. |
|
|
Q. What is the split in the local revenue streams? |
|
|
Q. What is the split between central and local revenue and by when will local revenue dominate? |
|
|
Q. What are the plans in terms of growing licensing and merchandising?
Teams come out with Jerseys for Rs 800-1000. I don’t think that Indians can afford this. It has to come down to Rs 200. For the next season, we want to tie up with a merchandise partner. Puma has been our merchandise partner and they have been pushing our brand, but the challenge is to penetrate into the interiors of the market to ensure that merchandise is sold.
There are different reasons why franchises have not turned licensing and merchandising into a serious revenue stream so far. In the first year, nobody knew about the IPL and in the second edition, the IPL went to South Africa. This is the first year where franchises have been able to sit down properly and think about how they want to go about things. Licensing and merchandising is a long term play. |
|
|
Q. Have you approached ticketing and hospitality in a different manner this time? |
|
|
Q. After this year, central revenue contracts (like DLF‘s deal) come to an end. How do you see the BCCI faring in terms of stitching together new deals with more value, given that viewership has fallen? |
|
|
Q. Champions Twenty20 League doesn‘t seem to be going anywhere in terms of viewer interest despite getting Bollywood stars to promote it. What is the reason?
Then the local audience will identify with those teams. One team that will get a big fan following is Trinidad and Tobago. They have been coming and doing pretty well. This season will be their third season. If a team comes in three to four times, fan following will go beyond the IPL teams. |
Category: Executive Dossier
-
‘No concrete offer has come from Jain Group’ : Rajasthan Royals CEO Raghu Iyer
-
‘We are looking at 20% revenue growth this year’ : India Cements joint president marketing Rakesh Singh
IPL franchise Chennai Super Kings has been slowly and steadily building its brand over the past four years on the back of its iconic captain Mahendra Singh Dhoni. The sustained efforts of the last four years are beginning to show result as the franchise looks at a 15-20 per cent revenue growth this year.
By retaining its key players, the franchise has managed to build a loyal fan base not just in Tamil Nadu but also among the Tamil diaspora. The two time IPL champions is leaving no stone unturned as far as engaging with fans is concerned and is stepping up efforts on the merchandising front to grow this revenue stream.
In an interview with Indiantelevision.com’s Javed Farooqui,India Cements joint president marketing Rakesh Singh shares the franchises journey so far and the growth path ahead.
Excerpts:
Isn‘t Chennai Super Kings targeting a revenue of Rs 1.7 billion this year? What is the break-up?
We did Rs 1.40 billion last year and are looking at a 15-20 per cent increase this time. It’s difficult to give a break-up for the simple reason that a major chunk of revenue comes from the central pool. There are components in our revenue pool – one is central pool which to my mind was Rs 60 crore (Rs 600 million) plus last year; then there are our sponsors and gate collections.Have you reached operational break even?
In the first IPL edition, we broke even. We lost money in the second season (due to shift to South Africa). While we made marginal profits in the third IPL, we widened that in the fourth edition.How has IPL season 5 been for CSK?
The IPL season has been good for us. Our total number of sponsors have gone up. Aircel is our main sponsor. Gulf Oil is our principal sponsor and then we have Life Ok and Washington Apples as new sponsors. We also have Amrapali Group, Hercules, and Usha International as sponsors.While our revenue continues to grow at a steady pace, what we are also trying to do is step up the merchandising efforts. We plan to grow merchandising by positioning it as a lifestyle brand so that fans not only buy CSK T-shirts during the IPL season but also wear them during the non-IPL season.
How did the deal with a Hindi GEC like Life Ok happen with a team franchise from the South?
There is a study done by one agency which says that 46 per cent of the fans support Chennai Super Kings andMumbai Indians. Now if that is the case, anybody who wants to take full advantage of the IPL needs to come to one of us. For somebody who wants make a Hindi GEC popular, it is a nice way of riding on the popularity of Chennai Super Kings. Another thing is that while we are the most popular team in Tamil Nadu, in most other cities we turn out to be the second most popular after the home franchise. I think that is because of the kind of team that we have with four Indian players – MS Dhoni, Suresh Raina, Ravindra Jadeja and R Ashwin.‘We had made Rs 1.4 billion last year with revenue from central pool contributing over Rs 600 million. We have got new sponsors in Life Ok and Washington Apples‘ The IPL has seen a lot of sponsor switches. How did CSK manage to retain its sponsors?
We believe in consistency and that is the reason we don’t believe in changing our players. We don’t change our management and we don’t believe in changing sponsors. That has clicked because that does not confuse the fans. We treat our sponsors well and we give them a value for their money for at the end of the day sponsors look at RoI.There are reports that title sponsor DLF is not sure of continuing its IPL sponsorship?
I don’t know about that but what I would like to say is that when the BCCI terminated the Nimbus contract, everybody was saying that the BCCI won’t get Rs 31.25 crore (Rs 312.5 million) per match. But ultimately the rights were sold for a much higher price. I think it has become a favourite time pass for everybody to talk ill of the only sporting brand that India has today.So are the team loyalties settling down?
I think so. If you see the matches where Mumbai or Chennai are involved, the viewership will be high due to team loyalties. That is also the case globally where matches involving Man-U or Chelsea will have higher viewership as compared to other smaller teams. In the first three IPLs, most of the matches were 8 pm matches and the number of teams were less. But now we have more teams and the number of matches have gone up.What do you think is CSK’s USP?
Our USP is that we always focus on cricket, unlike other teams who are focussed on glamour and parties. Not to say that these things don’t work but IPL at the end of the day is a cricket tournament. We have a disciplined team; so whether its on-field or off-field, our team carries a certain character. We have a very strong fan following in Tamil Nadu and Chennai in particular. As per one survey report, 96 per cent of Chennaites support Chennai Super Kings, which is the highest for any franchise in their home city. Mumbai Indians come second with 86 per cent fan support.How did you engage with fans?
Besides youngsters between 15-24 age groups who form our vital fan base, we believe that we have also get a lot of support from families. If you look at our merchandise, there is a lot of emphasis on women and children – it’s not just the typical male cricket fan. A lot of families come to watch our matches in the stadium. To reach out to our fan base, we have also tied-up with Radio Indigo besides The Hindu and Dina Thanthi. Our media tie-ups is a cash plus barter deal. But the barter part is helping us a lot on activation. That is something that was missing last year. What it has done is bring down our marketing cost.We also launched a new video ‘Wave your hands” which has got one lakh views within no time that it was uploaded on YouTube. We launched this campaign sometime in the first week of April, and by the third week we already have one lakh views on YouTube. Earlier we had done “Whistle podu” which was also a big hit. Every fan wants to do something to support his or her team, so that way we are channelising their energy into doing something to support the team.
How is licensing and merchandising doing?
We have been giving merchandising a big push since last year, but it takes time. For example, we got almost Rs 4 crores (Rs 40 million) through merchandise sales last year but what comes to us is only 10-15 per cent after excluding the costs. What we are seeing is that it is a good platform to engage with fans. But in terms to revenue contribution, it is only about five to seven per cent. But internationally this percentage is 60 per cent and that is what our goal is: how to grow this stream. This year we have opened an exclusive in the Chennai airport where you get all kinds of stuff. We have also partnered UniverCell for distribution of merchandise in North America and Europe.In terms of licensing, for the first time we have partnered with Café Coffee Day to make it a hub for Chennai Super Kings fans. Similarly Park Sheraton has converted their lounge into a CSK Bar. So we want to see how these deals work and whether we can make it a yearlong thing. We are working on a fixed fee basis wherein licensees can use our name and do certain things. This year we aim to double our licensing and merchandising revenue.
How has been the response been to ticketing? There were lots of empty seats during your home matches?
There are three stands in the stadium which, due to certain clearances issues, the state government has not allowed us to use. On the rest of the stadium, we are overselling. Till we get the clearance, we won’t be able to sell tickets for those stands. -
‘We have no intentions of selling Deccan Chargers currently’ : Deccan Chargers COO Venkat Reddy
For IPL franchise Deccan Chargers, it has been a story of ups and downs. The team had a miserable run in the inaugural season but bounced back strongly in the second edition to walk away with the title.
Even off the field, Deccan Chargers had to deal with uncertainty what with the main shirt sponsor changing hands every year. However in the fifth edition of the IPL, the franchisee has finally found its true calling striking a multi-million dollar three year sponsorship deal with Emirates besides roping in a host of other national and local sponsors.
The franchise has also been in the news frequently that it is on the blocks. Deccan Chronicle Holdings had mandated KPMG Corporate Finance to find a buyer and was looking at a valuation of $250 million in 2008.
In an interview with Indiantelevision.com‘s Ashwin Pinto, Deccan Chargers COO Venkat Reddy clears the air about the team’s sale reports by asserting that it is committed to the team and is not planning to presently sell the team. Reddy, a man of few words, also said that the franchise has broken even and is looking at good revenue growth this year.
Excerpts:
Will Deccan Chronicle sell IPL franchise if the valuation is attractive or will you wait for it to mature further?
Presently, we have no intentions of selling the team. Deccan Chargers is very much owned fully by Deccan Chronicle Holdings Limited.Deccan Chargers posted revenues of Rs 1.15 billion in 2010. What has the growth been since then and have you operationally broken even?
We have achieved break even and expect the growth to be good this year. It is an exciting season for us and we have got good response from sponsors.How did the deal with Emirates come about? Which are the other new sponsors who have joined?
IPL 2012 is a huge opportunity to leverage revenues with the Deccan Chargers being a well known and growing brand. Strategic trading in auction without compromising on the team balance has brought in sizeable revenue in its kitty. We are privileged to have Emirates as our team sponsor. And our other main sponsors are Jaypee Cement, TVS Motors, United Spirits, Kingfisher, Xenoh and Puma. We were associated with Jaypee for the inaugural IPL season and are pleased to have them back. We are reaching out to our fan base, taking the matches to the catchment areas of Vizag and Odisha.Is the Telangana issue going to affect your ticketing revenues once again?
This year we have three confirmed cities as Deccan Chargers home grounds – Vizag, Cuttack and Hyderabad. Our matches are well distributed in these three cities, which will see a considerable growth in gate revenues. Added is the special hospitality seating areas created for the spectators to enjoy the matches and have a great experience. The match entertainment is also very carefully planned, keeping the local flavour in view.‘We have achieved break even and expect the growth to be good this year. Emirates is our team sponsor. Our other main sponsors are Jaypee Cement, TVS Motors, United Spirits, Kingfisher, Xenoh and Puma‘ Given that it has been four years since IPL started, has licensing and merchandising become a serious revenue stream or is there still a long way to go?
Yes, it is and there are challenges yet to be faced.Has Deccan Chronicle got what it aimed at when it decided to be involved with the IPL franchise?
Deccan Chronicle has always supported sports and has nurtured the Deccan Chronicle cricket team for years. IPL was a great opportunity to get into big league and cricket is religion for us Indians. We are now a well known sports brand globally and want to extend further. T20 cricket is challenging. We have emerged as winners in 2009 after suffering a major setback in the inaugural season. We believe in working hard and motivating our team to perform well without putting any pressure. We have seen a tremendous growth trend in our fans base, which continues. As per the latest study on Top Ten Social Media Influencers by DataQuest, Deccan Chargers has been in the Top Ten Indian Brands.How do fans perceive the Deccan Chargers and how do you maintain a relationship with them across the year even after the IPL season gets over?
Deccan Chargers is always full of surprises. We have a loyal fan base that supports us thick and thin. We maintain interaction through the social media sites like Facebook and Twitter.What marketing activities are being done to create excitement?
Our local campaigns have already started. We recently organised events in Hyderabad and Vizag like the See U in Blue event, Buildings lit in blue, Cycle rally, Beach Corporate Cricket etc. A separate fans blog, selecting some active fans on social media sites and giving away DC goodies and many other fan engagement activities are lined up. unstoppabulls.deccanchargers.com/ featured a contest to find “Super Blogger, Photographer & Videographer” who‘ll be part of DC Crew to follow & cover team DC.Could you talk about your deal with My Rewards International?
We have agreed to market membership based programmes under a co-branding arrangement. This will give our members and their family access to the My Rewards benefits which are available throughout India and the world. Similarly, over one million My Rewards members throughout India, Australia, Hong Kong, New Zealand and the Philippines will have the opportunity to join the Deccan Chargers and enjoy all the benefits of being a member of one of the premier IPL teams. I am sure our fans will enjoy the plethora of rewards. -
‘For strong ROI in India’s TV biz, price controls must go’ : Fox International Channels president & CEO Hernan Lopez
Price controls are limiting the revenue growth for broadcasters in India as they earn net income of $700 million from subscription after paying out carriage fees of $400 million. Investments in programming are muted and, as a result, India is not able to export television formats and finished content while software, music and animation is travelling overseas.
In an interview with Indiantelevision.com‘s Ashwin Pinto, Fox International channels president, CEO Hernan Lopex says price controls have to go if the industry is to see strong ROI. He also talks about the company‘s growth plans worldwide.
Excerpts:
Q. Do you see India‘s television broadcasting industry growing at the right pace?
Broadcasters in India earn net income of $700 million from subscription after paying out carriage fees of $400 million. This is holding back investments in programming. India, as a result, is not able to export television formats and finished content while software, music and animation is travelling overseas. If the industry is to see strong ROI which would encourage greater investments in programming, then price controls must go.Q. What you are suggesting is that pay-revenues should scale up. What is the ideal revenue mix between subscription and advertising revenues?
It should be in equal ratio, which is what it is in the US. But in India it is heavily skewed towards advertising. Broadcasters generate $2.6 billion a year in advertising. Subscription income is dismally low in comparison.Relative to the size of the Indian economy as measured by GDP, this is only 0.04 per cent, and this ratio keeps declining. By contrast, in Colombia, a country with 1/25th of the population, broadcasters get over $200 million in subscriber fees. That is equivalent to 0.07 per cent of the GDP in Colombia, and that ratio keeps rising – partially due to the efforts that Colombia is doing to fight content theft and subscriber under-declaration.
Q. So India should learn from Colombia and allow its content industry to flourish?
Price controls lead to creative shackles. At Fox we buy formats and content from different markets, but India is not there. This is surely not due to lack of talent, ambition and vision.In Colombia a TV episode costs $150,000 compared to India where an episode costs around $20,000. The turnaround there was the emphasis on creating a dual revenue stream. New channels were launched for underserved audiences. Consumers also wanted content in Spanish and Portugese.
That is because Colombia has a strong system of TV production, has great writers, animators, actors and the country also fights strongly against piracy. In India under declaration, along with controls, means that the broadcasters are getting squeezed.
Q. But ARPUs (average revenue per subscriber) are low in India. How do you make consumers pay more for quality content?
When consumers see that spending more money results in better content, then they will be happy to pay more. In some markets, initially consumers thought that cable and satellite services were not worth paying for. But as more options were added, they realised that they were getting value. I am looking forward to a time when my children, when searching for content, find choices that come out of India. I am keen on buying Indian formats that can be shown elsewhere.‘We have seen double-digit growth year-on-year. We run a profitable business in India that is based on strong fundamentals with dual revenue streams of affiliate and advertising‘ Q. So you are not happy with FIC‘s growth in India?
We have seen double-digit growth year-on-year. We run a profitable business that is based on strong fundamentals with dual revenue streams of affiliate and advertising, which are both showing a steady upward trend. Currently, we have six of our channels in the Documentary and Lifestyle space in India.Q. As a market how is India different from the rest of Asia in terms of challenges and opportunities?
We run our channels in over 100 countries around the globe. While there are big similarities across markets, each has some of its own peculiarities and challenges. I think that the challenge of scarce bandwidth for channels coupled with price control and carriage fees put a limit on the revenue potential. However, India is a land of huge opportunity and with mandatory digitisation in the Metros slated to kick off in 2012, we believe that a very bright future is ahead.Q. With digitisation set to take off in India, do you see the carriage fee structure being rationalised based on the experience in other markets or will disputes happen with big operators like what happened in the US with Comcast?
We believe that digitisation will help all the stakeholders in the business to realise the true value – Last Mile Operators, MSOs and broadcasters.There will be teething issues like in any new technology, but market forces will aid the stakeholders in arriving at an understanding.
Q. News Corp restructured the Fox Networks Group last year. What was the aim and how did this impact Fox International Channels?
The goal was to foster stronger cooperation between various units. As a result, Fox International Channels has strengthened its ties with the US networks in entertainment, factual and sports.Q. Aren‘t you looking at doubling operating profit and reaching $1 billion by 2015?
The gameplan is very simple: to continue to deliver to platforms, advertisers and viewers a portfolio of must-have brands.This is what we call “brands with fans” – and get a fair share of wallet for it. In order to do that, we are investing more in content (both global and local), marketing and our teams.
Q. How much revenue does Fox International Channels contribute to News Corp’s TV business and what growth has been experienced year on year?
In FY‘11, we made a little over $1.5 billion in revenues and we‘re growing at double-digit rates.Q. How do you split up the global market into regions and which are your three biggest markets globally?
We run Latin America and US Hispanic; Italy and Germany; the rest of Europe and Africa; and the Asia/Pacific/Middle East. We don‘t disclose the ranking at the country level.Q. Globally what is the split between subscription and ad sales and which area do you see growing faster?
About two-third of our revenues come from subscription, with the balance coming from advertising, syndication, and other fees. We strive to make all revenue sources grow at the same rate.Q. Pay TV you have said is turning from a “nice to have” to “must have” service. How is this changing the dynamics of your business?
Whereas in the past we programmed primarily shows produced in the US, we are now broadening the scope of our lineup. The aim is to include more local shows, as well as different genres.Q. What challenges is the current economic slowdown posing?
In a handful of cycles we‘ve seen ad revenues decline, but overall our profits continue to increase.Q. Has Fox International Channels done recent research to find out what consumers globally want and how they view your brands?
We are indeed finalising a brand audit in 10 countries as we speak.Q. Digitisation globally is allowing FIC to have more specialised offerings in genres like Crime. How has their offtake been?
Very positive! Fox Crime, for instance, is the number one channel in Italy, surpassing even Fox.Q. Are there any genres that are currently underserved globally? If so, how do you plan to service them?
Our portfolio globally includes entertainment, sports, factual and lifestyle – we‘re quite content with it.Q. What role does sports play in your portfolio as it is a challenge to control costs given the intense competition for rights?
Sports is the ultimate must-have content. But because of it, there is intense competition for rights.We simply must be disciplined in our approach, but we have the benefit of a wide portfolio of channels – includingentertainment channels – that can both contribute to and benefit from having sports in the portfolio.
Q. Globally, how has FIC expanded?
These are exciting times! We now have 1.1 billion cumulative subscribers, and have a presence in 57 offices. I have been to 40 of them.We have added Fox Sports to our portfolio in Latin America, and continue to increase ratings at the National Geographic Channels. And yet there is still so much more to be done.
Q. How difficult is China due to government regulation?
We have a small but profitable business in China.Q. New media is growing globally. Are you launching channels for the mobile and Internet?
We are launching mobile extensions of our TV brands, like the Fox Movies Premium Player in Asia.Q. How is Fox International Channels leveraging high definition?
My goal is to launch nearly every TV channel from now on simultaneously on HD and SD. -
‘We expect to break even this year’ : Kings XI Punjab COO Col Arvinder Singh
Kings XI Punjab is yet to recover from the shock, its break even target having gone haywire after the Board of Control for Cricket in India (BCCI) terminated its franchise contract in October 2010 for breaching ownership rules. The Bombay High Court came to its rescue, allowing it to be a part of the Indian Premier League (IPL) after submitting $20.7 million in bank guarantee.
Having paid $76 million to acquire the IPL franchise, Kings XI Punjab is now on recovery course. Sponsorship deals have been stitched and the Mohali franchise is hoping to improve its performance this year.
In an interview with Indiantelevision.com‘s Ashwin Pinto,Kings XI Punjab COO Col Arvinder Singh says the franchise should break even this year and post a revenue growth of 15-20 per cent.
Excerpts:
Q. Could you talk about how the IPL as a property has grown year on year?
Cricket has achieved cult status in our country. In last four years since its inception in 2008, IPL has further strengthened the bond it has with the people of India.With time it has also amassed worldwide audiences. The league has grown beyond the realm of cricket and is considered as a complete entertainment package encompassing the entire family.
Q. Kings XI Punjab had expected to break even in the fourth year. Has this happened or did the BCCI termination play spoilsport?
We have not yet broken even. Break even is expected this year, for sure.Not everything goes as per plan. Ups and downs are a part of every business and they should not deter from chasing our dreams – that is to get the Cup home this year. We are constantly working towards creating a team which is extremely valuable and as partners, we will give all it takes – time, energy and resources for the love of the game.
And yes, the arbitration process is yet to conclude.
Q. What revenue growth do you expect this year and who are your sponsors?
We expect 15-20 per cent growth this year and are on course to meet that target. ACC, ONN, USL, Kingfisher, Coca-Cola and Max Healthcare are some of our sponsors.Q. Emirates has not renewed its deal with you. Is the economic slowdown forcing brands to look at the cost of association more carefully compared to earlier years?
We have been extremely fortunate that we have had the right partners since the inception of this tournament. This year too we have some of the best brands on our side – and we hope that there will be many more to come. When we enter in to a partnership with any brand, it is based on a set of mutually agreed and understood objectives.“We expect 15-20 per cent growth this year and are on course to meet that target”Q. IPL ratings fell last year, making it more expensive for marketers and sponsors. Do more efforts need to be taken in terms of marketing the event to consumers?
IPL’s fan following is not limited only to India; it has also gathered audiences worldwide. While the ratings went down because of the World Cup just preceding the IPL season, the overall reach did see a substantial increase. IPL is looked as a complete entertainer and it will be interesting to see the ratings this year.Q. Has the licensing and merchandising area grown?
This is a crucial source of revenue for the franchise. Having experimented with a few models in the past, we have now tied up with an international company to increase the reach of our L&M programme worldwide. This is a unique and long term agreement.Q. A sports marketing expert noted that the IPL has become more an icon-led rather than a franchise event. This means that if icons like Sehwag and Dhoni do not perform, viewership will get affected as people mainly want to watch icons. Do you agree with this?
Our belief is that cricket is a team and not an individual game. Although iconic players have a definite rub off on the likeability of a team, this is but limited appeal to start with.For a more concrete connection with the fans, the franchise must establish itself as a custodian of the values and attitude that the region represents. This kind of association will withstand any player movement.
Q. If you look at the IPL so far, which three players have been the most value for money in terms of performance for the franchise?
Every player in our team is a performer and we do not undermine their strength. Each one of them is a valuable asset and we are confident of bringing the IPL trophy home this year.Q. On the field, Kings XI Punjab did not fare well in the previous couple of seasons. How much has this affected your brand valuation?
Brand value is a cumulative total of a number of factors. Our performance last season almost ensured that we made it to the playoffs and this year we are pretty sure that our team has in it to make it there.We have been able to establish ourselves as a local team; we also have a loyal fan following in our catchment and also have a very huge fan following internationally. We have been growing for the past four seasons and we can only see it growing further this year.
Q. What strategy was followed during the two player auctions and were you affected by not being able to retain some of them?
We are very happy with the way the team has shaped up. We have great cricketing talent like Adam Gilchrist, Shaun Marsh, David Hussey, Praveen Kumar and Piyush Chawla, to name a few.We believe that we have the required strength in our team to take us all the way. Based on lessons learnt last season, we have enhanced the team strength with players like Azhar Mehmood and James Faulkner. We also have a great mix of experienced and young domestic players.
Q. What are Kings XI Punjab‘s marketing efforts this year?
Marketing is an integral part of our overall strategy; it helps us build a stronger connection with our fans. Our efforts are aimed at reaching out to our fans through all possible mediums.Currently one of the unique activities undertaken by us is our association with Indraprastha All India Sports Foundation for the ‘Cricket Champs‘ reality show. This initiative aims at nurturing youth to develop skills which not only will make them successful cricket captains but also help them in their personal endeavours.
Q. Is Kings XI Punjab able to do activation during the off-season once the IPL gets over or is non availability of players an issue?
We are there in our catchment area throughout the year whether through our presence on the social media like Facebook or with activities like KXIP Cup, Rocky and Ranjit Voice Hunt. We have always been doing activities to connect with our fans from time to time. Player availability is not an issue.Q. With the Big Bash league doing well in Australia, the debate about club versus country has again raised its ahead given how financially lucrative it is to play for clubs. How do you see things shaping up going forward?
I see this format of the game with different perspective rather than just the financials. We believe that the club / IPL format provides the budding cricketers to showcase their talent and further hone their skills as they get an opportunity to play with and learn from experienced players. IPL has been a suitable platform to judge performance. -
‘India is among our top 10 markets’ : Discovery Networks International president, CEO Mark Hollinger
India is one of Discovery‘s key priority markets along with Latin America where there is tremendous scope for pay-TV growth.
Bullish about digitisation in India, Discovery has plans to expand its portfolio of channels. The latest addition in the menu: Discovery Kids from the second quarter of this calendar year.
In an interview with Indiantelevision.com‘s Ashwin Pinto, Discovery Networks International president, CEO Mark Hollinger talks about the company‘s growth markets and its expansion plans in India.
Excerpts:
How important is India as a growth market for Discovery?
India is the biggest growth market for us. It is among the top 10 markets globally for us. The combination of the government being very open to international channels, the digitisation process and the great fit between the Discovery brand and the culture of India makes this country a high priority market for us.Discovery has launched in many genres. When are you launching the children’s channel?
We will launch Discovery Kids in the second quarter of this calendar year. The content will be global. We are also looking at local content. As networks grow, we have tended to have locally produced content in the mix. Discovery Kids in Latin America produces some of its own content. In India too time there will be global as well as local content as we go along.Is the timing right given that the kids genre is struggling?
We tend to be long term investors. When we launched a new channel in Spain, people thought that we were crazy as unemployment rate is as as 22 per cent in that country. But we saw that there was an opportunity for us and we went ahead and launched.So whether a market is up or down at any point of time doesn‘t matter; there is space for a more education-focussed network like ours. And India, moreover, highly values education. The digitisation process is beginning and is a good opportunity for us. We are not worried about the kids genre business at all.
Will the education component be your differentiating element?
Yes! The other kids channels are similar. We are not Scooby Doo. We are about how you do things, when do you do, why you do. It is inquisitive in nature. Education is an important part of society. But at the same time we are not naive to think that it is just going to be education that people will tune into; it has to be entertaining as well. This was the very genesis of Discovery when John Hendricks first started it.The channel will have a healthy dose of entertainment and also satisfy the curiosity of viewers in an entertaining way. The good news is that India is a young country. There are millions of kids below the age of 14 and so the market is big.
‘Flagship brands have a strong place in the market. We are in a better position to survive audience fragmentation than our rivals‘ The challenge here is that niche channels have to rely excessively on ad revenue. By when do you see subscription starting to contribute in a serious manner?
That is a big question in terms of the impact of digitisation on the affiliate revenue stream. If you look at the international portfolio, our channels are weighted towards affiliate. 70 per cent of revenue outside the US is affiliate.When we start in a market, there is a 100 per cent affiliate revenue and then we move towards advertising. India obviously is an ad sales market. But it is hard to sit here and say what the affiliate revenue stream is going to be. We can hope that digitisation will affect carriage fees and other things.
For the digitisation process to succeed in terms of cut off dates being achieved, what needs to happen?
For the cable operators, it is going to be a giant challenge. If you think just about the logistics it is going to be a huge task – acquiring enough set top boxes, distributing them, getting people to understand what is going on and creating the customer service capability.Forget about fancy things like DVRs. Just to get the infrastructure in place is an enormous challenge. Luckily for us, we can watch it from afar. But once it is in place, then there is an opportunity and sort of a challenge for programmers to take advantage of digitisation. We have done it successfully in other markets.
Do you think that the 30 June deadline will be met for the metros?
We met some MSOs recently and they are pretty much prepared for it. Moreover, a set top box is not such a novel thing now. There are 25-30 million STBs already in DTH homes. I don’t think that the deadline is a challenge. It will be managed.How will digitisation change OneAlliance’s relationship with MSOs?
This relationship will become stronger. When change happens, there is bound to be some chaos. There will be disturbance and that is the time when if you are part of a strong bouquet, you can navigate through things.We have a great team on the ground and great brands. When The OneAlliance was started, there was no digitalisation in India, no DTH. Now that there is DTH, the OneAlliance has only become stronger.
Will you now make a concerted effort at marketing yourself to Indian consumers so that they choose you?
This is already happening. On DTH more and more people choose us and the digital ratings of our channels are high. We offer quality content that people globally pay for. In India there is sensational television on other channels that target eyeballs at any cost. But as we move towards a digital environment, we are better prepared with quality content.Discovery is in several languages in India. Could you talk about the importance of localisation?
It is important from a content point of view, from a feed structure point of view and from a language point of view. Discovery is in five languages. We are evaluating other language launch possibilities. Some of the other players have possibly gone a little bit overboard, but we have found that local language results in higher viewership in that region.More players are entering the infotainment and lifestyle space in India. Will this cause fragmentation?
There is fragmentation of viewership happening. We are, however, in a better position to survive audience fragmentation than the other companies.Discovery spends $1 billion towards programming. Are content investments going to be affected by the global downturn?
No! The content that we invest in is evergreen. Moreover, we can ammortise investments across 210 markets due to the nature of our products. A show will have at least a four-year life. This allows for a longer timeline in terms of investing in shows.Which are the main focus areas for Discovery?
India clearly is one focus market. Latin America is also a big priority market for us; there is pay television growth to be had from there. In Brazil pay television was hampered, but now ownership has changed and pay-TV penetration is growing substantially. Poland and Russia are also big growth markets for us.What is the big challenge you face this year?
It differs from market to market. In the US pay TV has a 90 per cent penetration rate. The pay TV growth there will not happen in terms of penetration. So you will see the impact of OTT and if there is enough of an upside to counterbalance any cord cutting, that may happen. Again it is hard to know if Netflix and Amazon will continue to be successful the way they have been. This is not an issue in other markets.I would say that the big challenges are the impact generally of broadband or free platforms like DTT on pay television. Can pay TV penetration continue to grow? In some countries, there are regulatory issues. Some markets like Brazil have become more protectionist as of late in terms of local Brazilian content and local channels being required on packages. The availability of alternative platforms is both a big challenge and a big opportunity.
There has been a certain amount of operational restructuring within Discovery like the removal of the COO position. Is the basic aim to be more cost effective?
I would say that the changes were more on the US side of the business rather than on the international scene. The international business has remained largely intact in terms of its structure. The changes were made not due to cost reasons. We have an active CEO in David Zaslav. He likes to have as few layers as possible between people who run the US business and himself. The aim is to have a better handle on the business as opposed to saving money.Last year you split Europe into two business units. What prompted this move?
We used to have what I think was a bit of an odd structure. The UK is an entirely separate business. Then all of Europe, Middle East and Africa are another kind of business. UK has a lot in common with the other western European markets – slow pay TV penetration and DTT kind of opportunities.Then you have Central, Eastern Europe and the Middle East and Africa which are much more growth markets. There is still expansion to be done. These are more entrepreneurial markets. So we split along the lines of Western Europe as one unit and then Central, Eastern Europe, Middle East and Africa as another unit. We did not add a region. The international business still has four regions. We just restructured Europe to grow Western Europe and put common markets together.
Could you talk about Discovery‘s strategy to penetrate new markets like Colombia?
What we tend to do with new markets is to go in first and establish distribution. So we opened new offices in Central and Eastern Europe. We opened a sizeable office in Moscow. We opened other offices in places like Kiev, Almaty and Sofia.There is an opportunity in Colombia and it is our fourth biggest market in Latin America. We earlier only used a local representative for ad sales. We opened an office there for the primary purpose of ad sales while offices in Europe were opened for affiliate purposes.
In Spain you are free to air. Are you expanding your free to air portfolio?
This expansion has been a Western European phenomenon. In Spain pay TV has been at 30 per cent penetration for the last decade. It hasn’t grown.So now in Germany, Spain and in the UK, we have launched free to air channels. They complement the pay business and are not intended to replace it. They have allowed us to grow at a time when the overall Western Europe pay TV business is not growing. This is harder to do in other markets as there is not a big enough digital terrestrial platform or there are ownership restrictions.
In Korea you did a partnership with CMB. Why?
Korea is a difficult market to get into and almost impossible without a local partner. Tom (Discovery Asia Pacific MD) did an enormous amount of legwork. He spent a lot of time in Korea. It is a strong economy and very well penetrated from a pay television point of view and from a broadband point of view. So it has always been an important market for us to get into. We had to pick the right partner and have the right kind of structure in place.How did the JV with Oprah Winfrey for a channel come about?
Everybody knew that Oprah would be ending her show and moving to a new business. People in the media industry wondered what that business would be. David Zaslav sold her the idea that her brand and the Discovery brand’s missions were very well suited for each other.That is how it happened. We have ambitions for the channel in terms of finding markets internationally for it. Tom is a proponent for markets in the Asia Pacific where he feels that the channel will fare well. Oprah created a lot of buzz when she came down to India. This has also been the case in Australia and in other markets around the region. But we first want it to be well established in the US.
Discovery bought Betty in the UK, its first such acquisition of a production company. Are you looking at more such acquisitions?
It is not yet part of Discovery‘s grand strategy to get into production. But we will see whether owning production is a strong addition to our business model or not. But I will not say that we are actively looking at other companies. We will wait and see how the Betty acquisition plays out. -
‘IPL is our biggest property and we can’t afford to undersell’ : MSM president network sales, licensing & telephony Rohit Gupta
Multi Screen Media (formerly Sony EntertainmentTelevision India) is beginning to enjoy a remarkable turnaround story. The Indian Premier League (IPL) has surfaced as cricket‘s most lucrative property, Sony Entertainment Television has climbed to the No. 2 position in the Hindi GEC (general entertainment channel) space andSab has grown beyond its flanking channel status.
The other channels have also moved up the hierarchy. English movie channel Pix has raced past HBO and AXN has protected its turf quite strongly. Mix, the pure music channel, has had a good start. Being the only channel in that space that has network strength, it has taken up the challenge to grow the market and ramp up revenues.
In an interview with Indiantelevision.com‘s Sibabrata Das, MSM president network sales, licensing & telephony Rohit Gupta talks about how the company is going to end this fiscal with a 40 per cent ad revenue growth and a 25 per cent growth in FY‘13.
Excerpts:
MSM raked in Rs 9 billion in ad revenue from the IPL last year. But is growth slowing down for the property due to a fall in ratings in the previous edition of the T20 tournament?
I won‘t comment on how much ad revenue the IPL earned last year. But, yes, there is a little bit of anxiety on how IPL will do this year as advertisers have to set aside a large outlay for advertising on it. The ratings were down last time but we are sure that with marketing buzz starting, the IPL will come back on track. There was high intensity cricket with the World Cup preceding the IPL and India going on to win the championship. This year it is a clean slate and we have already stitched a few big sponsorship deals.Are we looking at a below double-digit growth as is evident from the deals that you have locked in so far?
We have got marginal increase in rates but I can‘t comment on whether we will post double-digit growth or not. Also, don‘t forget that the base is already high.So has IPL as a property matured?
We grew 30 per cent last year and so the IPL has matured to a certain extent. But if ratings start climbing, we will again see high growth.Hasn‘t it been a tough sell so far as by this time normally you manage to close almost 80 per cent of your ad inventory?
Yes, it has taken us a longer time as we usually keep aside 20-75 per cent of the ad inventory time for spot sells. We have sold around 65 per cent of our inventory. But we will not be dropping rates as it will set a benchmark for next year. We have worked hard to scale up the value and won‘t undersell.The IPL TV rights are with us for another five years and it is our biggest property; we can‘t afford to discount its current value. T20 continues to grow in popularity; the formats that are not doing so well are the Tests and the ODIs.
“There is an entry barrier for new players as the cost of running a Hindi GEC is as high as Rs 5-6 billion. Which new player has that appetite after a few of them have severely burnt their fingers? This has helped us scale up revenues even as our own channels have grown“So the new BCCI tender for international cricket played in India will not be as valuable as it was when Nimbus held the TV rights a few years back? Will that be the calculation when Sony bids this time?
Perhaps, Nimbus was not able to exploit the revenues as well as it could have. We have a strong ad sales team. We are a network and our distribution (as a JV with Discovery) has muscle.When Sony launches a sports channel, it will have to acquire other cricket rights than just the IPL and New Zealand board. Can ad rates be driven further up to support aggressive bids at higher acquisition costs for cricketing properties than their current value?
We are not going to make irrational bids but evaluate properties from a profit perspective. We feel that some of the boards are overvalued and there will be some price rationalisation. Cricket seems to have plateaued off to a certain extent. A few years back, broadcasters could get massive rate increases . That led to steep rise in acquisition costs. We are not in that market situation today. Don‘t forget that some people have lost a lot of money on cricket.Are we seeing some categories of advertisers retrenching from the sport due to the current tough economic environment?
Handset manufacturers are finding it difficult today. The auto sector has taken some hit. But though telecom service providers are under profit margin pressures, the intense competition in the sector will spur them to advertise.When will MSM‘s ad revenues touch the Rs 20 billion mark?
I can‘t talk on financials. But as a network, we will post a 40 per cent ad revenue growth this fiscal. Between Sony Entertainment Television, Sab and Max we are the No. 1 network in the Hindi heartland. And in the Hindi GEC space, we have two among the top five channels. The best part is that each of them is commanding a different kind of target audience and not cannibalizing each other. We are looking at a 25 per cent ad revenue growth in FY‘13.How far has SET contributed to this growth?
Our flagship channel has grown this fiscal and is today the second-ranked in the space. The rise of SET has increased our negotiating power. Kaun Banega Crorepati (KBC) is an impact property and is a strong revenue driver for us.Fiction is what we had missed out for the last 3-4 years. But it has started doing well. We have an upscale, urban skew; our male viewership is also very strong. Advertisers chase this segment and our fitment is the best.
Will SET launch an afternoon band to create a new revenue stream or still have a primetime overhang?
We have no such plans; it doesn‘t make a big difference to your ratings and, hence, advertisers have little interest for it. Hindi GECs have preferred to expand their primetime and it now fills up the early evening from 6 pm right up to 12 in the night; there is a lot of viewership in that time band. The market exists in the evening-to-night slot and not in the afternoon.Does Sab still play the role of a flanking channel or it has grown beyond?
It is not anymore just a flanking channel; it is a proper GEC, has a strong viewership and, as a family comedy channel, is uniquely positioned. Sab has helped our network revenues to grow.Has the Hindi GEC ad revenue market expanded this fiscal and will we see more channel launches in this space?
It (Hindi GEC space) has now become a game for the big boys. There is an entry barrier for new players as the cost of running a Hindi GEC is as high as Rs 5-6 billion. Which new player has that appetite after a few of them have severely burnt their fingers? This has helped us even as our own channels have grown. Even in a digital environment, it will be tough for a new player. Segmentation is not possible because GECs have to be mass and can‘t be niche due to the huge costs involved to run it.Is Max under pressure due to steep acquisition costs for Hindi movies?
The Hindi movie genre, pegged at Rs 9 billion, is under pressure from revenue as well as high acquisition costs. Viewership for the genre in terms of GRPs (GRPs) is not growing. Though Max will post ad revenue growth of 15 per cent this fiscal, costs have gone up. We did intelligent buying.There is bound to be a price correction in movie buying. Though Star went overboard last year, that strategy won‘t work every year. Some broadcasters are looking at launching action movie channels keeping digitalisation in mind. We have no such plans, at least not this year. We will wait to see how digitalisation evolves. Like GECs, the consumption of Hindi movies is more mass.
Why did MSM decide to launch a music channel when the market is too crowded?
Though the ad size is around Rs 2 billion at this stage, it is a good genre to be in. Mix‘s positioning of capturing the various moods during the day has got accepted and we believe that we will be the leader. As a pure music channel, we are here to grow the market. MTV and Channel [V] have taken a different route and focus on reality shows as their growth drivers. While other players in this pure music space have a standalone presence, we are the only one to have the network strength and will be able to ramp up revenues.Isn‘t the English entertainment space getting spoilt with new launches?
The genre is growing and is still undersold. It is an important space to be in and is sold not on ratings but on perception. AXN stands out in this genre. As digitisation grows, we will see more launches.MSM doesn‘t have a footprint in regional-language broadcasting that is growing the fastest. Was letting TV18 Group acquire ETV a missed opportunity?
The acquisition has to come at the right price. We are not desperate to launch channels. We do not believe in width that does not give us profits. -
‘We are adequately funded by New Silk Route’ : 9X Media business head- new business Punit Pandey
9X Media has seen its share of ups and downs. Launched in 2007 as INX Media by Peter and Indrani Mukerjea, the company started with a Hindi general entertainment channel 9X, a music channel 9XM and later an English news channel NewsX.
Then came the economic slowdown and coupled with problems at management level and fund crisis, the Indian promoters exited after selling off the English news channel.
The new management had a huge task: to reduce debt and turnaround. INX Media sold off 9X to Zee and started focussing on its only success – 9XM.
Today, with a new name, 9X Media, the company has four channels under its ambit. It has also relaunched in the UK.
Indiantelevision.com’s Gaurav Laghate caught up with 9X Media‘s business head- new business Punit Pandey to talk about the turnaround of the company and how it plans to grow further.
Excerpts:
INX Media was into losses and your Indian promoters exited. Why did New Silk Route agree to fund the music channels while the Hindi GEC 9X was sold to Zee?
The Hindi GEC did not work and we decided to concentrate all our energies, time and investments on 9XM as it was doing very well right from its day of launch. The turnaround story was around 9XM. NSR as a private equity partner, along with others, assured faith in not only the product but also in the management team.Fortunately for us and 9XM, they continued to show faith in us. And obviously, we are backed by a strong product and a strong revenue stream as a business model.
NSR continues to partner and fund us and we have delivered on what we were supposed to. Today, we are a zero debt company and adequately funded.
With their funding support, we have launched three more channels over the last seven months. We launched Punjabi music channel Tashan in August, first Marathi music channel Jhakaas in October and recently Jalwaa. We have also relaunched 9XM in UK.
Weren‘t you planning to first launch the Bengali music channel in the regional space. Why didn‘t it happen?
While you are at a business plan state, you obviously think of so many things. But if you look at it, we have managed to consolidate 9XM, which is our flagship brand. Then we have also launched three more channels and UK feed.And what about the performance of these channels?
Well, the Punjabi channel has replicated 9XM‘s success across the PHCHP (Punjab, Haryana, Chandigarh, Himachal Pradesh) region and has achieved leadership status in the first week of its launch. So, it has become our second winning product.Jhakaas and 9XM UK also have been received well. And though Jalwaa was launched just last week, we are getting tremendous response not just from trade but also from consumers that it is looking well.
So we have five operating products.
But Marathi channel has not picked up yet?
Jhakaas is not only Maharashtra‘s but India‘s first Marathi music channel. Since it is the only music player, it has been received well. But if your benchmark is going to be what Tashan has achieved in Punjabi, it is never going to be there.Maharashtra, as a region, is 800 GRP market, and bulk of it is from general entertainment – Marathi as well as Hindi. It is followed by movies and news. And if you see, we have not launched just a channel, but a genre. There was no Marathi music channel before Jhakaas.
Being the first music channel, viewers have to get used to watching a music channel. Considering that, it is doing well as per our expectations. We are interacting with people, and they are liking it. To my view, it has opened well. There is scope to grow.
“West Bengal is a big market. So is Bhojpuri. But that doesn’t mean that we will launch everywhere. Let’s see, you will hear from us once we are ready to launch“Talking about the business model, all your channels are FTA and only advertising lead. No plans for other revenue streams?
India currently is an ad-led business model and this applies to our channels as well. A large part of our revenue is from advertising, but we have also ventured into selling our merchandise through ecommerce.We have to build the category. So, we have started merchandising and we have a very strong online presence.
You have been very bullish on the digital front and all your channels have live streaming. Why?
Currently, all our offerings and channels are in music space and large part of music consumption also happens on the online platform. So it is important that as a product we are present across all platforms, not just television but online and mobile also.The idea is to reach out to your consumers, whoever they are and wherever they are and online cuts across that bet.
Online is a very important medium for us and is very visible. We are on Youtube, Facebook, Twitter, everywhere.
But can it be monetised?
As I said, we have already started ecommerce website; this is our first initiative. And as we move on, we will have revenue lines attached to it also.But yes, our business is driven by, and will continue to be driven by advertising.
How will you differentiate between the business models of all the channels?
Well, all our channels have a business plan and we ensure that we continuously monitor and follow it. That‘s how you see more new products.Each new product brings in a lot of confidence as to how the product is delivering from the content and business perspective. And that is how you move ahead.
Which all regional markets you think have potential for another regional music channel? And when is the Bengali channel coming?
Responding to important markets, we saw that Punjab is a good market and we got into that. Marathi is also a good market. We saw that there is a clear need gap for 25+ audiences, so we launched Jalwaa.Obviously, West Bengal is a big market. So is Bhojpuri. But that doesn‘t mean that we will launch everywhere. Let‘s see, you will hear from us once we are ready to launch.
And what about English?
English is also an interesting space. I am not saying we are launching, but it should interest a music broadcaster. -
‘We are weighing various channel launch options’ TV Today Network CEO Joy Chakraborthy
TV Today Network is in the process of an organisational shake-up as it prepares for expansion into regional news channels and language newspapers through the Aaj Tak brand.
The route isn’t easy, considering that revenue growth for the TV news genre is under challenge, the advertising environment is slowing down and it is a highly competitive TV news market where there is too much supply.
Earlier sitting on a cash pile, TV Today took a conservative approach and has in the past few years merged the loss-making promoter business of radio while taking a 13 per cent stake in TV Today for Rs 455 million. Now with no cash reserve, it is planning to expand through self-funding and debt (as it is debt free); it is also not averse to raising equity financing.
The winds of change are blowing. There is talk of weighing each channel individually, having business heads for each of them, and even exiting from radio if the price is right while at the same time preparing for its operational profitability and building synergies between TV, print and radio.
Late last year, the company tapped into a senior executive who has grown up in the television broadcasting space as a revenue specialist. His fast-paced aggression may have been a counter-counter to an otherwise editorial-driven organisation that believes in expanding at a comfortable speed. But that could have also worked in favour when the company’s revenues are growing at a snail’s pace, three of its loss-making channels are supported by its flagship Aaj Tak and radio needs to be turned around.
In an interview with Indiantelevision.com’s Sibabrata Das,TV Today Network CEO Joy Chakraborthy talks about how he plans to grow the company in challenging times, upping revenues, improving profitability and making radio operationally break-even in FY‘13.
Excerpts:
Q. How difficult has it been to fit into a pure news organisation like the India Today Group that is very editor friendly as your past experience has been in entertainment broadcast networks?
There is certainly a difference between an organisation which has got GECs (general entertainment channels), sports, niche and other genres and that which is a pure news outfit. When you are working for an entertainment broadcaster, it is more about using research, marketing, strategy and planning. News business, on the other hand, is very brand driven and credibility plays an important role; it is very day-to-day driven. My past exposure in Star and Zee will help me immensely to do a cross-fertilisation of cultures. The sanctity of news, however, has to prevail.Q. What skills you needed to acquire to transition from a revenue specialist to a CEO?
CEOs are not born in one day; they move up the ladder from different wings like finance and revenue. When you are the revenue head, you are acting like the CEO of that arm. And I was also running P&L of eight niche channels. So, anyway, I am familiar with handling the bottom line role. What matters is a basic understanding of the industry.The biggest challenge in TV Today Network is to get the staff within oriented to my mindset. I have to get the existing team, which is very talented, to work at my pace. My task is to give the editorial the latest in technology and news gathering. Being a revenue specialist, I can work out innovative solutions and increase the company’s turnover.
Spending years in Zee has made me understand the cost part of the business very well. It is important for media companies to be very cost conscious and not to splurge money. For TV news organisations in India, which have the structural issue of high manpower and low top line, this is much needed.
Q. Will we see a new restructured TV Today that is less rigid and more nimble footed as an organisation?
As an organisation, there is a lot of potential to grow. It has built high credibility and is a very strong news brand. The Group will start a process of synergising across departments and functions so that we can streamline costs and build economies of scale. I also hope to get the right support for taking calculated risks.Q. Does that mean that TV Today will have a less conservative approach to expansion in the areas of business and regional news?
We are making business plans that include regional news channels. We will be weighing various channel launch options. We are preparing for expansion, but will wait for the market situation to be good. Also, it has to make the right business sense.“We are open to the idea of selling the radio biz, provided we get the right price. We are targeting break-even in FY’13. We are not going to bid for Phase III
“Q. When TV Today was sitting on cash, it did not expand. Will it not be tough when there is no cash reserve and the company is averse to raising equity funding?
We will expand through self-funding and being a debt-free company, we can also source bank financing for our expansion. We are also not averse to raising money.Q. TV Today’s cash reserves have dwindled after the merger of the loss-making businesses of radio on a valuation of around Rs l billion and a 13 per cent stake buy in TV Today for Rs 455 million. How do you justify such huge valuations and how will it help TV Today?
We feel that radio and print will help us have a 360 degree approach; along with our main television business, it will complete the link and give us a cushioning feel. It also makes us cost effective.Q. How do you turnaround the radio business that had an operating loss of Rs 219 million on a meagre revenue of Rs 42 million last fiscal?
We are targeting break-even in the next fiscal. No doubt we are a weak player in radio. But we have a presence in the three main markets of Mumbai, Delhi and Kolkata. We are getting in a business head with a sales background. By doing proper structuring and sales, we can easily jump our revenues to the operating cost level. We are looking at packaging Delhi Aaj Tak sales with Oye (the radio brand). We will also be looking at the costs.Q.Will you be bidding for Phase III to expand or you will be content being a small player?
We will not bid for Phase III. The radio industry is not growing substantially enough to compensate for huge capital investments and long waiting period for profitability. We will rather work on strategic sales alliances with smaller regional operators who have a presence in some of the key markets like Bangalore, Hyderabad and Chennai; they may even have a single market presence. We can handle their ad sales.Q. Doesn’t it make more sense to find a buyer for the radio business now, particularly when the time for renewal of licence is just four years away and costs for retention are going to be higher?
We are open to the idea of selling the radio business, provided we get the right price. We are at the same time going to focus on reaching operational profitability and growing its revenues.The recently launched ‘Sabse Filmy‘ positioning of our radio station gives us a big advantage as a large amount of film content can be drawn from our TV channels. With content and ad synergies with our local and national channels, we hope to make this operation highly cost effective and benefit from the fast growing radio market, which in India is much lower than other growing and developed markets. Also with news expected to be permitted on radio in the future, the fitment with our TV channels will be perfect. Radio can be a support medium to our main television business.
Q. What is the reasoning behind TV Today’s small stake presence in Mail Today that is bleeding profusely?
Mail Today investment is highly synergistic to our TV business, both from content and ad revenue point of view. The paper operates in the largest ad sales market in the country (Delhi) and has a huge growth potential. A foray into the newspaper space also gives us an opportunity to set up Hindi newspaper business around the Aaj Tak brand. The Hindi newspaper space is growing very fast and the Aaj Tak brand is one of the most powerful Hindi news brands.Q. Sources inside TV Today tell us that you have been talking of a 20 per cent revenue growth target for TV Today in the next fiscal. Isn’t this an impossible target to achieve, considering that the revenue growth is under challenge for the genre (TV Today just grew 3 per cent last fiscal), the advertising environment is slowing down and it is a highly competitive TV news market where there is too much supply?
The market is tough at this point of time and there is too much of inventory in the news genre. The problem of news is that it has been sold on ratings rather than perception. The truth is that it should be measured like cricket; it has a huge ‘outside home’ viewership and is consumed by a lot of people. Being a revenue specialist, I know how to drive it up but will not be in a position to share my strategy at this point of time.We are also looking at ways where we can have a premium rate for news and a separate pricing for non-news content.
As a genre, we have to optimise our revenue sources. That is the only way we can stay profitable. I also plan to control and rationalise the middle line. While personnel cost comprises a good chunk, distribution expenses have to be reviewed. Digitisation is a hope for broadcasters at this stage but it will take three years to feel the real impact.
Moving to our own building, which will have the latest technologies, will also help us save costs and make our on air news look the latest with great graphics and presentation.
Q. TV Today’s flagship channel Aaj Tak is supporting the other three loss-making channels. Why not shut at least two of the channels which play a flanking or a niche role?
I am planning to have business heads for each channel; they will have to manage their P&L. The idea of Tej as a flanking channel works when it is strong enough to cannibalise some viewership away from the main channel. There needs to be some shake-up; it needn’t necessarily imply a closure. We are in the process of microscopic analysis of each channel individually. We will take calls where we are heading keeping 3-5 years in mind.Q. How can you have pricing power and up the revenues of Aaj Tak when there is so much of commodisation of news and the second and third Hindi news channels are priced so much lower?
Aaj Tak may have deviated for some time and gone the wrong way of sensationalism. But it has always been a market leader and for the past 13 weeks, we have a 30 per cent lead over our nearest rival. It is present in most of the media plans. And don’t forget that 45 per cent of the channel’s viewership comes from females. There is a lot of untapped revenue potential.Organisations sometimes make the mistake of feeding the weak child instead of the strong. I believe in feeding your generals even at the cost of the soldiers. We will be investing a lot in Aaj Tak.
We will be doing a lot of strategic alliances. We have tied up with Star for its biggest upcoming property with Aamir Khan; we are their channel partners for that. We will be launching a weekly show with the Bollywood star in Aaj Tak. The issue-based special follow-up show will be similar in nature to Star’s.
We will also get into awards and events without compromising our credibility. For starters, we are doing the Aaj Tak Care Awards event.
Q. Headlines Today has gone through new positioning and revamps a few times. How do you build the channel into a powerhouse?
The biggest challenge is Headlines Today as we see big potential there. We are investing in the channel where we think we can make money. It has to build numbers but what it misses more is perception. In fact, TV Today needs a big marketing and PR push. We have changed our agency to Black Pencil (Leo Burnett’s creative agency) with whom we are going to work on brand films. You will see a lot of action around Aaj Tak and our other brands.Even with the channel’s current status, we can double its revenues next fiscal. We are setting up a separate ad sales team for Headlines Today and removing it from the rate card. The channel has not been able to get its true value because it was sold along with Aaj Tak; Hindi and English news channels have to be sold separately. We have already recruited an All-India head for Headlines Today who would be reporting to the existing network head and coming on board next week.
Q. What about Tej and Delhi Aaj Tak?
The value of Tej will be if it can effectively supplement Aaj Tak. Along with Delhi Aaj Tak, they can tap retail advertisers and dig deep. Retail, in any case, is Aaj Tak’s biggest strength.Q. Are we going to see more launches internationally?
We will have to try and get more international revenues. We will be exploring other markets outside US and UK. We will also strengthen our existence in UK, US and Canada. We have recruited Vikram Das as our new international head who moves in from Neo Sports’ international business. -
‘Market research biz in India is Rs 10 bn’
‘Market research biz in India is Rs 10 bn‘
Posted on 15 February 2012 Majestic MRSS has launched in India, hoping to fill in the gap of a quality independent local market research agency. Its cutting edge: supplementing research with technology.
For the multi-country market research agency and business intelligence firm, the key verticals are media, packaged goods, finance, pharma, auto, IT and telecom.
The market research business in India is worth Rs 10 billion and growing at 15 per cent. Majestic MRSS feels that with its entry, the growth will be faster.
In an interview with Indiantelevision.com‘s Ashwin Pinto, MRSS co-founder Sarang Panchal talks about the key challenges that market research companies face and how people are willing to pay big for quality research.
Excerpts:
Q. Do you think this is the right time for you to enter the Indian market or you are late ?
Clients used to ask us why we weren’t here.We feel that the Indian market is ready for us. The Indian market
wants a quality independent local market research agency to meet its needs. We have become a large company globally as we are up to date on technology and are also quality conscious.We will formally launch our service next month. Some of the technologies that we have used in the last decade is being brought to India. We are supplementing research with technology. This way the kind of information that you get is faster and richer.
Q. How will your outfit stand out against other established market research organizations in India?
Our USP is that we are leveraging the use of appropriate technology – whether it is to collect better information or use information. Everywhere there will be technology which market research agencies do not use.We believe Indian market research companies have not been able to use appropiate technology. Our cycle time to do research will be less. Through technology our people will be able to go anywhere.
Q. Could you talk about the new technologies you have?
The Focus Vision camera streams sessions. P&G in the US, for instance, can understand why an Indian housewife uses a particular detergent. Perception Analyser allows you to do research in any language. You can also use it on an illiterate person. It is a statistical tool and television channels among other companies use it.Then there is the tablet. It is more effective than paper and pencil. Capi helps reduce time needed for fieldwork. Cati is a telephone surveying technique in which the interviewer follows a script provided by a software application. You can use this to go to posh houses to sell products like a Mercedes. Meanwhile, Eyetracker measures visual attention and emotional response. It tells you the impact of an ad. We come out with a new technological product every month.
Q. What is the business strategy?
Our aim is to build deep, meaningful relationships with clients. We are not a run of the mill agency. If a company like Accenture or McKinsey was to do market research, then their approach would be similar to us. The client comes first. Our aim is to make sure that clients achieve their targets. Many companies are not happy with the non customised factory-based approach that other agencies offer.Our whole agency will revolve around the client. This means making all our tools available to the client. Clients will get cutting edge tools, research to help them launch new products, improve existing products. We will also help them understand the extension lines they can have.
“Sri Lanka is the cheapest priced market research place in the world, followed by India. The price needs to go up. It will go up only when clients see value” Q. How does technology improve accuracy in terms of results?
Technology is about helping clients understand a different dimension. For instance, Eyetracker will tell a client what a consumer is drawn to. Is the logo, the writing or the brand endorser? Software helps the client understand better how a consumer behaves. One difference between us and the other agencies is that we have our own offices in the countries we operate in.Q. Which are the key industry verticals that you focus on?
We will be doing media, packaged goods, finance, pharma, auto, IT and telecom. In media, we have done things like testing TV programmes. The Perception Analyser will tell channels what viewers liked in a particular show. Did they like the angle of the story or a particular star? This has been very successful abroad.Q. Which are some of the clients you work with?
Tata Motors, Pepsi, Unilever, Sony, Kelloggs and Nissan are some of the companies that we work with. We have a strong presence in pharma.Q. Which sector is the hardest to deal with as far as doing market research goes?
Packaged goods is the simplest. But I don’t think there is a sector that is very difficult. The challenge is when you talk to very high end consumers, but we are probably the only agency which can handle it due to technologies at our disposal.Q. What potential do you see in India as a market?
The Indian market is developed. There are people who understand market research and who are willing to pay top dollars for people who supply good quality research. The market research business in India is worth Rs 10 billion. It is growing at 15 per cent but we think that we can make this grow faster.Q. Has the definition and scope of market research expanded in recent years?
Yes! We include things like social media. We include technology that earlier was not available. We partner with other affiliates to introduce products that are not available here.Q. Could you talk about how Majestic MRSS is expanding its presence globally?
We are looking at India first. We have six fully serviced offices in the country. We want to be the biggest independent local agency by the end of the decade. This is why we are focussing on long term relationships with big spenders. I would rather work with a few people and do a really good job of it than have 500 clients.Q. What separates good market research from a mediocre offering?
The ability to give clients what they need to know rather than what you want to sell makes a big difference. We want to help clients grow their business by helping them understand their customers better.Q. You have been in market research for over two decades. What are the two biggest changes you have noticed in this field?
Technology is certainly one. You can now do online and telephonic research. From a methodology perspective, life has changed. The second change is that the top layer of echelon is there across the country. I did not see this earlier. The same guys are buying jaguars and BMWs whether in the big cities or in smaller towns.Q. What are the key challenges that market research companies face at this point?
The challenge is to offer quality research that people are willing to pay top dollars for. This has always been the challenge. Anybody can do inexpensive research. The effort should be to offer international quality research at incremental price points.HR is also a challenge but that issue is there in any industry. Market research compensation is not as high as it should be but you can say the same thing for advertising. Anybody who joins us can go abroad as well. From a client perspective, the aim of our research is to expand their business. That is very clear.
Q. Is the economic downturn affecting the monies that companies are willing to spend on market research?
Not really! What we find is that people use this time to try and understand consumers better. They will do more research. Also research is not that expensive to do. India is one the lowest priced market research places in the world. Sri Lanka is the cheapest and India is the second cheapest. The price needs to go up. It will go up only when clients see value. Companies see value in market research but not enough. People cut expensive items, not inexpensive ones.Q. In general how much of a client’s marketing spend goes towards research and are there sectors that spend more than others on research in order to understand consumers?
Around six per cent of a client’s revenue goes towards market research. Packaged goods spend the most on market research as they are used to it. Financial services are beginning to spend quite a bit. Telecom companies also spend. Media companies will soon begin to spend more. The aim is to understand the market, consumer, distributor, sales people, etc.Q. Is the consumer more evolved and savvy compared to five years earlier?
Yes! Now with their exposure to social media, they will be even more evolved in the next five years. They will be even more demanding. People expect world class products and service from Indian manufacturers as they travel abroad.People are exposed to those products and services and that lifestyle. Exposure to media, the ease of traveling abroad and the fact that people have relatives abroad in countries like Dubai, US Singapore is getting consumers more familiar with the outside world. This is fuelling demand for products and services.
Q. Could you shed light on how you will approach rural India?
With technologies, we can collate data easily. We are in a position to do research better than others in the tier three, four, five towns as we leverage technology. While we do work in the Metros, we can expand. Doing research in the smaller towns will be more manageable for clients when they use us. It will not be as cumbersome as earlier.Q. In terms of companies using mediums as vehicles to reach consumers how is TV faring vis-?-vis radio, print etc?
Television is still there in the US, though online has overtaken print. TV has become big in India. Online is the market of the future in India. Right now penetration is not that high. Radio will still be there in rural markets. But print will have an issue as online grows.Q. How is social media impacting market research?
Social media allows consumers to directly talk to brands. If a consumers are upset about pampers not being there in their area, they can put up the information on Facebook. In social media the task of market research is different; the job becomes analytical and technical. It is about using data to create a business opportunity; it is not about asking questions and getting information.Social media has made traditional market research redundant. Our aim in social media is to make intelligent recommendations to clients. People express their views in a social media environment which is rich information. Everyone is underestimating the power of social media. Social media is developed but not many research companies service it in India. Abroad market research companies have been working in this space for four to five years to seek opportunities for businesses. We will be bringing products to India which will help clients leverage social media.