ITV

Category: Year Enders

  • ‘Cable TV sector sees rapid consolidation and new competition in 2008’ : Hathway Cable & Datacom MD & CEO K Jayaraman

    ‘Cable TV sector sees rapid consolidation and new competition in 2008’ : Hathway Cable & Datacom MD & CEO K Jayaraman

    Cable TV companies have attracted private equity funding and used it for consolidation and digitalisation. But tight liquidity credit markets, intense competition to woo local cable operators, and rise in cost structures present a challenging 2009, says Hathway Cable & Datacom MD & CEO K Jayaraman

    2008 marked the emergence of new multi-system operators (MSOs) with pan India ambitions. This resulted in intense competition to woo the local cable operators. The year also marked subtantial private equity/mezannine funding to some of the existing and new MSOs. Some estimates say that the combined inflows during the year could have reached about Rs 7 billion.

    The substantial equity inflows resulted in furthering rapid consolidation of the industry with the independent cable operators (ICOs) partnering or entering into joint ventures with the larger MSOs. In fact some estimates put that almost 40 per cent of the total C&S (cable & satellite) homes could be the cumulative universe under the umbrella of the larger MSOs.

    A welcome fall out of the rapid consolidation and equity flow was the intensive pace of digital cable tv roll out. Incremental voluntary digital cable during the year could have touched one million, based on rough estimates.

    But this was again restricted to selective MSOs. Customers who opted for digital cable enjoyed 150 plus channels at the same price as of analogue. The digital boxes were also subsidised deeply by the MSOs. Digital cable was able to effectively combat the competition from satellite despite the latter companies having huge funding and high decibal advertisements. While the fob prices of cable digital boxes fell, the gain was lost due to 20 per cent rupee depreciation during the year.

    The year also saw spiraling salary costs in the cable TV companies, with each one outdoing the other, even as subscription income lagged. The raged optimism arising out of projected placement fees and new capital infusion fuelled the salary costs and other overheads too.

    Sadly towards the last quarter of the calendar year due to a combination of global meltdown and zero liquidity in the Indian banking system, the companies were sent scurrying for cover and control over these costs. While it may not be easy to cut these fixed costs, the situation can result in further profitability pressure for unorthodox business models in the year 2009.

    The intense competition to woo the local cable operators (LCOs) sucked a lot of funding and, therefore, the roll out of value added services like broadband through cable etc suffered, barring a few whose inherent business model comprise these services too.

    While the year saw rapid consolidation and new competition, sadly the core subscription business was forgotten. Subscription income from LCOs have dipped for the industry as a whole, except for business model where last mile also co-existed, as the chase for territory and placement fees gained predominance. Business models and enterprise valuations were being built around these non-conventional parameters. Cost structures increased rapidly including pay channel costs even as the LCOs dodged the MSOs.

    The last quarter meltdown and liquidity crisis, coupled with slowing down of advertisement income for the channels, did send ominous signals to the MSOs with non conventional parameters. Pressure had started building rather quickly, but the difficult signs are being ignored.

    Overall, the year ended on a sombre mood with a more challenging year 2009 in the offing.

  • Out-of-Home is In

    Out-of-Home is In

    Though times are tough, the OOH sector will continue to clock steady growth, says Out-Of-Home Media chief executive officer Ishan Raina.

    Recently, I have been swamped with queries about trends and happenings on the Out-of-Home industry. And it feels good. This shows that the industry is thinking out-of-home and is looking upbeat. Out-of-Home is in.

    The last year has seen a flurry of movements in OOH due to legislation issues. Although a tough year for the industry on that aspect, this has been a move for the better. We can now expect more innovation and widening horizons as agencies and the media owners are thinking beyond traditional.

    Suddenly, we see a spurt of street furniture being used across cities. Newer formats of outdoor media are seeing the light of the day. Not just media formats, but creativity in using the media effectively also points to the fact that creative agencies, who are the brand custodians, are taking OOH seriously. The use of ambient media, for instance, is another development. So, if you take a walk down any street in a city like Mumbai, you can be absolutely sure that you won‘t feel bored for a moment!

    With the audiences now moving out of their residences more often to newer public avenues along with the boom in the real-estate scenario (barring the current situation) such as malls, multiplexes, public entertainment zones, corporate parks, socialising hubs etc, out-of-home has exploited this trend really well.

    SEC A audiences frequent to these locations, which gives the advertiser a plum of OOH advertising opportunities to put his monies on. With the Western influence seeping in, a need was felt to experiment with sleeker, technologically advanced media. The onset of digital media and its growth shows that advertisers have adapted to digital media like LEDs, OOH TV etc. quite well. From just two to now about six players already in the digital OOH TV market, this medium is making a huge impression upon the end-users‘ and hence, the marketers‘ mind. Today we have grown to about a Rs 15 billion industry (static and digital inclusive).

    The specialty of OOH is the ability of an advertiser to customise his communication and buy as per his budgets. For example, OOH Media offers the tool of Flexicast – which can be explained as the ability / flexibility to telecast brand communication on Out-of-Home Media screens as per the advertisers‘ choice of city, location, target audience etc. Advertisers can, thus, use our medium or any OOH medium for various reasons like for instance to launch a brand, add frequency to their overall campaign, act as a reminder medium, etc depending on their needs. For instance, OOH Media, being the only AV media in an out-of-home environment, has the advantage of adding frequency to TV, and visual to radio, print and outdoor media campaigns.

    So whether it is finance, telecom, auto, FMCG, real estate, consumer durables, apparels, media…..any and every advertiser from a small retailer to a multi-crore MNC can use the OOH medium effectively. We have seen advertisers from finance, auto, FMCG, apparels, consumer durables, telecom, real estate, media, tourism, etc use our medium quite a lot.

    Legislations have been an issue especially for traditional media, but since we are in an indoor environment, these issues have not affected us much. The fact remains that OOH still remains a fragmented and unorganised industry. Our first step towards making it organised was to launch OOH Metrics – the first ever large scale research on Digital Out-of-Home TV media in India, by OOH Media and Nielsen. The research profiles the likely audience as well as substantiates footfall figures. With a scientific approach to OOH TV, advertisers and agencies are considering the medium seriously.

    Though times are tough currently, my take is that advertisers will not stop spending as such on OOH, but will be more prudent and cautious. Value for money and effectiveness will be under scrutiny. That‘s where metrics will come into play. Innovations will be a crucial factor and flexibility to adjust around the advertisers‘ needs will be required.

    OOH is a growing medium and will continue to grow. With so many technological advances already making news, we can look forward to a steady year ahead.

  • Turbulence and Asian media meltdown

    Turbulence and Asian media meltdown

    The economic crisis may reshape Asian media, says Media Partners Asia (MPA) Executive Director Vivek Couto. Companies will focus on cost savings, improved business models and, potentially, new acquisitions as asset prices fall.

    The fragility of an American economy means it is getting harder to predict when Asia‘s media economies will return to better health following this year‘s downturn. As a result, these remain volatile times. Globally, the cost of capital has become high while economic growth continues to fall. At the same time, investors remain risk averse and credit continues to tighten. This is leading to further erosion in public market valuations for Asia media and limited funding options for both private and publicly-held media concerns.

    Capitalising on the crisis through M&A could be a course for some, as the recent $1.1 billion transaction between Sina and Focus Media in China perfectly illustrates. Expect more crisis-driven deals to occur over the next 12-18 months though visibility on almost everything remains an issue.

    The latest MPA research suggests advertising in Asia will grow by 1.5 per cent in 2009 versus its earlier expectations of 2.5 per cent, while growth in 2008 finished up at 5 per cent versus an earlier forecast of 5.6 per cent. Lower visibility and higher volatility also mean that recent ad growth estimates don‘t carry an upside potential anymore.

    MPA‘s latest advertising forecasts have been downgraded due to volatility in Korea, Japan and India. A region-wide rebound of 5.8 per cent is expected in 2010. Excluding Australia and Japan, Asian ad growth will slow from 12.1 per cent in 2008 to 6.4 per cent next year, before a rebound to 9.4 per cent in 2010.

    While MPA expects China and India to grow at trend levels of 10-13 per cent over the next three years, ad growth this year could be lower than forecast in both these markets.

    In India, for instance, the economy is expected to grow by 6 per cent next year in real terms but could decelerate as low as 5 per cent, according to consensus. Meanwhile, the Indian ad market is expected to grow by 10.8 per cent next year but forward budgets for the next quarter indicate that dominant TV and print sectors face a tough time with growth, potentially coming in far lower than forecast. Elections in Q2 may boost spending but trend growth could come below MPA‘s 10-11 per cent forecast.

    All of this means that the importance of monetising content through consumer transactions will grow as opposed to an over-reliance on brand spend, especially in places like India.The market share of digital in places like China will continue along an upward trajectory.

    At the same time, new ad drivers will become even more important for traditional players: local as opposed to national ad markets in Indonesia, for instance, and regional markets in India as the recent advances by Star and Zee have shown.

    Overall, MPA analysis indicates digital and out-of-home media will have a combined market share of close to 30 per cent by 2010 in China and Korea; more than 20 per cent in Japan, Australia and Taiwan; and more than 10 per cent in India. TV and print will continue to hold more than 40 per cent share in India, while TV will retain 60-70 per cent market share in Indonesia, Philippines and Thailand. Print will remain dominant in Malaysia, with more than 55 per cent share.

    Potential buying opportunity

    Media M&A talk has arisen because of the collapse of equity markets, risks around maturing debt and weak balance sheets. Publicly-traded market capitalisation for media companies fell by an average of 30-80 per cent last year in China, Japan, Korea, Australia, India, and Indonesia.

    To be sure, equity market capitulation does not necessarily mean that media assets will actually sell at bargain-basement prices. After all, most have an intrinsic value far higher than what the fearful public and risk-averse institutional investors are currently prepared to pay.

    Potential sellers today and in the future may include: Korean cable broadcaster On*Media (045710.KS); Indonesian terrestrial TV network Surya Citra Media (SCMA.JK); Indian broadcaster IBN-18 (IBN.BO); Chinese CAS supplier CDTV (STV.N) and media wannabe Xinhua Finance Media (XFML.OQ); Japanese satellite broadcaster WOWOW (4839.T); Chinese media giant TVB (0511.HK); and Australia‘s APN (APN.AX).

    Debt issues, focus on Australia and Thailand

    Asian companies with heavy debt leverage include: Australian publisher Fairfax (FXJ.AX), PBL Media and Thailand‘s True Corp (TRUE.BK). At least one of these is likely to sell parts of its troubled franchise in the months to come. True in particular faces a big credit crunch, having notched up around $180 million in liabilities, while its overall debt ratios will likely breach the covenants in its bank loan facility.

    There was at least some good news for PBL Media at the end of last year with majority shareholder CVC Asia announcing that it would inject a further $230 million equity in PBL. Like many of its counterparts, PBL Media is struggling with one of Australia‘s worst ad downturns in a long time with the ad market expected to decline by more than 6 per cent this year.

    Australia‘s Ten Network (TEN.AX) is also suffering – it saw TV revenues decline by 12 per cent in its latest quarter while overall group EBITDA fell 25 per cent. Canadian media major CanWest has steadfastly refused to consider selling its 57 per cent stake in Ten. Current economic hardships may force a rethink. CanWest has consolidated debt of close to $3 billion versus a market cap of only $60 million, and is increasingly exposed to Canada‘s worsening economy.

    Pay-TV platforms

    Opportunities in the private market include various pay-TV platforms needing funds for further expansion and digital deployment. Indonesia‘s Indovision, one of the fastest growing operators in Southeast Asia with over 500,000 pay-TV subscribers, potentially needs more funds to grow beyond its end-2009 target of 1.2 million customers. Meanwhile, numerous operators in India need new capital, as the cost of subscriber acquisition escalates and average revenue per user (ARPU) growth remains modest. Candidates include WWIL, Tata Sky, Dish TV (DTV.BO), DEN and Hathway, though only the latter has a positive EBITDA level at present.

    Various next-generation broadcast satellite licences in Japan are also coming up for grabs in 2009 with J:COM, NBC and Time Warner‘s Turner slated to feature in potential acquiring consortiums. Future M&A in Korea is also worth highlighting, with new regulations allowing cable MSOs to increase market share coverage with more MSO acquisitions. In the near term however, Korean MSOs, weighed down by a combination of debt and IPTV competition, may look to pursue bargain acquisitions and alliances in the content space instead.

    Global media and India

    Gauging how M&A in Asia media may play out also depends on what happens in global media. The severity of the US downturn, as well as various debt issues, have hit global media companies, including most notably Viacom and NBC. Both own assets in key markets such as India, and supply quality programming and brands to various networks across Asia. NBC is scaling back the pace and extent of its investment across Asia ex-India while Viacom has scaled back operations again in Asia ex-India, this time even scaling back in profitable territories such as Japan.

    How these companies manage the crisis is important: whether they choose to sell certain assets in Asia, or sell big assets, or merge with a competitor such as Time Warner and News Corp., could have a decisive impact on future trends.

     

    India‘s IBN18, which has a highly-rated but costly GE channel JV (Colors) with Viacom, recently raised $25 million through a qualified institutional placement (AIP) to five institutional investors: T Rowe Price, Reliance Capital, Franklin Templeton, JM Financial and HSBC. IBN has also issued 15 million warrants to news media company TV18 (TVET.BO), convertible at Rs 102 per share, implying an infusion of about Rs 1.53 billion, which puts a lot of pressure on the TV18 balance sheet and limits its flexibility going forward. Future funding for IBN and Colors next year will need bigger players and more cash, which could lead to a better strategic result for the company.

  • Three-way tussle in the English news channel arena

    Three-way tussle in the English news channel arena

    The English news channel market, unlike the situation existing in the Hindi arena, is not about cutthroat competition and a constant search for new and ever more outrageous attention grabbing news pegs. A three player fight for bragging rights as well as a more broadbased target audience allows for far greater ‘traditional news’ play among the channels.

     

    A detailed analysis of the English news channels using Tam data (All India, C&S 15+, all day parts) during the one-year period beginning January 2007 reveals that there is no clear leader in the genre.

     

    2007 has seen the number one position baton changing hands between the three – NDTV 24×7, CNN IBN and Times Now more than. Still, looking at average annual relative shares it is NDTV 24X7 that is ahead by a nose with 29.75 per cent. In second spot is CNN IBN with 28.5 per cent average annual relative share, just ahead of Times Now which at 27.25 per cent.

     

    Hovering in a range between 28 and 31 per cent, NDTV 24X7 was in the top position in the February to June period. In July-August, with 28 and 30 per cent respectively NDTV 24X7 lost the crowning position to CNN-IBN. Occupying 28 per cent in November, NDTV 24X7 had to give away the top place to Times Now. It rounded off the year sharing 29 per cent each with Times Now to be in the top place.

     

    On the other hand CNN IBN started the year in the top position with 31 per cent but handed over the reins to NDTV 24X7 thereafter. Picking up in the months of July and August with 32 per cent and 30 per cent respectively, the relative share of CNN IBN started falling drastically and hit 25 per cent in November and 28 per cent in December.

     

    CNN IBN editor-in-chief Rajdeep Sardesai said, “I feel that sometimes too much is inspected of the frills, but making the cake is the real challenge. That is my biggest worry: how do you relentlessly make quality news without getting into the ratings war.”

     

    In terms of market share, though Times Now has seen some highs and lows in the year, yet the English news channel has displayed the best progress overall of the three. In its second year since launch, Times Now has been able to break the two-channel shackle in the English news genre.

     

    It started the year with relative share as low as 22 per cent. It gained in February to April period to reach 31 per cent but started slipping down since then dabbling between 25 to 26 per cent. It hit 31 per cent in November and for the first time held the highest position. Even though it fell to 29 per cent in December, yet it retained its top place to end the year on a high note.

     

    Times Now editor-in-chief Arnab Goswami said: “Our idea was to get into the minds of the viewer which we successfully did in 11 months of launch in 2006, the year of our launch. The clear target was to become the default news habit of the country. And we closed 2007 as the unquestionable number 1 news channel in India not just in the English news channel space but even when putting Hindi and English news channels together. It is a good feeling. But what gives me satisfaction as a journalist is that we have set the modus operandi. We have broken 90 per cent some of the biggest stories of 2007.

     

    “Newshour at 9 PM is doing well. We are the clear number 1 in this segment. People watch news channels for news. So instead of having niche shows in an important band time, we have news at 6 pm, 9 pm.

     

    “We have our sports show at 8:30 pm. We do not place a show in a particular slot just to compete with others in the same slot. Only a confident channel can do that. I do not pass off as a sports show where two people sit in a studio and keep blabbering. The game is more dynamic,” he asserts.

     

    For Hindi News channel market leader Aaj Tak’s English sibling Headlines Today though, the story continues to be that of the straggler. With an average annual relative share of 11.6 per cent, it had managed its highest of 14 per cent in November. It gathered 13 per cent each in January, June and August. It has its lowest of 9 per cent in May.

     

    Meanwhile, international news channels BBC World and CNN have an average annual relative market share of 1.3 per cent and 1.5 per cent respectively.

     

    Still, as Sardesai correctly points out, the news channel battle is not just about eyeballs but perception. “The future battle will be of perceptions, of influence, or being thought leaders. In CNN IBN. That’s been our aim, to be thought leaders,” he avers.

  • ‘Southside sees action’

    ‘Southside sees action’

    “Mind it!”

    A phrase immortalized by Channel [V]’s south Indian cowboy character Quick Gun Murugun in the nineties. And one that is most relevant to the regional language market in 2007. The year saw a flurry of launches or announcements of launches, a change in long-running political equations, continued growth, and an increasing intensity of competition in almost every language segment – whether Tamil or Malayalam or Kannada or Telugu – of the regional market.

     

    The big news of the year in this space was the public parting of ways between Kalanidhi Maran’s Sun Network and his grand uncle Karunanidhi, the chieftain of the DMK party. The breakup was bitter, and it was almost as if the floodgates were let open and a flurry of launches followed.

    Kalanithi Maran holds the Contribution to Television Award trophy he was presented with at the Indian Telly Awards 2006.

    The DMK launched its own channel Kalaignar TV with a little bit of help from former Maran friend Sharad Kumar, a few Sun TV employees and Sun arch rival Raj TV. The latter offered it uplinking facilities for Kalaignar TV which has a menu consisting of film and entertainment programs and news. The DMK appeared to be in in a hurry to make up for time it lost – over the past decade during which it supported the Sun Network – and announced plans to build a channel bouquet with a 24-hour news channel and music or a movie channel. This apart, it initiated steps to set up its own cable network in the state to counter any moves by the Maran-owned MSO Sumangali Cable Vision as well as to gain control of the last mile.

    DMK ally, Raj TV announced plans to introduce its DTH service, again as if to darken the Sun Network’s DTH prospects. In May 2007, the Raj TV management said that it would roll out 11 channels, and would take the acquistion trail to expand nationally in other languages, without disclosing any time frame. In August, 2007, it unveiled a FTA music channel Raj Musix.

    Besides Musix, Raj TV telecasts two channels – Raj TV and Raj Digital Plus’.
    On the Raj TV horizon are Tamil and Telugu news channels.

     

    Jaya TV, backed by the AIADMK party, and a comparatively smaller player, recently started testing two new Tamil channels – music and news, which are expected to start full time transmissions sometime this month. As the year drew to a close, Tamil Nadu Congress member of parliament, KV Thangabalu’s flagged off Mega TV, a 24 hour FTA Tamil news, current affairs, and entertainment channel, while Tamil Nadu Congress MLA Vasanth Kumar said he intends to start Vasanth TV.

     

    For the Sun Network, 2007 was business as usual, the political setbacks notwhithstanding. The network, which has the highest number of channels in south India, dominates the region, with the exception of Kerala where it trails Asianet as a close No 2. It drew the curtains on its DTH service using transponders on Insat 2B, offering subscription packages that looked extremely competitive and attractive. Industry watchers expect Sun’s dominance to get eroded over time, but 2008 is unlikely to be the year when we will see that happen.

    “Sun’s biggest strength has been content, be it GEC or movie. Just because Sun may be not be gaining numbers and Kalaingar is showing unprecedented growth, it doesn’t mean that advertisers are going to run away from Sun to its next biggest rival. At present, Sun has retained a firm grasp on its slowly reducing share in percentage terms, its share has not reduced in numbers,” says an ad executive.

     

    So far, Sun has been able to maintain a lead over all the others in most of the space it operates in. In a few places, even its second channel has performed better and attracted far more viewers than its nearest competition’s main channel has. In a very dynamic space, how the new equations will work out only time can tell.

     

    For Telugu print and TV baron Ramoji Rao, however, 2007 would be a year he would prefer to write off as a bad dream. For Rao, who owns TV network ETV and leading Telugu newspaper Eenadu, it was reportedly his close alignment for the past quarter century with the Telugu Desam and his run-ins with the Congress chief minister of Andhra Pradesh, Y Rajshekhar Reddy that cost him dear. It is pertinent to note that a deal signed between US-based Blackstone Group and Rao’s holding company Ushodaya in January 2007 for the sale of a 26 per cent stake is yet to see closure. If Blackstone’s proposal to invest $275 million in Ushodaya had gone through, it would have been the biggest ever media investment in an Indian firm.

    2007 will also go down in the annals of regional television history as the year of TV9. Promoted by Associated Broadcasting Corporation’s (ABCL), it appears to have ambitions to get its foothold into almost every language segment. In Andhra Pradesh, TV9 News got the better of Gemini News and ETV2 News, with its Telugu religious channel Sanskruti beginning to get noticed.

    In Karnataka TV9 Kannada surpassed the biggest player Sun’s Kannada news offering Udaya Varthegalu. It has also been itching to get control of Kerala’s fledgling news channel IndiaVision, but has only managed to start selling air time for it.

     

    Karnataka witnessed the launch of two GEC channels Asianet’s Suvarna and Kasthuri (the latter headed by then chief minister HD Kumaraswamy’s wife) during the year. Another channel ‘Real Estate TV’ for national consumption by a construction group made a lot of noise, but failed to get its signals carried.

     

    “Kasthuri could be eating into DD Bangalore’s ad shares, especially ads by the state government and public sector undertakings based in Karnataka,” said an executive from an advertising agency. “Having been the chief minister, Kumaraswamy could leverage his contacts in these companies. Even if these pickings are small, they are very good for a new entrant,” he avers.

     

    Observers expect the action in the southern space to continue. Balaji Telefilms is expected to launch TV channels in partnership with Star TV either in 2008 or 2009. And there is no doubt that others will also make a try for the southern pie.

  • ‘Once digitalisation happens, let a thousand channels come’

    ‘Once digitalisation happens, let a thousand channels come’

    Concluding our three-part series of interviews looking at the year that was and on into 2008, we turn the spotlight on NDTV Imagine CEO Sameer Nair.

    In a candid chat with Indiantelevision.com, the former Star Entertainment India CEO offers his take on the entertainment industry, why he feels the TV industry needs a kick up, the importance of not just ambling along, and the potential that 2008 offers.

    Excerpts:

    What were the key points of reference which defined 2007? One would be for you personally and also if you could offer a sense of where the industry is in general?

    Well, I left Star TV, in which I was working for about 13 years. But I think 2007 opened on a good note because we did KBC with Shah Rukh Khan and so I thought that was a good swansong of sorts for me. We also got Gajendra Singh from Zee to Star. He was with Zee for I think 16 years and so this was something equally dramatic.

    So those were the last good things to do at Star. On a personal level it was of course moving on and setting up a whole new company, whole new business and preparing for the launch of a new channel.

    2007 basically marked preparation for 2008?

    Yes! As you can see, it’s been all the pre-production and production. And now we get ready for release. So it’s been a lot of that kind of hard work. It’s been about team building… It’s been about company building. It was about resource building and also financial resource building and putting it all together.

    I think by the time indiantelevision.com puts up this interview we will have over 132 people, which is I think a good collection of people across all disciplines.

    What were the positives that came out of this year?

    One positive of course is there seems to be a lot of interest in all things media, in all things entertainment. So there have obviously been so many more players entering the market, so much more money being put into the market.

    So that’s obviously a good thing, industry per se. I think a lot of people have announced or started new ventures, which shows that there is obviously place for growth and a place for new players to get into.

    There is some level of consolidation, there is some increased activity of international participation in local business. The movie business has gone through the roof.

    But was it a good year for the business?

    2007 was an interesting year because it, in my mind, remains a sort of a question mark. It will get resolved in years to come as to whether it was a good year or not. But everything is too close, so I mean this was the year where millions of dollars were pumped into the system. You know prices went through the roof, newer and newer players getting into it, each man with bigger and bigger claims and promises. Nobody talks the normal figures anymore.

    Everything is in a super inflated scenario. It’s like the wire where the string is really stretched. So whether it will be good or bad, it is hard to say now. Currently, everyone is into this valuation zone and everyone seems to be so rich.

    The rollout of digital cable, which was supposed to proceed in a particular manner, did not go the way it ideally should have. Your views on this?

    That is hardly a surprise. There was always this issue about how it would roll out and if it would be mandatory or voluntary. How does it all work? It didn’t really come as a surprise that it didn’t happen in A or B or C manner.

    So effectively nothing of any real note happened?

    No! There was no landmark legislation that occurred, there was no landmark regulation that occurred, there was no landmark activity.

    I don’t really think that there has been any major change. The world has not undergone a digital revolution, nor a mobile one.

    On television, some shows are doing better than others. The gap between Star and Zee narrowed, Zee came within the whisker of Star, than it again fell back. Now it is again coming back pretty much as per calculations. But there was nothing outstanding. It was straightforward.

    But for the industry in terms of sports, a lot happened.

    Sports was an interesting thing that happened. That was pretty good if you look at the high priced acquisition of the ICC rights (by ESPN Star for $ 1.1 billion).

  • ‘Once digitalisation happens, let a thousand channels come’

    ‘Once digitalisation happens, let a thousand channels come’

    It is not looking so high-priced now because T-20 was not a factor in that purchase and now it’s there as a very high value part of that.
    T-20 is the best thing that happened to Indian cricket.

    It completely re-energised sport and completely reignited interest in it. Now between ICL and IPL, it has really brought the sport back. But the price points, because there is no distribution revenue in this model of note, it’s not robust at all.

    The lament is that distribution channels are clogged and yet we have all these channels launching? Isn’t that a big contradiction?
    Well distribution and then everything that will happen as a result. Some people look at this business and they say that, ‘Oh so many new players are launching there is no space.’ On the one hand we talk about how the market is growing, the media sector is growing. The other version is that it is growing but there is no space for new players, which is actually the exact opposite of growth. You know its like saying that the movie industry is growing but let’s any not make any more movies.

    They are completely contradictory terms. So once digitalisation happens, whichever version they choose to refer it by, I’d say let a thousand channels come. Because water finds it own level, and people decide what they want to see, when they want to see, how they want to see and what they want to pay for and it all sorts out in the end.

    But saying let not a thousand channels come, is not progress at all. It does not mark progress for consumers, or for operators. or for anyone as a matter of fact.

    The TV business needs is one nice kick in the butt, like the telecom business got. This is what will help it really surge forward. So far it has been sort of ambling along.

    Everybody is expecting that Reliance will give that kick. Reliance is launching DTH this year, Bharti is launching.
    This is why 2008 will be a year to write home about. We hope that 2008 will be the year for the industry to really surge forward and make that big leap forward. That the big leap forward had much been spoken about but has not actually occurred for many years.

    Each year we talk of the big leap forward, but it’s not happened. 2004, 2005, 2006. You know few things occurred here and there, like suddenly in 2006 the cricket purchase was big. But the rest of the industry didn’t keep up. The whole $ 612 million price point was based on some assumptions, and those assumptions didn’t really come through.

    The fact is that all of business is predicated over some basic parameters, which is that people will go to movies, people will buy movie tickets. People will pay their cable bills. Advertisers do need to reach to consumers and they will buy advertising. That’s basic, and our problem is that we don’t have this in the TV part of the business. We don’t have this one little basic matter about people will pay their cable bills which will then be passed on.

    So it leaves a lot of things in the air when you talk about the television business.

    You are talking about pricing, subscription?
    It is already priced. Subscription is priced. But when you try and compare talk time, in the telecom context to TV, that doesn’t really work. Because the input cost on TV for example is not talk, it is real cash. If people play cricket, make movies, shows, that is like a real cost. It is not talk time. So when you say that every home will pay Rs 5 per month for a channel to see movies and serials, at some point the mathematics are not going to add up.

    So it is just that these things will get sorted out as it goes along. As more players get into it I think that the industry itself will sort it out.

    But there is also the theory that the government will not allow the market to determine costs of TV (and cricket) because other forms of entertainment are becoming too expensive for too many. Multiplexes for example are out of reach for many. So there is only TV. This would mean that tomorrow the IPL will be termed as being of national importance and will become free to view?

    You must note that there is no such thing as a free lunch ever, so somebody has to pay the bill. What’s been happening in the last so many years is that the advertisers have been paying the bill. The advertiser is the ultimate God who is paying for everybody’s lunch.

    Currently there is a combination of private equity money and advertisers who are footing the bill. But eventually, the bill will have to be paid by the consumers, who consume content in whatever manner or the price points will have to come down. So either all the price points return to normalcy by which market settles and everything will sort, or you will have to pay the bill.

    Anywhere in the world in a mature TV / entertainment business, you have the twin model (advertising / subscription). That’s the way the business works. For us, it’s always been immature, fully lopsided towards the one side. Do you know any other market which boasts of 300-400 channels which are all essentially ad supported because distribution as a model is all over the place.

    You go to any other country where it is supported this way, you will find 5-10-15 channels. So that’s something which has to be sorted. It is not like players have to think that India is unique. And I think this has to happen.

    It is just a functional evaluation. This is what it needs, that leap forward. The input cost is going through the roof, return is coming down, and for the majors it is flattening their margins.

    For others what would be the plan be then? So that, I think that has to happen and as they see that as the defining moment. Whether you define a moment or the moment defines you, in any case the industry will have to define the way forward. Whether it is collective or individual something has to happen.

    That is exactly the contradiction in this. That it is true. But it needs resolution. Otherwise a lot of these contradictions can co-exist for a long time. Things can go round and round and circle and circle without imploding or exploding.

    Something has to give?

    Over the last 6-8 months, and with the spate of these new announcements in the last 2-3 weeks, there has been more addition into the TV space. This is obviously going to create enormous amount of pressure on the current infrastructure, obviously we are all new, we wish to make a mark for ourselves, so everyone will do things to try and make a good impression. There will be the existing players, who will obviously look to protect their turf.

    But it is at an interesting point because there is pressure on the system. Now this has never happened before, that there have suddenly been so much, forget new channels, so many new platforms that are all coming at the same time. There is this huge interest in the movie business all of a sudden. In the last year and a half all that has happened.

    Screens are opening up…

    Screens are opening up, It’s happening. So, as the pressure increases, obviously people will find newer and newer ways to do things. New minds enter into it, lots of different people, younger people, coming out with even cleverer ideas. It has to go through a change.

    So 2008 has a lot of potential?

    We hope, though these predictions have been made many times in the past and have sorely let you down. But 2008 seems to have a chance than most years to make a real impact.

  • ‘From the’Small Big’ company to the ‘Big Small’ company’

    ‘From the’Small Big’ company to the ‘Big Small’ company’

    2007 was a remarkable year for the Indian media industry. It was a year that witnessed small steps as well as giant leaps, fundamental shifts as well as tactical maneuvers, greater clutter as well as cutting edge innovation.

    On the whole, 2007 fulfilled a lot of potential in the industry, yet it leaves us with a sense that the Indian media story is still pregnant with a thousand more possibilities… Media players saw newer growth pastures, widened their business horizons, deepened their portfolios and above all competed and cooperated aggressively. This was a sign that the industry was alive, kicking and ready to reach the next level. The fact that many global brands made a beeline to enter the market or strengthen their presence is a testimony to the health of the industry.

    There was widespread strengthening of newer trends such as the heightened sensitivity to user generated content across genres, and a greater focus on interactivity and ‘mobilization’ of content across the board
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    The year saw some good old fashioned competition reach newer pinnacles. Within television, multiple channel launches, especially in news and entertainment, aggressive sales and marketing ploys such as those displayed in the battle for cricket broadcasting supremacy, innovative new show formats, dogged pursuance of alliances and rights and the perennial scramble for prime time shares, ensured 2007 was an exciting period for the industry. At the same time, there was widespread strengthening of newer trends such as the heightened sensitivity to user generated content across genres, and a greater focus on interactivity and ‘mobilization’ of content across the board.

    Even in other media such as print, competition became fiercer amongst the national print majors. Yet, there was also a rise of more targeted products, creating niche plays across regions (launch of city specific compacts in Delhi and Bangalore), demographics such as the youth, women (launch of youth oriented compact paper) or genres such as lifestyle, global fashion, celebrity gossip ( launch of many international magazine titles). The same high intensity and feverish growth pitch could be seen in the online and new media space, with multiple mobile marketing solutions, out of home innovations and web enabled services hitting the market.

    Clearly, 2007 was a momentous year for the industry, with a great degree of optimism in the air. However, there were also concerns that made us exercise caution in all that optimism. Talent management became an important issue for the industry, with sustained levels of attrition. Industry fee and rate structures were under much debate, especially for broadcasters with respect to the surcharge issue. The need for a re-alignment in these became a matter of contention and that is yet to be fully resolved. The regulatory environment for the industry did not improve substantially and a lot of streamlining in policymaking is still necessary in close consonance with industry players. Issues such as revenue leakages through media value chains and a greater level of industry consensus and organization are other key areas that continued to impede us in 2007.

    This year, the group saw tremendous ‘competency expansion’, apart from continued organic growth in its already existing market leading brands.
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    For Network18, 2007 was a defining moment in many ways. Befittingly, in 2007, we confidently unraveled our new brand identity and re-committed ourselves to continue enlightening, entertaining and enabling India. Moreover, the year symbolized a great culmination of the first phase of Network18’s growth story. By 2007, we have progressed from being only a “small company” a decade ago, a production house as our genesis, to now becoming a “small BIG company”, which is considered as one of India’s leading full play media conglomerates.

    In fact, in 2007, our growth story reached newer unprecedented highs. This year, the group saw tremendous ‘competency expansion’, apart from continued organic growth in its already existing market leading brands. In 2007, Network18 expanded into newer media such as print and genres such as general entertainment, through strategic alliances with global leaders like Viacom and Forbes, the acquisition of Infomedia and announcement of the JV with Jagran Prakashan.

    We diversified our gamut of services with the launch of E18, our full spectrum events business which clocked early coups with prominent music gigs such as Americas and Scorpions. Our filmed entertainment venture Studio18 led from the front with innovative distribution and marketing strategies as was evident from Jab We Met becoming one of the year’s blockbusters, despite the high voltage drama from other big budget releases.

    We continued on the leadership path in the Indian online space with stronger performance of all portals across the content, communication and transaction spectrum. Our foray into the Hindi online space with the launch of ‘Josh18’ and success with our latest mobile innovation “Moneycontrol’s Markets on Mobile” ratified our status as new media pioneers in the country. In fact, Markets on Mobile has already emerged as one of the largest mobile subscription services in the country within a couple of months of launch.

    On the television side, our leader brands across business news, general news and music and entertainment (CNBC Channels, CNN-IBN, IBN 7 and MTV Network channels) continued to traverse new boundaries and sustained their momentum through 2007. Ratings, viewer feedback, awards and advertiser interest ratified the continued progress of our television business.

    Clearly, in 2007, it was definitive that Network18 has become a “small BIG company”. The future promises to be exciting and invigorating for all of us at the group. Our long term vision is quite simple and clear. Network18 must emerge as the “Big Big company” on the global media stage, a torchbearer of the Indian media industry’s arrival on the world market.

    However, our immediate objective towards achieving that vision is to FIRST become a “big SMALL company”. The “SMALL” symbolizes our passionate commitment to huddle together (Much like the famous Indian cricket one!) and continue to work as a well knit team which envisions and synergizes together and above all never loses the spirit of innovation and enterprise that has been the DNA of Network18. At Network18, expanding size will not mean furthering distances!

    At the group, our success mantra has always been our ability to execute with great precision, led by India’s best media talent along with strong adherence to our core values and vision. We hope to continue attracting and retaining the most innovative and passionate minds in the business as we strive to achieve the next phase of the Network18 growth story. 2008 and beyond…

  • ‘Future scoping Indian private FM radio’-Apurva Purohit, CEO, Radio City 91.1 FM

    ‘Future scoping Indian private FM radio’-Apurva Purohit, CEO, Radio City 91.1 FM

    For the radio industry, 2007 was a year that started off with several distinct lacunae; with concerns such as differentiation, measurement, talent and regulation top of mind for most broadcasters.

    While we, at Radio City, took the lead to differentiate with ‘Whatte fun’ and a vibrantly melodious station sound, various other national brands realigned their vision and brand stance.

    There’ve also been two developments greatly significant to the industry as a whole. The first would be the advent of Radio Audience Measurement (RAM) – a robust radio measurement system which we, along with TAM and a few other broadcasters took the lead to introduce. Since its presence in the industry, RAM has been an invaluable tool – both for the industry, planners and advertisers alike. It allows media planners to showcase the saliencies of using the medium by demonstrating the cost-benefit analysis. This would embolden planners to recommend radio to advertisers who seeing the merit of this research-backed proposition would in turn, enhance their spends on the medium.

    The second would be the convergence of radio broadcasters across the nation under the aegis of the Association of Radio Operators of India (AROI). With the setting up of a high powered governing council from radio operators across the nation, we believe the AROI will emerge as a very strong entity which will work aggressively towards the progress and strengthening of this medium and industry in the year to come.

    Thus with steps taken in the right direction in 2007, 2008 will see radio further on the rise!

    Advertising

    The numbers are gradually increasing and it is encouraging indeed. Rather than the pace of this growth, it is important that the growth be stable and sustained. Internationally, radio comprises seven-15 per cent of the overall advertising pie. In India, this number varies from three -3.5 per cent (approximately INR 500-550 crore) which clearly shows the potential of business yet to be explored.

    This bodes very well indeed for an industry which is seeing daybreak through growth and a robust measurement system like RAM which justifies the revenues spent, to advertisers.

    The future

    The Indian private FM space is clearly booming. While Phase II is still rolling out, Indians in 91 cities stand to gain access to private FM as an entertainment option. Given the pace of this rollout, one can expect these stations to be ‘FM active’ by mid to late 2008.

    While this happens, Phase III is round the corner with 97 FM radio frequencies on offer. Given that this wave would settle by mid to late 2008, one can expect these Phase III stations to unfurl by 2009-2010.

    These numbers alone make the organic growth spurt of FM radio very obvious. This growth, coupled with robust radio measurement (RAM) and the easing of regulations will see FM radio as a medium of entertainment, become one of reckoning.

    2008 will see Radio Cithy adding to our list of ‘firsts’. As a leading player in the radio space, we remain committed to deliver a sustained, unmatched melodious radio listening experience to our listeners across the nation. Providing originality to the medium through programming and music, based on robust research, is part of our plans for the next few months.

    Frgmentation

    Fragmentation is good – both for the medium and for the audience. While it offers the audience choice entertainment options, it also ensures that the players up the ante in securing their share of the pie.

    We have witnessed the exact same phenomenon a decade or so ago in television. And what did that do to television? While for starters even smaller, niche channels started getting monitored, this added to their revenues by advertisers with niche propositions investing in them. And today, 50 per cent of advertising revenue in television is going on to segmented offerings today.

    Look at the advertiser. By virtue of having segmented product offerings he himself needs segmented media vehicles for him to optimize media spends on his specific target group. Such an approach, contrary to a carpet bombing strategy, allows for higher return on investment (ROI).

    We saw the lack of fragmentation or segmentation in radio as an opportunity. Vis-?-vis a carpet bombing strategy, it is intelligent business to be meaningfully relevant to a select audience. Which is why we took the lead this year and identified our distinct target audience SEC AB 25-44 years and it has worked marvelously for us.

    FM Phase III

    2008 comes with the likelihood of several industry expectations being addressed.

    With Phase III and the further expansion of the coverage of FM radio, it is very likely that the Ministry will revisit pressing issues such as raising the FDI ceiling for radio broadcasting, allowing broadcasting of news and current affairs, allowing broadcasters to operate multiple frequencies in the same city among others.

    The resolution of these issues is likely to open up the market and further enhance penetration of the medium across new and existing markets. This would also make Indian private FM radio more attractive to potential investors, encourage the influx of niche channels and contribute to the overall profitability of the business and the industry as a whole.

    Innovation of formats

    In the year gone by, radio as a medium has emerged from a supportive medium to a preferred medium to reach out to the masses. Radio by itself is a habit forming medium which creates a deep personal connect with listeners with the music and the c the obvious pull factors for the listener.

    Thanks to the boom in Indian private FM by way of newer stations coming up across the country, the listener today is more evolved and highly sensitized to the medium. This makes it very important for any brand to engage him proactively in a manner which he can relate to, through value-added initiatives which are ‘meaningfully relevant’ to him.

    The spectrum of options in addition to vanilla product promotions/ radio spots and contests, now also includes value-added propositions such as content integration, brand mentions woven in the RJ’s script and ground activation directly involving the listener.

    Value added outdoor activation led initiatives create an additional point of interface between the listener and the FM station thereby bringing both meaningfully closer. In doing so, they help make the brand proposition tangible for the listener by creating a unique and memorable brand experience. It is this listener experience which is so invaluable and goes a long way in enhancing listener loyalty and recall.

    Radio advertising – moving beyond the mundane

    Innovations in radio advertising which are beyond the obvious, yet very relevant to the listener, create an excitement among the audience with a superlative impact on the advertiser’s business. Advertisers are certainly open to trying out new, innovative propositions. A value proposition which allows the advertiser enhanced benefits over a vanilla radio spot would always interest him. Our teams are known to excel in this domain by devising customized solutions after an in-depth understanding of the advertiser’s product offering and specific marketing needs.

    2007 has seen its share of innovations in radio advertising. This is on the upswing and as radio branches out beyond the air-waves with on-ground activation, it only goes higher up the value chain of benefits – both to the listener and the advertiser.

    Increasingly, radio is being seen as part of the 360 degree effort to engage the consumer through a mix of radio interactivity, activation and BTL promotions forming a very comprehensive and accountable option to the typical use of mass media.

  • ‘2007: The Year of New Beginnings’

    ‘2007: The Year of New Beginnings’

    When I was asked to do a round up for the year gone by, only one word resonated in my mind – 2007 was the year of strong emergence for the Industry. It was a year when the media and entertainment Industry galloped ahead and consolidated its growth on many fronts such as animation, the kids’ space, licensing & merchandising, DTH and the ever increasing number of channels aggressively competing for a piece of the Indian TV pie.

    Kids’ television has been the catalyst for televised animation produced in India for some time now and will be one of the key drivers. Delightedly, the Indian Animation Industry seemed to have come of age in 2007 with the badshah of Indian entertainment, Bollywood discovering the potential of animation. In fact one of the greatest challenges that Cartoon Network faced when it pioneered kids’ television entertainment in India was to elevate animation to the level of general entertainment.

    Local animation talent pool is fast growing and the Industry got a further fillip with homegrown animation hits like Hanuman, Krishna movie series etc. International studios have also recognised the potential available in India and are increasingly outsourcing work, beyond the sweat shops to creative hot spots to animation studios here. In the coming years, one will surely see a huge spurt of growth in animation studios followed by an inevitable consolidation.

    Similar to Indian animation, the demand for original content in 2007 actively fueled customized content creation and production especially for kids. Reading the signs of the times to come, locally produced content in India would be created for a larger audience footprint, not restricted to India, offering a significant leverage of economies of scale to kids’ TV players here, both local and international.

    Acquisitions, whilst is a very critical part of this genre, but to be able to have a sustainable business model, there is an imperative need to owning Intellectual Properties. For e.g. the very successful original production on POGO – M.A.D is a classic example of how quality content that is well researched and creatively executed, is critical, as audience tastes are becoming increasingly sophisticated

    Television continues to be the dominant and the first medium of choice for kids. Kids spend on an average of two hours watching TV and have relatively very low preference for other media. (To be fair, they spend about the same time playing at home or outdoors as they spent watching TV). Source: New Generations TM

    So no wonder that we saw an outburst of kids’ television channels launching in the country, not very unlike what happened in the news’ television space a few years back. From a couple of channels in 1995, we now have nine kids’ channels in the country today, of which two new players joined in 2007.

    On a more professional note, 2007 really spelt “leadership” for Turner India, as our clear focus of the year was to constantly innovate and continue to rule the roost with each of our brands in India: CNN, Cartoon Network & POGO and we did succeed!

    • Even with seven kids’ channels in the country, Cartoon Network and Pogo continue to be #1 and #2, garnering almost 50% of channel shares in 2007! Cartoon Network and POGO accounted for 98 of the top 100 transmissions across all kids’ channels in 2007, up from 91 in 2006! Even the highest raters on kids’ channels – shows that rate 2+ TVRs – have exclusively been on Cartoon Network and POGO in 2007!
       
    • Ad sales for India and South Asia region achieved a new height with 32% growth, of which kids’ entertainment grew by 26%, HBO by 16%, CNN by 41% and Cartoon Network Pakistan by 73%!

    Our 2008 mission is to continue to blaze the trail and the lead the Industry from the front.