ITV

Category: GECs

  • TV18 Broadcast returns to profitability in Q3

    TV18 Broadcast returns to profitability in Q3

    MUMBAI: TV18 Broadcast turned profitable in the third quarter ended 31 December on fall in operating expenditure and a small rise in operational income from a year earlier.

     

    TV18 Broadcast, which owns news channels CNBC TV18, CNB Awaaz, CNN IBN and IBN7, reported a net profit of Rs 223 million in the third quarter against a loss of Rs 138 million a year earlier. In the second quarter of this financial year, it had reported a loss of Rs 252 million.

     

    The company’s operating revenue rose 5 per cent to Rs 1.47 billion in the third quarter from Rs 1.40 billion a year earlier.

     

    The news broadcaster was able to report a profit in the third quarter as its operating expenses fell 16 per cent to Rs 1.09 billion from Rs 1.30 billion a year earlier, on lower staff costs, marketing and distribution expenses and flat production expenses.

     

    The company’s interest cost in the third quarter was Rs 216 million, flat compared to a year earlier but down by a sharp 51 per cent from a quarter earlier (Rs 365 million).

     

    The fall in interest cost was a result of part repayment of debt from the large flow of funds into the company through a rights issue in the previous quarter.

     

    Raghav Bahl, managing director, Network18, the holding company of TV18, said, “I am delighted …. that TV18 has returned to profitability this quarter. Our recast balance sheet has helped us rationalise our interest payouts.”

     

    “We are now entering an exciting phase in our journey as we strengthen our existing operations and consolidate our regional acquisition,” Bahl added.

     

    The rights issue was largely meant for the acquisition of ETV non-Telugu news and entertainment channels from Reliance Industries Ltd (RIL).

        
    B Saikumar, Group CEO at Network18, said, “We are extremely pleased that all our broadcast operations grew their margins despite softness in the advertising environment. The News Network will further consolidate its leadership position with the addition of ETV News to the stable.”

     

    Business News operations had a strong quarter with margins expanding almost three-fold from a year earlier.

     

    In the third quarter, revenues from business news channels were up nearly 10 per cent at Rs 780 million. Operating profit from business news was Rs 307 million, nearly three times a year earlier and two times a quarter earlier.

     

    The significant improvement in margins in business news operations came on the back of expansion of net distribution income, the company said.

     

    TV18’s general news operations broke into positive territory with 10 per cent margins. In the third quarter, revenues from general news operations were Rs 723 million, nearly flat compared with a year earlier. Operating profit from general news was Rs 69 million in the third quarter against a loss of Rs 16 million a year earlier and loss of Rs 33 million a year earlier.

  • Fashion One launches in Germany on KabelKiosk

    Fashion One launches in Germany on KabelKiosk

    MUMBAI: Fashion One, the international channel for fashion, entertainment and lifestyle television, has launched in Germany on Eutelsat’s digital cable platform KabelKiosk.

     

    The channel has concluded an agreement with Eutelsat’s German subsidiary (Eutelsat Germany) for distribution of the channel to cable operators in continental Europe.

     

    The channel will be available in high definition to cable networks in the KabelKiosk digital television platform provided by Eutelsat Germany. KabelKiosk will carry Fashion One starting 2 January.

     

    After capitalizing in Germany, Fashion One is now equipped with the potential to continue its expansion on the viewer base in Europe by further distribution on platforms in Austria, Switzerland, Liechtenstein, Luxembourg and Alto Adige.

     

    The international television network caters to a female audience with content covering the very latest in fashion, entertainment, and lifestyle news, profiles of A-list celebrities, luxury brands, holiday destinations, and red carpet events. Fashion One also delivers a strong lineup of original programming from reality shows, documentaries, beauty tips and street styling.

     

    “We are excited to be launching Fashion One in Germany with KabelKiosk. The channel will be broadcasted in crystal clear high-definition for the sophisticated audience in the region. This launch supports our drive for continuous growth in the Western European market following our launch of European headquarter last year and marks the start of a new era in the company’s operations in Germany,” said Fashion One CEO Ashley Jordan.

     

    “Fashion One HD delivers pictures in a crisp HD-quality, building a bridge between fashion, luxury and travelling. This unique mixture makes Fashion One HD a real benefit for all of our modern, open-minded KabelKiosk viewers and connect them with an international community,” says Eutelsat Germany MD Martina Rutenbeck.

     

    The channel will debut with two original programmes Fashion One Correspondence Search: London and Front Row Season 2. Viewers could also enjoy on-going documentary series Eco Fashion and lifestyle series Yoga, Health and Well-being.

  • Airtel Digital TV services Q1-2014 losses halve as compared to Q1-2013

    Airtel Digital TV services Q1-2014 losses halve as compared to Q1-2013

    BENGALURU: Airtel’s Digital TV services business contributed Rs 490 crore or just 2.4 per cent to Bharati Airtel’s (Airtel) Q1-2014 total net revenues of Rs 20,2263 crore, but its loss for the quarter at Rs115.6 crore eroded the communications services major’s PAT of Rs1837.7 crore by 6.3 per cent.

     

    The loss for Q1-2014 of Rs115.6 crore by the Digital TV services business, was however almost half (51 per cent) of the loss of Rs 226.5 crore for Q1-2013 and about 65 per cent of the Rs 178.4 crore loss reported for Q4-2013. During FY-2013, Airtel’s Digital TV services business’s reported loss was Rs 810.5 crore.

     

    Consequently, its capital employed (segment’s assets minus segment’s losses) has eroded 34.5 per cent to Rs (-2.946.8) crore in Q1-2014 from Rs (-2,190.4) crore in Q1-2013 and by 4.7 per cent from Rs (-2,813.8) crore for Q4-2103.

     

    Revenues from Airtel’s Digital TV services business for Q1-2014 grew 34 per cent from Rs 365.8 crore in Q1-2013 to Rs 490 crore mentioned above and by 10.9 per cent as compared to Rs 441.9 crore reported for Q4-2013. During FY-2013, Airtel’s Digital TV services business had revenues of Rs1,629.5 crore.

     

    Airtel has reported a 14.2 per cent growth in its customer base for its Digital TV services from 7.4 million in Q1-2013 to 8.452 million in Q1-2014 and a 4.35 per cent growth from the 8.1 million reported for Q4-2013.

  • ‘Star to invest in India’s growth market and not be greedy about profits’ : Star India CEO Uday Shankar

    ‘Star to invest in India’s growth market and not be greedy about profits’ : Star India CEO Uday Shankar

    Uday Shankar had to wrestle with a thorny problem as soon as he took over as Star India CEO: How to be more successful than his predecessors Peter Mukerjea and Sameer Nair?

    Grown up as a journalist and in TV news for long, Shankar did not take long to take tough business calls in the television entertainment broadcasting business. He parachuted out of the Balaji Telefilms’ joint venture agreement as the popular long-running ‘K’ soaps were running out of steam and were turning out to be “expensively” priced. He brought in a bunch of young producers to connect with the changing India at a time when new players like Viacom18 (Colors), 9X (Mukerjea’s venture after quitting Star) and NDTV Imagine (headed by Nair) were making their entry.

    Shankar also quickly realised that Star’s creative, marketing and distribution strategies were not in sync to capture the new markets that had come into the C&S homes. He designed Star’s new strategy and laid out a clear road map for the Rupert Murdoch company’s growth in India which at that stage was heavily dependent on the flagship Hindi general entertainment channel (GEC) Star Plus.

    Asianet was acquired to get a footprint in the lucrative South Indian media market and Bengali and Marathi GECs were launched. He next launched the second entertainment channels in Hindi to house them under the ‘OK’ brand.

    Shankar knows well that India is a growth market and has, thus, decided to reinvest in the business aggressively to build a Star network that would grow and thrive in the future as well. “While we will always try to keep a very sharp eye on the profits, we will not be greedy about profit margins,” he says.

    In the third and concluding part of the interview with Indiantelevision.com’s Sibabrata Das, Shankar talks about how Star India is ring-fenced today to stay as a strong leader in the TV entertainment business and is ready to grow in a digitised environment.

    Excerpts:

     
    Q. How challenging was it for somebody who came from a news background to conquer the entertainment broadcast business as CEO of Star India? Or was the transition easier because TV news in India had imbibed entertainment content in its culture?
    Listen, the news that I was part of is very different from the news of today. I launched Aaj Tak which was a financially very healthy company. It did high quality news, it had a large number of viewers and it was profitable. Hence, it could invest in content. Today, the scenario is very different.

    I think too much is made out of this whole thing of news versus entertainment. At the end of the day, the viewer is the same. In a way, news allows you to engage with the consumer in a very dynamic environment and it gives you those insights. Those insights helped me.

    The other thing that helped me is that as a news editor or journalist you get to develop some understandings and insights about the Indian society which in all humility I think the entertainment guys lack completely. Their reference to India is a few films, a few shows and little stories that they pick up in newspapers. Sometimes I see what is portrayed in our films and stories and dramas about India is completely unrealistic. And that is what my advantage was in this aspect. Because I had done so many years of journalism, I understood India very well. My general understanding of this country, both as a journalist and as a student of social sciences, was fairly evolved. I think that helped.

    Q. When you inherited the chair, Star India had slipped into some sort of a management mess. What were the ills that you had to correct?
    No ills. Star was a great company even then and it had a solid leadership. It had an amazing brand; I don’t think there is or there ever will be a media brand in this country that would be as big as Star. The problem is that it was the victim of its own success. There was a sense of complacency that had set in.

    The other thing that had happened is that there was a disconnect that had developed between the channel and its viewers. The cable and satellite (C&S) TV universe had penetrated deeper into the countryside. And our creative, marketing and distribution strategies were not in sync to capture the new markets that had come into the C&S homes. I think that was the biggest challenge which I had to tackle. And that is what we have done slowly – by going regional, by creating stories which are more diversified and realistic. We got content which echoed the new sentiments, the new aspirations and the new women. We brought that into Star Plus by way of ‘Rishta Vohi Soch Nayi’.

    I also think that we changed the talent mix inside the channel and also the mix of the producers outside the channel. We brought in a bunch of young producers who were producing their first shows at that time. They brought in a fresh pair of eyes and a certain amount of freshness of creativity – and I would like to think that they were better connected. So that’s what helped.

    Q. Was there a need to bring about changes in Star Plus in phases? Are we seeing the Aamir Khan show as part of that content evolution?
    I don’t see those as different phases. I see them as a journey of evolution for a company, a channel, an entertainment network and for me as a professional.

    We were doing a certain kind of stories, we were reaching out to a certain kind of audiences and were addressing a certain kind of market. Slowly, we wanted to expand and diversify in all these three areas. First we started doing different kinds of dramas and then a different kind of non-fiction shows which finally evolved into ‘Satyamev Jayate’ (the Aamir Khan show launched in May 2012 and aired on Sunday mornings). However, it would be a mistake to say that ‘Satyame Jayate’ was the first such step that we took. As early as four years ago, we did a show with Kiran Bedi called ‘Aap ki kacheri…Kiran ke saath’ and in 2009 had ‘Sacch ka Samna’. In drama, we launched Kaali – Ek Agnipariksha.

    I go back to the philiosophy that I carry from my journalism background – we must constantly try out new things and must constantly innovate. Because the biggest story of yesterday becomes stale today. And that is something which is deeply ingrained in me.

    Q. When you earlier spoke about sports broadcast, you mentioned about drama becoming a bit of a commodity. What made you say that?
    Anybody who has the money and an idea can go and create a drama – lease the producer, the writer and the studio. But even if you have the money and the idea, you can’t go and create a sporting property because it is locked in IP. You have to have the teams and the sporting board has to back you up. In that sense, the access to drama is commoditised. But that is not the case with sporting content. If you want to create a cricket tournament, you can’t do it unless the BCCI is supporting it. And BCCI won’t go and support any cricket tournament.

     

    ‘My bosses and I are very clear about one thing: reinvesting in the business far more aggressively than taking out profits because India is a growth market and we are building a network that would grow and thrive in the future as well. This is the most critical phase of building the network. If we don’t continue to invest aggressively and ahead of the curve in a market that is so dynamic and evolving and segmenting, then the market forces might overtake us. While we will always try to keep a very sharp eye on the profits, we will not be greedy about profit margins‘

     

    Q. Is entertainment content limited by the fact that India is primarily a single TV household country? That is a bit of a concern. There is mature adult explicit content that you can’t do in a single TV household. Even otherwise, you can’t do that in multiple TV households because not everybody in his or her bedroom wants to watch adult content; the content consumption habits are heavily determined by our cultural systems. I am not sure whether Star as a network would want to do such kind of content even in multiple TV households.

    But what is bad is that the government, the regulator and a bunch of self-styled policemen want to act on behalf of the audiences. They act as guardians thinking that the audience is a mass of retarded, dumb, unintelligent people who do not know what is good for them. You go and show them one kiss and it is as if the whole culture of India will collapse. It doesn’t work like that. And these are the people who either have a vested interest and say this because they want to control media or their mindset is so corrupt and regressive that they think that because they have a dirty mind, the whole world has a dirty mind.

    Q. But isn’t the growth of niche content limited by single TV households in India?
    Surely, because niche content means content that is of interest to a very small set of people. It is difficult to have a business model for niche channels in an analogue cable environment where there is bandwidth constraint. A channel on health, education, classical music and serious political drama will not interest a large number of people and youngsters. Older audiences are not generally interested in science fiction; nor are women in crime or thriller-based shows. In a single TV household you will have to do content which appeals to a large common denominator.

    In Star Plus, for instance, we don’t want to put content that won’t deliver reach; it simply doesn’t work for us. But digitisation will change this whole content game. We can then create a channel only for youth or for older men or for teenagers. And audiences having digital cable can choose individual channels; in an analogue system they have to take the whole bunch of channels and pay for it. Why will a family having no youngster in the house want a youth channel? And if there is no old parent living with me, I wouldn’t want a channel meant for old people.

    Q. Star Plus made an effort in creating a Sunday morning band and we have seen other channels follow that. Is it possible to drive in audiences regularly in these time slots?
    I hope so. I do think that on Sundays there is an appetite that we as content providers are not able to satisfy. Sunday content is generally not satisfying except for a movie that gets shown once in a while.

    The quality and quantity of Sunday content is not adequate. Broadcasters should step in to fill that gap with all kinds of programming. What matters is the emotions that your content triggers, the stories that you tell and the connect that you build.

    Q. Haven’t all Hindi entertainment networks evacuated the afternoon band?
    This is kind of sad but reflects our economic compulsions. The advertising market is tough, rates are under pressure, subscription incomes aren’t going up much and the programming costs are up. That is why broadcasters have to do all kinds of things. But it is not good in the long run. There are a large number of people who tune in to watch TV in the afternoons. It is an audience that all of us had built over a period of time. I guess broadcasters have all had to take short sighted and tactical steps.

    I also think that there is another challenge. The creative capacity, particularly in Mumbai, is not developed enough. Or not broad enough to cater to the prime time, afternoon and the weekend needs of such a large number of Hindi entertainment channels. So somewhere the capacity construct is also influencing. You are not getting high quality content. At least that is what our experience has been.

    Q. Hindi GECs are almost entirely depending on prime time for ad revenues. As we are in the midst of an economic slowdown, is this the wrong time to make that shift and cultivate other time bands?
    There are challenges in opening other time bands. But there is never a right time and there is always a right time. The last few months have not been great for advertising. That has pulled back broadcasters from experimenting with the afternoon slots. But I see this as a short term tactical withdrawal.

    Q. Since Star is as you say an amazing brand, why did you create the OK brand for your second channels in the Hindi general entertainment and movie space?
    Though we have a big portfolio, each market in India is segmenting and new competition is coming. We were getting restricted because in Hindi we had only one channel and Star One was not doing well. When we were looking at fixing Star One, we thought why should we limit the company to just one brand. Though Star is an awesome brand property, we decided to create one more brand. That is how the OK brand was born.

    Q. Is Star being identified as premium and the OK brand with a more general appeal?
    I don’t see the positioning of Star Plus or Zee TV or Sony as any different but pretty much similar. If at all, we see Star Plus to be the channel that’s identified more closely with people who are more aspirational and OK with those who are satisfied with life. That is the only distinction we think we can make.

    Q. Is this more in tune with a flanking strategy?
    I don’t believe in flanking strategies at all. It is a very boring and owner-driven mindset. Viewers do not understand anything of that; they want to go to a channel and a programme that they like. Everything competes with everything in this market. It is a very dynamic and fluid market where one remote changes everything. Flanking is perhaps a product conceived by somebody who has been influenced by a military mindset and didn’t understand media much.

     

    ‘The C&S TV universe had penetrated deeper into the countryside. And our creative, marketing and distribution strategies were not in sync to capture the new markets that had come into the C&S homes. I think that was the biggest challenge which I had to tackle. And that is what we have done slowly – by going regional, by creating stories which are more diversified and realistic‘

     
    Q. Do you see the need of a second channel, particularly in a digital environment which will lead to further audience fragmentation?
    It will always help in segmenting the market. But there is no question of a second GEC. Who knows? The viewer doesn’t. That is why we have decided to keep Life OK totally separate from Star Plus. A large number of viewers may not be even aware that the two channels are owned by the same company.

    In a market where there is Star Plus, Life OK, Zee TV, Colors, Sony, Sab and Sahara, everyone competes with everyone. At an ownership level, you might have two channels. But in the marketplace, the two channels are relevant only when they are the only two channels.

    But yes, second channels help in aggregating audiences. And it is becoming increasingly difficult to address the entire Hindi heartland through one channel. Demographic segmentation is also taking place.

    Q. Was Movies OK conceived because Star had a vast movie library and a new channel gave it more ad inventory to sell?
    India is a very movie crazy market. TV attracts more audiences than cinema theatres for movies. We beefed up Star Gold. We thought we should go deeper into that market and so launched a second movie channel. In any case, we had invested in a big enough movie library.

    Movies OK gives more fizz to the OK brand. And opens up ad inventory.

    Q. Will we see more launches in the OK brand?
    It is always an option. In Hindi entertainment content, we have already got Life OK and Movies OK. Unless there is some clarity on the digitisation front, I am not sure we are going to launch more channels in the near future. We have a huge challenge on the sports front and need to build it after the deal (buyout of Disney’s stake in ESPN Star Sports) finds the necessary regulatory approvals. We also need to consolidate Life OK and Movies OK.

    Q. What led Channel [V] to shed its Bollywood music content to become a youth GEC from 1 July?
    In the ‘90s, Channel [V] and MTV connected to the youth through music offerings. But now music has become a commodity; it is accessible across many devices including FM radio, mobile and online sites. So we needed a different proposition to get to the youth segment. We came up with the idea of capturing their aspirations through regular TV viewing formats and dramas; we thought this way we would integrate more deeply with youth and address them more effectively.

    The other route some music broadcasters have taken is some kind of non-fiction content which reduces youth to being sex-starved and having non-thinking minds. Reality shows like Roadies (MTV) have painted the youth as a group that is sensually-driven. We have not gone through that path. We believe the youth is interested in society, career and education.

    Q. How is Zeel’s Ebitda margins from non sports business (Q1 Fy’13 at 34%) higher than Star’s which market estimates say is around 25-27per cent?
    First of all, I am not commenting on Ebitda margins because Star doesn’t discuss its financials. But my bosses and I are very clear about one thing: reinvesting in the business far more aggressively than taking out profits because India is a growth market and we are building a network that would grow and thrive in the future as well. This is the most critical phase of building the network. If we don’t continue to invest aggressively and ahead of the curve in a market that is so dynamic and evolving and segmenting, then the market forces might overtake us. While we will always try to keep a very sharp eye on the profits, we will not be greedy about profit margins.

    Q. Will digitisation increase content costs with many more channels being launched?
    Yes, but your earnings should also go up. If you have more channels, you will have more inventory to sell and your subscription income should be more if you succeed.

    Q. Will Star launch new channels or enter into new regional markets?
    No, I don’t see any immediate plans. In regional markets, the carriage capacity is even more constrained. Even if digitisation happens with contracts, its impact will not be felt for at least 2-3 years after the implementation.

    We might do small channels here and there. We just launched a movie channel in Kerala (in July) to take our bouquet of Malayalam channels to three – Asianet, Asianet Plus and Asianet Movies. In Tamil Nadu, we have Vijay TV which is a very successful Tamil GEC but is still not the leader. There is an opportunity to make it grow bigger. In Kannada, we have Suvarna which is doing very well now and is the No. 1 channel in prime time. But it is still not the unqualified leader in the Karnataka market. So there are certain unfinished agendas that we have to first complete before we launch something new.

    Q. Sun TV network is seeing some sort of market share erosion due to cable TV distribution being challenged by state-owned Arasu Cable. It is also losing control over movie studios in the state. Will Star be aggressive in Tamil Nadu to capitalise on this opportunity?
    Everybody has been talking about it (market share erosion) but it has not happened yet. And I don’t see that happening in a hurry, if at all. Don’t forget that despite everything, Sun has built a very loyal viewership profile. It also has many channels and is, thus, able to segment the market very well.

    The shift in viewership you are talking about is marginal, not gigantic. There would always be a bit of an opening in that market but it would be a mistake to swing to the other extreme. Sun has some very strong content and some very successful channels. And those are not easy to take away.

    I won’t launch anything where we don’t have clarity on breaking even and making the business profitable. Otherwise, it doesn’t make business sense. And right now there is no business model.

    Q. When Star expanded into regional-language markets why did it look at Bengali and Marathi GECs?
    Though the states of Bengal and Maharashtra form part of the Hindi TV viewing population, they are also distinct linguistic markets with strongly driven local creative communities. While Gujarat and Punjab are also attractive markets, the creative class does not work in the local language. Mumbai is more attractive for them and they find it lucrative churning out Hindi content. We, thus, decided to launch Bengali and Marathi GECs first.

    Q. Why are broadcasters pressing for a new television ratings system under the aegis of BARC?
    Television advertising is cheaply priced today. TAM (the sole TV audience ratings agency in India) does not map the entire C&S universe and only a part of India is measured. We want the ratings coverage to spread out into more areas and socio-economic demographics.

    The ratings system should primarily be for a broadcast market. BARC will reflect this need of the broadcasters and allow them to monetise the eyeballs that they deliver more effectively.

    Also read:

    ‘BCCI rights great opportunity to build Star‘s sports biz‘

    ‘Cross-media regulation has only discouraged clean, legitimate players in DTH & cable‘

  • ‘The last 20 years belong not to Star but to Zee’ : Star India CEO Peter Mukherjea

    ‘The last 20 years belong not to Star but to Zee’ : Star India CEO Peter Mukherjea

    Peter Mukerjea became the CEO of Star India at a crucial period of satellite television history in India when the relationship between two media moguls Rupert Murdoch and Subhash Chandra had soured.

     

    led Star against India’s homegrown broadcasting business of Chandra and took its flagship Hindi general entertainment channel (GEC) Star Plus to the top in 2000, the position it still enjoys after he quit to try his hands at his own private equity-backed broadcasting venture.

     

    The former Star India CEO admits that the last 20 years of private television broadcasting belong to Subhash Chandra despite himself being at the helm of a significant piece of Indian broadcasting history by successfully leading Star India.

     

    In a tete a tete with Indiantelevision.com’s Sibabrata Das, Mukerjea speaks candidly about how Chandra has outrun Star and Sony and today “runs the most effective broadcasting network, has a thriving cable business and was the first to launch DTH in India”.

     

    Excerpts:

     

    Q. Rupert Murdoch and Subhash Chandra started as allies and formed a joint venture. But this relationship turned stormy by the time you became Star India CEO. How bitter was it?
    The relationship with Zee was initially harmonious. But as News Corp started becoming more grounded in the Indian market and established its capability, Chandra’s views on Star, Murdoch and a multinational broadcaster changed.

     

    That in a way was inevitable to happen. So long as Star was in English and Zee in Hindi, the two companies operated in two ecosystems. The moment Star started Hindi content, Chandra saw it as a violation of the joint venture agreement and there was a major shift in relationship between the two partners.

     

    Q. And the beginning of the pay TV industry in India also helped in Chandra taking a hostile approach?
    Yes, it built a hostile environment. Alongside the personal stresses and strains, pay TV was becoming a reality in India. Murdoch has experienced pay TV in other markets and successfully developed it in his sprawling media empire. Chandra knew this.

     

    Though the two also ran an equal joint venture in Siticable (the cable TV outfit), there was mutual suspicion. The partnership became frigid and fell apart.

     

    I was in the hot seat as CEO. And the only way to progress was for Zee to buy out News Corp’s stakes in the joint ventures – which they eventually did. Having finished with that task, Star got an opportunity to do a total Hindi entertainment channel. Punit Goenka (son of Chandra and now in charge of Zeel and Zee News Ltd ) was a baby then and Chandra was running the company.

     

    Q. Were Chandra and Murdoch bitter even when they met after they split?
    Even when the meetings were pleasant, there was always tension in the background. Both were media moguls in different parts of the world and there was mutual respect. But it was always laced with a fair amount of rivalry.

     

    Q. In your early days as CEO, how did you find Chandra’s aggressive attacks?
    There were lots of questions put in Parliament and Star was accused of repatriating money from India and showing obscene content (Star Movies). Some of these were public petitions but we suspected that they were from our competitors. We, though, had no proof that they were Zee-backed.

     

     

    ‘Lobbying, having deeper pockets, being able to hire better executives – all these don’t matter. In love and war, all is fair. As a piece of history, it is Chandra who started DTH first in India. He has a strong presence in cable and runs the most effective broadcasting network in India. It is only in sports broadcasting that he needs an international partner‘

     

    Q. Murdoch always wanted to be the first to launch direct-to-home (DTH) operations in India. So what made Chandra beat Murdoch in this race?You can say it is because of lobbying or whatever. But the truth is that Chandra launched the first DTH platform in India. And he deserves credit for that.

     

    Q. Even Murdoch is known as a lobby master. Is that how you see this as a neutral proposition?
    Lobbying, having deeper pockets, being able to hire better executives – all these don’t matter. In love and war, all is fair. As a piece of history, it is Chandra who started DTH first in India.

     

    Q. So who would you say ruled the first 20 years of private satellite television broadcasting in India?
    The last 20 years surely belong to Chandra. He runs the most effective broadcasting network in India today. He has created an Indian product and has built a phenomenal international business with that content. He is the first to set up a regional-language network across India. And he has a strong presence in DTH and cable.

     

    Q. You say this even though you used to work in Star and later head it?
    Yes, you have to give credit to the man. He has worked so hard getting back, despite being knocked off in Hindi entertainment business in 2000. That was the time he expanded into different languages. Chandra has helped Zee stay probably as the largest broadcasting business in India today and as a publicly listed company. He had a longer part of the rule in these 20 years.

     

    Zee has outrun everybody else. It’s not Star, not Sony but Zee which is the leader of the pack. And this despite not having the backing of the multinationals which have an advantage in bringing truck loads of money. Look at the impact he has had in Indian society and entertainment culture. Zee has connected deeply with the Indians.

     

    Q. Do you see Chandra becoming a leader in sports broadcasting?
    He has to find an international sports partner. Though India is just cricket, he needs to step out of the base and bet much bigger. If he has higher risk-taking ability in sports and finds an international partner to provide richness in content, Zee will become a strong competitor to Star in sports broadcasting.

     

    Q. But didn’t he bid the highest for the ICC World CUP and also the BCCI rights?
    You can blame that on pedigree. The sad truth is that if you are a decision maker in allocating sports rights, you may go for a lower bid which has greater capability rather than give it to the one whose monetary bid was higher.

     

    Q. Chandra is now stepping into local languages in overseas markets like Middle East and Russia. Is the timing good?
    After building a solid business in India, Chandra is now stepping out to other parts of the world. There are great opportunities in eastern Europe or the entire Soviet Union country base. Parts of America are also a good hunting ground.

     

    I think it is a great strategy. Chandra has built the capability, the resources and the relationships. And it is not a bad time to strike. News Corp is going through a crisis and a lot of management time is wasted on external issues rather than businesses. Zee can capture market share and grow it.

     

    Q. Do you think Zee’s over-the-top (OTT) platform has a fair chance to succeed?
    There are serious rights issues and OTT is not still an open book. The bulk of the revenues in OTT is in the movie business. Chandra will have to wait it out. But it is creditable to pursue OTT and see it as a future growth business. Even in India, OTT will happen and grow alongside TV.

     

    Q. Would you have loved to work as CEO of Zee?
    That is difficult to say and I have never thought of it. I have never spent time with Chandra to understand him as an individual and what his goals are. A lot depends on the personal chemistry that you share with your personal boss. If goals do not match, then that relationship can’t work.

     

    Q. How much does an organisational culture matter?
    The promoter always brings a certain kind of personality into the organisation. But a lot depends on the CEO rather than the owner in influencing that culture; he brings his style and charm to the operations of the company.

     

    There are many critics who say the corporate culture in News Corp is not as wonderful as it is supposed to be. Citing the phone hacking issue, they say the organisational culture is wrong. There is, thus, no fixed solution to corporate culture.

  • ‘We have a 3-tier growth plan and are eyeing a bn viewers internationally in 3 years’ : MD & CEO – ZEE Punit Goenka

    ‘We have a 3-tier growth plan and are eyeing a bn viewers internationally in 3 years’ : MD & CEO – ZEE Punit Goenka

    For Subhash Chandra the last 20 years has been one man‘s war. He has allied and fought against Rupert Murdoch, fallen and bounced back in winning spirit, triumphed over the competitors, and grown a media empire that can make anybody proud. A nationalist to the core, he has a strong footprint in all the value chains of the media business and stands independent in a media landscape that is occupied by the multinationals.

    When in my early years of journalism, I remember the day I rushed to my editor. I told him that I heard from a source that the merger talks between Chandra and Murdoch had snapped. He told me to go ahead with the story and I was afraid that I could be proven wrong.

    I felt happy that the divorce took place. Some may call this a sadistic pleasure but it made me feel nice that my story in The Financial Express was right and, more importantly, allowed me to observe the growth of a warrior who was blessed with intuitive powers, strong business acumen and an innate ability to get into untapped areas.

    Chandra showed his true colours very early in life and in 1991 got the better of Hong Kong tycoon Li Ka-Shing who asked for $5 million to lease a transponder on AsiaSat. He signed a deal with Richard Li a few months later that would kick-start his Zee empire.

    Zee‘s unchallenged growth from its origins in October 1992 halted in 2000 when Murdoch‘s Star launched Kaun Banega Crorepati (KBC) and the three Balaji ‘K‘ soaps. Chandra‘s convergence game also went nowhere and kicked in losses. But Zee expanded into the regional language markets and Chandra also ventured into online lottery with Playwin.

    The rebound in the Hindi entertainment business happened slowly. Chandra appointed Pradeep Guha as CEO in 2005 and inducted his son Punit Goenka  into the organisation.

    Zee Telefilms Ltd (ZTL) got demerged in late 2006 into Zee Entertainment Enterprises Ltd (Zeel), Zee News Ltd (ZNL), Wire and Wireless India Ltd (WWIL) and Dish TV (DTH). He acquired Ten sports and has a growing sports broadcasting business.

    Chandra‘s sprawling empire is not just in India but has strong positions in different corners of the world with his Indian content.

    Even in 2012, Chandra is not in full retreat. He has passed on the baton to his son but is still around. His overwhelming personality can‘t be missed in the Zee office.

    Asked to “get off the fence” and “get in the game” as head of Zeel in 2008,Goenka has proved that he definitely is his father’s son. He ended the rivalry with Murdoch and formed a distribution joint venture company in 2011 to correct revenue leakages and lift subscription revenues. He has identified growth areas in regional, international and new media. His target: to reach a billion viewers internationally in three years.

    Punit (as he is called by his colleagues in the Zee group) is hungry to grow his charge; whether it is sports broadcasting, entertainment, overseas or in niche genres. In a tete a tete with Indiantelevision.com’s Sibabrata Das, he speaks pretty forthcomingly about the road ahead.

    Excerpts:

    Q. When did you first realise that your father was building a media powerhouse in India and that you would be part of this momentous history of television broadcasting?
    For over 12 years, he was practically handling the business by himself. He was running around, surmounting all hurdles, and being a pioneer in all ways to spearhead private satellite television in India. I never thought I would run this kind of organisation. But when he told me to get into it, I quickly became a part of the Zee culture and liked it.

    Q. Now when you look back, do you see any lost opportunities amid this explosive growth of the company?
    The company has grown so rapidly in such a short span of time that it completely overshadows everything else. Zee started in 1992 from a single channel network and two hours of original programming – and look at where it is today! In fact, the first ten years were maddening growth. We have grown to 31 channels spread across genres, languages and geographies. Our international business is also very healthy. And today Zee (read Zee Entertainment Enterprises Ltd) is one of the top ranked Ebitda delivered companies in the media sector.

    Q. What did you feel when the joint venture with Rupert Murdoch collapsed and your father bought out New Corp‘s stakes in Asia Today, Patco and Siticable?
    The split was bound to happen. Murdoch violated the JV agreement and began to show Hindi content. The pact prescribed Star to focus only on non-Indian language programming. When Zee bought out the JV companies, it was a proud moment for all of us.

    Q. You broke this 12-year divorce three years after you took charge as CEO of Zeel and inked a JV agreement for the distribution business. What made you overcome the past enmity?
    We formed Media Pro Enterprise to correct the faulty distribution structures of the analogue cable TV business. It took us almost a year to finalise the agreement. The purpose is to fix the problems of the industry. There are revenue leakages in the distribution business and broadcasters get a small share of the subscription income collected by the cable networks.

    The media industry has matured and we are living in a period of history when there is need to both compete and co-operate. That is what Star and Zee are doing in India. And it has been beneficial for all the partners. Zee and Star were growing their subscription incomes from domestic cable by 6-7 per cent when they were handling the distribution of their bouquet of channels independently. But both the companies are seeing 15 per cent growth from cable subscription income in the first year of operations of Media Pro itself. We are happy with the way Media Pro is shaping up.

     

    ‘The industry can’t survive on ARPUs of Rs 180. Broadcasters have heavily subsidised the content cost to support the DTH companies to grow. A similar trend is happening in digital cable‘

     

    Q. Media Pro is currently distributing 75 channels and more launches are planned by the JV partners. Won‘t this be too heavy a load and the logic of a distribution JV become irrelevant in a completely digitised television carriage-services environment? Are we completely different from the rest of the world where broadcast companies manage their carriage agreements independently?There is no reason why we can‘t work independently in India as well. In a transparent environment, there may not be a need. In any case, the JV agreement is only for five years. We will weigh the market conditions then and take a call after that.

    But having said that, Media Pro has been set up not to just take care of revenue leakages. There are other challenges in the distribution side of the business. The industry can‘t survive on ARPUs (average revenue per user) of Rs 180. Broadcasters have heavily subsidised the content cost to support the direct-to-home (DTH) companies and allow them to grow. A similar trend is happening in digital cable. But content is worth much more and we will have to lift ARPUs.

    Q. Zeel gets subscription income of Rs 4.58 billion from content supply to 20 million paying DTH customers while domestic income from analogue cable is Rs 4.14 billion. What is the potential revenue growth from cable after the networks are digitised?
    We expect healthy growth in subscription income over the next few years. As the cable TV subscriber universe becomes transparent, the paying subscribers will automatically become much more than DTH. Zee will be able to monetise its digital cable subscribers and the revenue gains will be significant. ARPUs will also have to go up.

    Q. Since you have taken charge of Zee‘s broadcasting business, what are the future growth engines that you have identified amid new challenges of digitisation, audience fragmentation and competition from multinationals and big Indian corporates who are tiptoeing into the media business?
    We have identified three-tier strategies for our growth. On the domestic front, regional will drive growth for us. We will participate in fragmenting the regional markets. Our launch of a Bengali movie channel, Zee Bangla Cinema, is part of this game plan. We are working on other genres and in other languages.

    On the international front, we plan to expand our reach from 650 million viewers to 1 billion viewers within three years. We will not just restrict our focus on South Asian audiences; we will have to address local audiences in those geographies as well.

    We have identified Middle East as a key market for us and intend to invest between Rs 1 billion and Rs 2 billion over the next two years. We have just launched our second Arabic channel, Zee Alwan. This will complement Zee Aflam, our first Arabic channel that shows Bollywood movies dubbed in Arabic. We plan to invest $100 million in that market.

    Q. What made Zee so bullish about the Middle East market?
    We had success with Zee Aflam which is a profitable channel. We are also look aggressively at growing in Russia (digitisation by 2014 in that market) and Africa. Russian audiences love Bollywood and our drama content. Besides, we are doing extensive research for the Indonesian and Malaysian markets where we are growing in single digits.

    Q. Is new media a big growth piece for you?
    Yes, this forms the third pillar of our future growth strategy. We have launched our over-the-top (OTT) television distribution platform, Ditto TV, in India and plan to take it to the rest of the world next year. We also have India.com and will continue to offer content across leading genres. With these content formats and advanced distribution avenues, we intend to target new audience segments. I cannot give you a number (in terms of investments or revenues), but we are committed to see that these businesses become successful.

     

     

    ‘On the domestic front, regional will drive growth for us. Internationally, we plan to expand our reach from 650 mn to 1 bn viewers in 3 years.New media forms the third pillar of our future growth strategy‘

     
    Q. Digitisation will throw open a lot of growth opportunities. Will we see a more aggressive Zee launching new genre channels and addressing new geographies as distribution costs fall?
    We are getting into the kids TV segment and will be launching Zee Q. The content will aim at ‘learning through fun and entertainment.‘ In the past year, we have already launched six channels.

    But only the four metros will have digital cable. The real action will start in the second phase of digitisation when we go to the smaller towns. We have not studied the potential yet. We will have to wait for knowing the impact after the first phase of digitisation rollout. And then possibly you will see a flurry of channel launches.

    We will also have to keep in mind what we are launching and whether it is going to cannibalise on our Hindi product. And let us not forget that there may be free-to-air (FTA) opportunities in the broadcasting space as well.

    Q. Zeel is sitting on a cash pile of Rs 11 billion. Will you acquire channels to grow in a digital environment?
    We are looking at acquisition opportunities if they come at the right price and make business sense for us. But we are also aware that it is cheaper to build.

    Q. Zee has always been conscious of its costs and its Ebitda margins from non sports business is around 34 per cent and is higher than Star‘s. But with plans to increase original content hours on flagship Hindi GEC Zee TV and more channel launches in the pipeline, will Ebitda margins fall?
    There should be some fall. Even in this fiscal, we are increasing our original content from 24.5 hours to 32-34 hours. This in itself will amount to a rise in content cost by 14-15 per cent. Our revenue in the first quarter of this fiscal has also seen strong growth.

    Q. Zee has already renewed the South Africa and Zimbabwe cricket boards at around 10 per cent inflation cost. But Star has bought out Disney‘s stake in ESPN Star Sports and Sony, deprived of the BCCI rights, will be hungry for acquiring cricket rights. There is also the threat of ESPN entering the marketplace after the two-year non compete contract with Star is over. So will we see Zee bid aggressively to renew the rights for the three boards that are going to come up?
    We are in active negotiations with two boards. But we will be aggressive up to a reasonable level. We realise that sports is a strategic business for us. It gives us dedicated youth and male audiences and adds to our viewership base.

    Q. Will forex fluctuations affect the earlier target of the sports business turning around in FY‘14?
    Yes it could, as most of our sports content is contracted in dollars. But we expect our sports business to come out of the negative zone. We also realise at the same time that sports broadcasting across the world is a low Ebitda margin business.

    Q. Is Zee News Ltd planning to launch an English-language general news channel?
    At ZNL, we are working on our English language strategy. We believe the news channel business will go through a phase of consolidation.

  • ‘Cross-media regulation has only discouraged clean, legitimate players in DTH & cable’ : Star India CEO Uday Shankar

    ‘Cross-media regulation has only discouraged clean, legitimate players in DTH & cable’ : Star India CEO Uday Shankar

    Uday Shankar is a tough man when it comes to dealing with joint venture partners: he is not averse to exiting from old relationships if he sees the growth engines being exhausted.

    In his eight-year tenure as CEO, Star India has parted ways with three of them: Balaji Telefilms, Hathway Cable & Datacom and MCCS, the JV company with ABP Group for the TV news business. At a much broader level, parent News Corp also ended the Asian sports broadcasting joint venture with Walt Disney and took full control of ESPN Star Sports.

    Still, Shankar is fair, ethical and a trusted friend. Star has made none of the promoters of the JV partners uncomfortable by selling the shares to anybody hostile. The only joint venture left is Tata Sky, the DTH company in which Tata Sons has 60 per cent stake and Temasek holds 10 per cent. And, of course, Shankar’s grand alliance with Zee Group to handle the distribution business through an entity named MediaPro Enterprises.

    In Asianet Communications Ltd, which was acquired by Star, Shankar has former telecom czar Rajeev Chandrasekhar as a minority partner. Star has agreed with its partner to list Asianet and give Chandrasekhar an exit option.

    In the second part of the interview with Indiantelevision.com’s Sibabrata Das, Shankar talks about the joint venture exits, Star’s bet on DTH, cross-media restrictions and the scope of Indian media businesses to attract foreign capital if the policies are further liberalised. He is candid in his replies even on issues which normally would have evoked guarded responses: be it the restrictions on broadcasters owning direct-to-home (DTH) companies or cable TV operations or about the possibility of Rupert Murdoch’s first ever initial public offering (IPO) in India through Asianet.

    Excerpts:

    Q. The government has recently lifted the cap on foreign direct investment (FDI) to 74 per cent in broadcast-carriage services sector like DTH and cable. So will we see News Corp taking majority control of Tata Sky?
    In the shareholder agreement with Tata Sons, we have an option to become an equal joint venture partner in Tata Sky. But there is a cross-media regulation in India (broadcasting company can‘t own more than 20 per cent stake in a DTH or cable venture). So we are handicapped by that.

    Q. Is this cross-media regulation unfair?
    There is no logic to hold on to the cross-media restrictions. Let me explain why. There are four strong safeguards that would protect the market from evolving into a monopolistic structure. In India, distribution platforms are not allowed to own content. Besides, exclusivity is not allowed and content has to be supplied to the other distribution service providers on a non-discriminatory basis. The third safety measure is the regulation of the wholesale price. And lastly, there is enough competition in the distribution end of the business at the retail level.

    In any case, the cross-media regulation has been violated by at least three players having broadcast interests. If anything, it has only discouraged clean, legitimate players. When there is a massive fund requirement to digitise cable networks across the country and the government has taken the positive step of allowing more FDI into the sector, global strategic investors would have been encouraged if the cross-media restrictions weren‘t there.

    Q. How is this a stumbling block to private equity and other investors?
    India is an emerging market and both DTH and cable are emerging sectors. They would require huge funding support to address such a large cable and satellite (C&S) universe. And capital of that size will not be available locally.

    For global strategic investors to come in, it is necessary to do away with cross-media restrictions. And if they don‘t come in, financial investors will not look into the sector more aggressively.

    Q. Won‘t low DTH ARPUs (average revenue per user) be a deterrent for investors?
    I don‘t take that as a serious handicap. There have been a few reckless players who have spoilt the DTH market. But sanity is returning. Besides, there have been a few serious drives in recent quarters to lift ARPUs up. HD services is also another route to improve ARPUs. The industry‘s most serious problem is very high taxation. Investors will look at policy corrections that would help the sector turn healthy.

     

    ‘There is no logic to hold on to cross-media regulations. Distribution platforms are not allowed to own content, exclusivity is not allowed, wholesale prices are regulated and competition at the retail end is intense‘

     

    Q. Now with digitisation being mandated, will you re-enter cable TV distribution business as it offers a huge value proposition?We exited cable when we sold our entire stake in Hathway Cable & Datacom (the final 17.3% it sold to private equity firm Providence and Macquarie Bank for Rs 3.58 billion). It is a great cable company but in the distribution side of the business, we decided to place our bets on DTH. We will not re-enter cable; nobody has the management bandwidth to participate directly in every piece of the business. The market is big and there is a huge opportunity for DTH.

     

    Q. Will the cable companies be able to attract FDI in the current environment?
    They will surely need a lot of capital for digitising their networks. The local cable operators (LCOs) who pocketed the bulk of the subscription revenue have not made the investments; it is the MSOs who have. Perhaps, they will not need to raise capital in the first phase. But in the second phase, there will be a huge fund requirement. Global companies will be interested but will wait for the first phase of digitisation to be over to evaluate the performance of these companies.

    Q. Is Star looking at buying a stake in NDTV, after exiting from the TV news joint venture company MCCS?
    We decided to exit the TV news business in India because of the 26 per cent FDI cap in the sector. MCCS (which ran three news channels including Star News in Hindi, Star Ananda in Bengali and Star Majha in Marathi) had become operationally profitable. So our problem was at a more strategic level. We have decided not to invest in any news venture including NDTV till this ceiling is lifted.

    We feel that the whole economics of the TV news business in India is not working. In any case, News Corp is not a financial investor. If you are not in the driver‘s seat or have no significant say in the business, it doesn‘t make strategic sense at all.

    Q. But won‘t the former MCCS CEO and a newsman himself miss the news business?
    We have created a tremendous entertainment footprint and will now build the sports business. News is definitely a gap in our portfolio. But unless there is a change in the FDI limit, it doesn‘t make sense at all.

    Q. Sources say Star is selling its 26 per cent stake in MCCS to JV partner Ananda Bazar Group (ABP) at a value that is not high. Why so?
    We do not talk about our financials. All that I can say is that we have offered our shares to ABP Group at a mutually agreed value. We are in the last legs of completing the transaction and are awaiting regulatory approvals. We have split amicably.

    Q. Did the differences with ABP start when Star decided to launch its Bengali general entertainment channel (GEC) independently?
    When we decided to launch Star Jalsha, ABP had no interests in entertainment content at that stage.

    Q. But when Star Jalsha was launched, ABP did not cover the event in its print publications. So what could be the reason?
    The joint venture arrangement with ABP was specifically for the TV news business. They were a strong news media company and our JV wasn‘t for any specific language (Bengali). In fact, We launched news channels across languages.

    For the entertainment business, we were not looking for any JV partner. Being an entertainment company ourselves, there was nothing a partner could bring to the table.

    ABP at that stage was, perhaps, concerned about advertising revenues getting reallocated and shifting away from print to television if a strong entertainment player emerged in Bengali language. But it so happened that our channel launch actually expanded the advertising market. This possibly encouraged them to later launch their own Bengali GEC.

     

    ‘In the shareholder agreement with Tata Sons, we have an option to become an equal joint venture partner in Tata Sky. But there is a cross-media regulation in India. So we are handicapped by that‘

     

    Q. Why is Star unable to sell its shares in Balaji Telfilms even after completely disassociating with its operational management entirely?We continue to own equity in Balaji Telefilms. We have assured the promoters that at any stage they want to buy us out, they can. We have the right to sell it outside. But we do not want to do anything that will make the promoters uncomfortable. We took care of the promoters‘ interest even when we sold our Hathway stake.

     

    The problem with the promoters of Balaji Telefilms could be in the fact that they will not only have to buy back our shares (25.9 per cent) but also make an open offer since it is a listed entity.

    Q. Star‘s other partner is former telecom czar Rajeev Chandrasekhar. Sources say when he sold his stake in Asianet Communications, he had an exit clause in the deal either through a put option or an IPO. Will we see News Corp‘s first public float in India through Asianet, in which Star holds around 86 per cent stake?
    We have mutually agreed to do an initial public offering (IPO) in Asianet. We will wait for the market conditions to improve to tap the market.

    Chandrasekhar always wanted a public currency. We share a good relationship with him and have agreed for an IPO.

    Q. Is Vijay TV and Kannada GEC Suvarna also a part of Asianet Communications?
    Yes, the entity has these south Indian-language channels.

    Q. You share a strong relationship with Zee Group‘s Puneet Goenka, the son of founder-promoter Subhash Chandra. The outcome of that was a landmark distribution joint venture company, MediaPro Enterprises. Will that survive in a digital environment?
    There is no reason why it should collapse. The fact is that all the partners are seeing growth in subscription revenues.

    Q. Zee is currently distributing its sports channels independently and so is ESPN Star Sports. Since News Corp is going to completely own ESS, will we see a consolidation in the sports bouquet under MediaPro?
    It‘s difficult to say anything right now. We are still waiting for the approval and the acquisition of the company (ESS) to go through. There is MediaPro as far as we are concerned. It is up to both the partners to see if we want to increase the scope of our relationship and partnership or do we want to limit it to what we already have.

    Also read:

    ‘BCCI rights great opportunity to build Star‘s sports biz‘

  • ‘Star Pravah is only entertainment channel with 25% of content aimed at males’: Star Pravah channel head Nachiket Pantvaidya

    ‘Star Pravah is only entertainment channel with 25% of content aimed at males’: Star Pravah channel head Nachiket Pantvaidya

    Star Pravah had a bad start and had to rework on its programming strategy to keep in pace with rivals Zee Marathi and ETV Marathi. Now having found the right content mix and being aggressive in buying movie rights, the channel leads the ratings chart.

     

    Launching with culturally rich shows like Raja Shivchhatrapati and Agnihotra, the channel changed track and is now focusing on contemporary content reflecting today’s lifestyle. It is betting big on movies and is willing to pay high prices.

     

    In an interview with Indiantelevision.com’s Gaurav Laghate, Star Pravah channel head Nachiket Pantvaidya talks about the channel’s programming plans and the challenges of the Marathi market.

     

    Excerpts:

    Q. After joining on 1 April last year, Star Pravah has grown in the Marathi general entertainment genre. What has worked in your favour?

    From 120 GRPs during the last IPL, we have grown to 250 GRPs today. While the ratings are just a number, we have come a long way because we got the right strategy in place.

    Q. Star Pravah started with a show like Raja Shivchhatrpati and other shows portraying rich Marathi culture. Today, the shows are more on the contemporary day-to-day life. Are you talking of this shift in strategy?

    We believe that whatever the content is, it needs to reflect the society of today. So while we respect the ‘Maharashtrian’ culture, we are focussed on catering to today’s generation.

     

    With the help of our researches and various contact programmes, we have realised that our viewers, staying in whatever part of Maharashtra, are global citizens with big dreams and aspirations. They understand the importance of values versus the changes that are happening in the current economic scenario. With our programming, we are constantly portraying “today’s Maharashtra”.

    Q. Marathi viewer is equally comfortable with Hindi. And if Hindi GECs are offering same shows, doesn’t it pose a challenge?

    One of the major challenges is that a Marathi viewer is equally comfortable in watching Hindi general entertainment channels, news and sports. So we decided to work not just like a Marathi entertainment channel but an entertainment vehicle. We focus on being concurrent as well as on entertaining our viewers.

     

    And it is paying also. In the last eight weeks we have been ahead of the Hindi GECs. In the week ended 26 May, we clocked 256 GRPs, highest for the channel so far.

    Q. From programming point of view, what is the thought process behind the shows?

    All our shows are based on unique themes and we promote the idea of positive bright relationships.

     

    Our shows like Bhandaa Saukhya Bhare (game show between saas-bahu), Devyani, Pudhcha Paaul, Swapnanchya Palikadle, and upcoming Laxmi Vs Saraswati portray today’s time, today’s value system and ask relevant questions.

     

    We have kept the packaging the same… the dresses, attires, setups are still the same, but our approach is very modern.

     

    Also, we are the only entertainment channel with 25 per cent of the FPC dedicated to the male audience. We decided to have differentiated content, so from 9.30 pm till 10.30 pm we show Lakshya (crime drama) and Anolkhi Disha (supernatural) to cater to the male audience. In future we would also like to create some shows for the kids audience as we are a wholesome entertainment channel.

    ‘The ratings of TV premiere of Marathi movies have doubled. We are progressive and aggressive in the film acquisition space and want better production value, for which a better price is justified ‘

    Q. What are the other genres you are exploring?

    We would like to explore genres like comedy, thriller and socially relevant shows. We are sticking to our identity and will make sure that we offer the complete package.

    Q. Many times a viewer is not happy with the quality of production. How are you tackling this issue?

    A few of our shows are already being shot in high definition. And Shrabani Deodhar (creative director), at the helm of programming, makes sure our programming quality is no less than the Hindi GECs – at the price of Marathi GECs!

    Q. You have been acquiring a lot of movies. How has it helped the channel?

    We are bullish on acquiring movies as we want to see the Marathi film industry grow. So if you see, we have acquired a major chunk of movies, including all the three national award winning movies.

     

    We are looking at buying the rights of these films prior to the release. And these films have helped us to aggregate the incremental viewers. With every blockbuster, new viewers come to sample the channel and we promote our other properties.

     

    We have a good mix of high concept cinema as well as commercial films in our library. For high concept films we are investing in subtitling. We also put advertisements in English dailies so that a non-Marathi speaking viewer can also watch and enjoy good cinema.

    Q But many players say that you are also spoiling the market with such high acquisition prices?

    We want to write the resurgence story for the Marathi film industry. If you see, Maharashtra still has the lowest film acquisition price. If we keep doing hard bargain to acquire good films, it will drag us all down.

     

    In today’s time, the ratings of TV premiere of these movies have doubled and we can recover the cost of acquisition. And after all, the price is just any number; we want to be assured of good cinema. We are progressive and aggressive in the film space and want better production value, for which a better price is justified.

     

    Today, all the big filmmakers in Maharashtra are willing to partner with us as we are expanding their market and trying to make the economic model work for them as well.

    Q. How are you marketing the channel and the properties?

    We know that as a late entrant in the market, we did not have the legacy to fall back on. Thus, we had to make that extra effort to reach out to our viewer. We have very extensive direct connect programmes and activities through which we keep reaching out to them.

     

    We want to make the viewers realise that we love them, we know their aspirations and we try to meet and talk to them directly. So you will not see many hoardings from our side just announcing a new show; we will reach to the nook and corner of the state and will meet them in person. Our ground connect programme is very strong.

    Q. And how is the response from the advertisers?

    Today we are a big vehicle for the advertisers to put their message across. A big leap of thought for us is that economic and SEC classification is not a geographic concept anymore. The concept of rural and urban is not there. We see rural parts in metropolitans like Mumbai and Pune as well as an urban class in very small towns. We are working closely with the local brands to help give them a global identity.

    Q. How is digitisation going to help you?

    I believe that digitisation will benefit us more than anybody as the inequalities in the distribution business will iron out.

    Q. How is being part of Star India helping you?

    Today Star India has many No. 1 channels in the national as well as regional space. The group has done great in regional with faith that regional could be the new national. The group strength also helps us in leveraging resources.
  • ‘No concrete offer has come from Jain Group’ : Rajasthan Royals CEO Raghu Iyer

    ‘No concrete offer has come from Jain Group’ : Rajasthan Royals CEO Raghu Iyer

    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?
    Many offers keep coming our way. Interested parties come and talk to franchise owners. One of them was from the Jain Group, but it is not on the table anymore. So far no concrete offer has been made. We are not waiting for the BCCI’s permission to sell the franchise.

    Q. Has Rajasthan Royals broken even?
    We have. We run a tight ship and are in the black. We have not gone berserk on buying players, which is a big cost area. You need to spend only where it is necessary.

    Q. Does the arbitration process with the BCCI make it harder to plan long term?
    No, the arbitration process continues. Our operational business also moves along.

    Q. Are Lachlan Murdoch and Suresh Chellaram silent investors or are they active in the team‘s functioning and operations?
    We are a professionally managed franchise and owners don’t get into day to day activities.
    ‘Very seldom does a property come and take over the entire playing field. The IPL has changed the business of sport. It is one of the largest brands that India has created and is one of the largest sporting brands globally‘

    Q. What impact has the IPL had on the business of cricket and sports marketing?
    Very seldom does a property come and take over the entire playing field. The IPL has changed the business of sport. It is one of the largest brands that India has created and is one of the largest sporting brands globally. If you look at the various stakeholders, everybody has gained significantly from it.

     

    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 call it a downward trend. The cumulative reach has plateaued at the 140 million level. In terms of ratings, even the average of 3.6 is a success. Name one property on television that delivers this rating day in and day out – whether it is at 4 pm or 8 pm. Of course, if you compare it to the initial years where the IPL managed a 4.8 rating, it is low. I will give you the example of KBC which launched with a rating of 20 and then settled down at a rating of 5-6. Even soaps like Kahaani had a rating of 10 and then settled down.

     

    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? 
    I don’t think that there is a viewer fatigue at play. Fans are flocking to the stadiums for tickets. A rating of 3.5 is not fatigue. There are other factors – perhaps, there is fragmentation of media. And it is not that ratings have dropped drastically – it is a marginal drop in the initial period. The number of close matches has increased and if you observe the buzz, people are following the league.

    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?
    I wouldn’t call it a mistake. Having an auction is so that the teams have an even playing field. The idea of the auction and a salary cap was that all the franchises taking part would have an equal opportunity to pick up players and build decent teams. In order to address viewer confusion, the IPL introduced player retention. As a franchise what we would want is for the fans to remember Rajasthan Royals for the brand of cricket that we play.

     

    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?
    These teams along with Bangalore are at an advantage due to the cities. The people in those cities are loyal and passionate about their team and this is evident from how the local film industries are passionate about their team. The fans there are more loyal than the fans in some of the other cities. Player retention was allowed to all the teams. Some franchises chose to retain. We chose to retain Warne
    and Watson as we felt that those were the two players around which the Rajasthan Royals name was pretty synonymous with.

    Q. Does the IPL Governing Council need a franchise representative?
    It would be nice if the IPL governing council had franchise representatives. Having said that, the IPL has interactive workshops with the franchises. As long as the IPL Governing council is addressing our problems, it is fine. The IPL makes it a point to ensure that franchises points are addressed.

    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
    in this regard?
    This issue has been brought up in the workshops. To be fair to the IPL, they have taken cognizance of this and have promised to address this. One challenge is the lack of availability of players. There is the Champions Twenty20 League but the franchises who have not qualified have to think of interesting things to keep their brand alive. We tied up with a school in Jaipur and ran a school tournament in November.

     

    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?
    We started off with Rahul Dravid as the captain. Once he retired, his brand value shot up to a different level. We piggy backed on this to some extent. Locally in Rajasthan we did on-ground activities. The aim was for the fans to meet and greet players. We also had a huge bunch of local Rajasthan players in the team which was not there earlier like Pankaj Singh and Ashok Maneria. Along with Dravid, we took them to hangouts like malls where they could meet fans.

     

    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?
    Social media is growing in importance. All franchises have focussed on this area this season. This is the best way to keep in touch with fans and get responses. Post the player auctions, we got fan responses about whether they were happy or not happy with our picks. Post the sale of Ross Taylor, some fans were disappointed and wrote in.

     

    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?
    We have a hard working team and have managed good results. We have got a 15 per cent hike in sponsorship revenue. To be honest, it did take some amount of selling to get in the sponsors. We have 19 partners brands on board including Ultratech, Puma, Pepsi, and HDFC Life who have come back as sponsors. There was a question mark initially about how good the IPL would be after last year. But this year we are happy about how things have gone so far.

    Q. How do you break through the clutter to offer maximum returns to sponsors?
    Creative initiatives come from the clients as they want to break clutter in their category. For example, Ultratech Cement is with us and in their category there is only one company associated with another franchise in a smaller manner. In life insurance, HDFC Life is with us and I don’t see any brand in that category in the IPL. They take the trouble to do some really good advertising. Clients are with
    us not just as advertisers but also to gratify their sales force and distributors.

     

    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?
    The trading window is starting to generate good revenue. It can become a significant area if teams look at this in a serious manner. Ticketing has been fantastic. Sponsorship, though, accounts for 60 per cent of revenue, followed by ticketing. Licensing and merchandising is the item that should show exponential growth this area. It is waiting to explode. I don’t think that it has done that for any franchise so far. To go back to your earlier question on how to keep the brand alive throughout the year, this is it: L&M has to come into play.

    Q. What is the split between central and local revenue and by when will local revenue dominate?
    55 per cent of our revenue comes from the central pool. The key is licensing and merchandising. Once that takes off, then local revenue will go past what we make from the central pool. The healthy share of television revenue will hopefully still be there. It will take four years for licensing and merchandising to grow.

    Q. What are the plans in terms of growing licensing and merchandising?
    The first plan is to keep the franchise brand alive across the year because if you sell merchandise for just two months, then it will not work. It has to be available for at least 10 months in a year. The second issue is to make merchandise more affordable.

     

    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?
    We brought down the ticket prices starting at Rs 200 for stands that are price sensitive. Some of the hospitality tickets are at Rs. 4000-5000 compared to previous years when it was only Rs 30,000-40,000. For the first four matches, we really stripped it down. We needed to see what the off take would be. We have done well.

    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?
    The IPL is a unique property and platform. It is something that people will be willing to pay a premium. I don’t see the BCCI not being able to get in sponsors at the value that they are forecasting.

    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?
    It will take some more time to deliver as far as ratings are concerned. The quality of cricket is excellent. They will get in ratings when the same foreign teams play in it more often.

     

    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.
  • ‘If you are up in the hierarchy, you will get pricing power’ : Star India president ad sales Kevin Vaz

    ‘If you are up in the hierarchy, you will get pricing power’ : Star India president ad sales Kevin Vaz

    Leading broadcasters will continue to post strong ad revenue growth while the long tail will be severely hurt as advertisers tend to consolidate their spends in a cautionary environment.

     

    Genre leaders will benefit as advertising monies get rejigged. It is the weaker performers that will not find support from advertisers; they will degrow.

     

    The television sector will see a 13-15 per cent growth in ad revenue this fiscal while print will be pushed back in a slowing economy.

     

    Star India, which has leader channels in most genres, has done more annual and network deals this year. Its top 10 clients, for instance, have done deals stretching from a minimum of 12 months to three years.

     

    The Hindi general entertainment channel (GEC) genre is on an upswing even as ad monies are moving away from cricket.

     

    The Hindi movie channel genre is set to grow at 15-20 per cent. The news genre will, however, continue to struggle this year.

     

    In an interview with Indiantelevision.com‘s Sibabrata Das, Star India president ad sales Kevin Vaz talks about the changing equations in the television advertising space.

     

    Excerpts:

    Is India‘s leading broadcasting network ready to announce that the advertising economy is slowing down?
    The ad market is not as buoyant as it was in January. The television sector will not see a 20-25 per cent growth in ad revenue this fiscal as was forecasted earlier. But it will still post a 13-15 per cent growth while print will be pushed back in a slowing economy. With print crawling at a 0-3 per cent growth rate, ad monies will move to television.

    Even then it is a slower growth for the TV broadcast segment. Is Star beginning to feel the heat?
    Leading broadcasters will continue to post healthy growth while the long tail will be severely hurt as advertisers tend to consolidate their spends in a cautionary environment.

     

    Genre leaders will benefit as advertising monies get rejigged. It is the weaker performers that will not find support from advertisers; they will degrow.

    Aren‘t Star‘s top advertisers noticing a slowdown?
    We have actually done more annual and network deals this year. Our top 10 clients, who account for 30 per cent of our revenues, have done deals stretching from a minimum of 12 months to 36 months. We will buck the trend and grow much faster than the industry. Having leader channels in most genres has helped us stitch long term deals.

    The fiscal first-quarter is indicating a slowdown for certain listed media companies. So isn‘t there a negative sentiment already prevailing in the market?
    The April-June quarter has been good for us. And the July-September quarter is even better. Of course, the channel performance has also improved. If you are up in the hierarchy, you will get pricing power.
    ‘The hard core press categories are shifting more to TV. The automobiles category is now spending 60 per cent of its ad budgets on
    TV, up from 30 per cent. The consumer durables segment is also
    following this trend‘

    But aren‘t we seeing a small dip in FMCG spending in the first quarter?
    The FMCG category is going to be aggressive this year. Some of them may have issues, but as a whole they will continue to spend more. P&G, Marico and ITC, for instance, will not shrink their promotional budgets. There are variants being launched and competition in the category is fierce. TV is the last thing they will cut down on as it is the most efficient medium for the category. And within TV, they will consolidate their spends.

     

    In a toughening economy, advertisers tend to flirt less; they commit their spends to the bigger players and keep aside a lesser amount for shopping with the rest.

    Are Hindi general entertainment channels going to benefit because cricket is not delivering due to India‘s poor performance?
    Cricket is hit in a big way. GECs are on an upswing even as ad monies are moving away from cricket. The Hindi GEC genre, pegged at Rs 37-40 billion, will grow at 12-15 per cent this year.

     

    It is important to note that cricket is losing out because of India‘s dismal performance; this has nothing to do with a slowdown. In fact, the Indian Premier League (IPL) will be tested next year; as ratings slip, there will be a churn.

     

    So what is working well for us? Cricket and print are on the losing side this fiscal.

    Are tentpole properties bringing in revenue spikes in GECs?
    Advertisers are supporting tentpole properties as they look at buying impact. Brands like Maruti and Cadbury, who are on cricket, are sponsors of Just Dance. Kaun Banega Crorepati has got Idea. If cricket was doing well, we could have come under some pressure. Even in regional language channels, we are seeing tentpole properties being created.

    What about the Hindi movie channel space?
    The ad revenue market for this genre is around Rs 8 billion. It is set to grow this year at 15-20 per cent.

     

    Star Gold will capitalise heavily as the channel is performing very well. We have cut the ad inventory time by 33 per cent with effect from 15 August to give it a Hindi GEC environment (Channel V saw a similar ad cut time from 1 January) and ramped up our investment on movie acquisitions.

    How will the launch of a Hindi movie channel by Viacom18 impact the market?
    We will see a huge erosion in viewership for some channels who have not invested in movies. But from a revenue perspective, we must remember that it is a very efficient genre.

    In the Bengali and Marathi regional markets, it is becoming a three-horse race with Star performing well. So how will this fragmentation impact?
    The successful launch of Star Jalsha has actually grown the market. The Bangla GEC advertising market has grown from Rs 3 billion two years ago to a size of Rs 6 billion. Even in Marathi, there will be a revenue expansion as we start monetising the growth of Star Pravah. In these stand-by-itself markets, advertisers had only limited GRPs to buy. Now that the supply has increased, we expect a 30-40 per cent expansion. National brands are going deeper and deeper and local brands are getting more aggressive.

    Now that Star is also handling ad sales of NDTV, how do you see the growth in the news genre?
    The news genre will continue to struggle this year. Banking, finance and automobile categories are seeing a huge hit; so news television will feel the impact. With the resurgence of GECs, the news genre has actually stagnated for the last few years.

     

    Regarding NDTV, we are selling it along with the network. So we are bringing in a wider range of advertisers.

    Do you see consortium selling growing as a concept?
    Yes, leading broadcasters will become the rallying point. It has happened in the case of distribution (Star and Zee merger) because they sensed value; we will see it in the advertising arena as well.

    Is the English entertainment segment under pressure?
    English general entertainment channels will benefit as the premium segment grows. High-end cars, for instance, will increase their exposure to TV. The English GEC genre will see a 30 per cent growth this fiscal.

    So is TV gaining at the cost of print?
    The hard core press categories are shifting more to TV. The
    automobiles category is now spending 60 per cent of its ad budgets on TV, up from 30 per cent. The consumer durables segment is also following this trend.