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  • Dead men walking!

    By VINAY KANCHAN

    The prologue to an agency review – an agency review is ideally an open minded exercise that is meant to evaluate the performance of the advertising agency over the past year, in as fair and unbiased manner, as is humanly possible. However, since this is about as achievable as having an advertising awards show without at least one self respecting agency deciding to boycott on ‘philosophical‘ grounds, what it‘s very announcement leads to is unmitigated stress, panic and confusion all round.


    “News of an impending review always fuels the need for warm brew.” The hushed oriental accent, the slight flutter of mach speed induced turbulence and Chai-La (the mystical Chinese canteen tea boy) had delivered the customary tea cup and opening barb to Ram Shankar. It was Monday morning and Ram had not yet got his bits and bytes together when Vikas (his boss) beckoned him, in a manner that meant business.


    “Mr Bose has told me this morning that we are going to have an agency review,” started Vikas, adjusting his tie in his reflection in Ram‘s glasses.


    “Do you think the account is in danger?” asked Vikas in a hushed tone.


    “I wouldn‘t know,” began Ram and was cut in mid sentence by PP (the creative director of the exaggerated mustache fame) bursting into Vikas‘s chambers like Ronaldo in the penalty box.


    “Why are we having an agency review man? Are we going to lose the account?” boomed PP in his customary high decibel style, causing weak hearted account executives to instantly sign up for medical insurance policies.


    “Relax PP, its nothing new,” replied Vikas, in his most soothing tone, trying to function for once like the head on the business, but after he remembered that it was the first time that this was happening in five years, his morale fell faster than the credibility of ‘breaking news‘ after the last pest control visit of the BMC had been aired live.


    “This hasn‘t happened with us in a very long time,” echoed Planimus, the media head, in his routinely philosophically platonic tone, “I smell trouble brewing.”


    Almost on cue Dharti, the ravishingly radiant account planner walked in, “Hey the security guard told me that the account was up for review, what‘s happening guys?”


    “Lets just meet in the conference room, we need to figure out a strategy,” suggested Vikas, and for once all the necessary evils were in agreement.


    The scene shifted to the conference room. Vikas, following his perfunctorily servicing impulse of staying on top of things, walked purposefully to the board, marker pen in hand straight from the ‘have whiteboard will scribble‘ school of thought.


    “Let‘s see what we have here,” furiously constructing geometric shapes, like he had a personal vendetta against parabolas (he didn‘t draw any, just in case you assumed).
    He finished with three circles – client, agency and external forces and had somehow managed to link all three with arrows that looked like having directional issues.


    “What does all this mean?” asked an irritated PP. “Why must you complicate simple things? I bet that‘s why the review is happening.”


    “If you had shown more interest in the account after finishing with the film, maybe we wouldn‘t be here, client‘s dislike creative who just do the glamorous jobs.”


    “It‘s not my job to write calendars, I am never good with dates,” retorted PP.


    “Given the numerous angry women waiting in the reception for you daily, for once I would agree,” replied Vikas, relishing the opportunity to kick the old foe in the more delicate, unmentionable parts.


    Before PP could venture into his nuclear explosion, Dharti patted a firm hand on his shoulder, fortified with a smile that spoke waist downwards.


    “Must we be fighting like this? Let‘s try and figure this out,” she purred, instantly sending goose pimples down Ram‘s spine.


    However years of crunching and rounding figures had made Planimus oblivious to the wiles of women, and he still had some ax to grind.


    “Madam, you knocked us all out the last time we discussed strategy, I think the client is still nursing the bump on his head from your last interaction. In my time strategy used to be simple, over and done with in ten minutes.” He finished with a sardonic smile.


    “This isn‘t your time Planimus,” cooed back Dharti, in an interesting tone that bordered between spite and contempt.


    “To lose the war, put four generals together in a room and ask them to arrive at a decision-Old Chinese army saying.” Chai-La popped in and out of Ram‘s subconscious mind, leaving behind the sacred brew nestled in his fingers.


    Ram waited for the mayhem to subside before deciding to make his point. A valuable tip he had picked from Planimus, about advertising when clutter was low for more impact.


    “Could it just be that given the new personnel at the clients end, they want to look at everything in a fair and unbiased manner? You know like bringing a newer perspective to the table so that the communication that we create could actually get better and more focused? Are we making too much of our fear of losing the account?”


    All the participants in the room starred at Ram in rapt silence, like people would have when Moses was reciting the commandments. Then the conference room erupted with laughter.


    “Fair and unbiased,” choked Vikas, as he hung onto PP‘s shoulder for support in a rare ‘Kodak moment of camaraderie‘.


    “Should we be scared of losing the business?” stuttered Planimus as he kept banging the table in an almost tribal ritual.


    Dharti sat composed, dignified and silent through it all.


    Ram felt he had at least one supporter. All the others turned to look at her.


    “Bringing a new perspective so that we can create better communication,” she said and burst out into laughter, further fuelling the mirth factor in the room.


    Ten minutes later all attention was back to the whiteboard, though not strictly at the seismographic visuals Vikas had crafted earlier.


    “We need to figure this one out. You know how the boss panics when he hears these things, we will end up creating 42 campaigns for everything,” mulled Vikas.


    “Why 42?” Dharti queried innocently.


    “That‘s because the boss is a Douglass Adam fan and you know the bit about 42 being the answer to life, the universe and everything. The chief applies it everywhere.”


    “Well I don‘t mind writing a 42 slide presentation,” cooed Dharti.


    “What about the creative trying to churn out 42 campaigns, are we going mad?”


    “Well statistically 42 is an interesting number,” started Planimus and was instantly rebooted by the chilling glares that were shot in his direction.


    “Why don‘t we just call Bose, maybe he will help us,” asked Dharti.


    “After the way I keep taking his case in meetings,” said PP, “I think he is having this because he wants to settle scores with me. I expect to be the target.”


    “Tchah!” interjected Vikas, “He hates it that I‘m not involved on a day to day basis,” not wanting PP to steal the limelight even in such issues.


    “Why don‘t we just call him?” implored Dharti


    “Who should?”
    Furtive glances were exchanged across the room.


    “He hates me.”


    “He is intimidated by me.”


    “I can‘t stand the creep.”


    All eyes rested on Ram Shankar.


    “Call him chief,” chirped Vikas, relieved that the onus of this ‘stress call‘ was off him. “Make it seem natural, start like you were just inquiring when it is.”


    All the others offered encouraging glances by way of support.


    Ram‘s hand was trembling as he began dialing the number, somewhere deep down he felt that he was a bit too junior to be making that call, but Vikas‘s quick fingers zipped across the number pad and the phone was buzzing at the other end before Ram could even think of formulating an escape plan.


    “Mr Bose, I was just calling to inquire when the review meeting would be?” he began in his most earnest voice, all eyes in the room transfixed on him.


    There was silence as Bose‘s voice cackled its usual cacophonic tone for a bit. Ram put down the phone, his hand still shaking. “He says it was just a misunderstanding. The Chairman had told his assistant, ‘Get the agency to Hotel Sea-View to meet me.‘ That fellow apparently has a hearing problem and so he spread the word about the agency review.”


    “I knew it!”


    “How can they dislike our work?”


    “Or our planning.”


    “Or strategy.”


    And before he knew it the other four had cleared the room and zipped off for a lavish lunch, the voucher of which Ram would have to clear later (with much explaining).


    “Tale of the review woe is useful to keep agency on toe,” the ancient Chinese rhyme (for better or verse), the express delivery of the tea cup and Chai-La had vanished into one of the circles on the whiteboard.


     


    After stints at Lowe, Mudra and Everest the author is now with Triton as Associate Vice President Brand Services. In addition to that he is also patron saint of Juhu Beach United – a movement that celebrates obesity and the unfit ‘out of breath‘ media professional of today. To join up contact vinaykanchan@hotmail.com


    (The views expressed here are those of the author and Indiantelevision.com need not necessarily subscribe to the same)

  • Patricia Field tells CNN’s ‘Talk Asia’ what the devil wears

    Patricia Field tells CNN’s ‘Talk Asia’ what the devil wears

    Airtimes: Indian Standard Times

    Saturday, May 6 at 0500am and 2030hrs

    Sunday, May 7 at 0600am and 1830hrs

    This weekend on CNN’s TALK ASIA, American designer Patricia Field shares with Lorraine Hahn on what it’s like to style for the trend-setting series “Sex and the City.” She also talks about her 40th anniversary in the fashion business, how fashion “doesn’t cost a dime” and offers simple tips for the everyday wear.

    Loud but chic, Field’s early designs had wide appeal and her reputation for “fashion forward” made her popular among celebrities and fashionistas. Style is “a unique way of appearing to the rest of the world. It’s something to do with originality and synonymous with signature…that belongs to an individual person”, the designer explains.

    The popularity of television series, “Sex and the City,” also projected Field onto the international stage. “We were like “Oh, my God! Oh, my God! This is unbelievable!” she recalls of the series’ success. The stylist adds, “Sex and the City empowered or helped women feel their power. I want all the women to be powerful and whatever I could do to push that. I’m happy.”

    Tune into TALK ASIA for the latest update on Field, including her work on the upcoming film release of “The Devil Wears Prada” and other big screen projects. The designer also offers fashion tips for those rich and famous, as well as those on a shoe-string budget.

    AIRTIMES ARE SUBJECT TO CHANGE

    For more program information and details on upcoming guests on TALK ASIA visit

    http://edition.cnn.com/ASIA/talkasia/

  • Mega block buster ‘Hum Tum’ to be aired on Max

    Mega block buster ‘Hum Tum’ to be aired on Max

    Sunday, 07th May 2006 at 1: 00 pm, Only on MAX!

    Continuing with its promise of making Sundays bigger MAX is all set to treat its viewers by bringing them HUM TIUM to air on Sunday, 07th MAY 2006 at 1.00 pm.

    Karan Kapoor (Saif Ali Khan) works with one of India’s leading newspapers as a cartoonist. Hum Tum are his cartoon characters. Hum Tum because that’s how he sees the world divided. No countries, no religions, just two divisions – boys and girls. Karan met Rhea (Rani Mukerjee) for the first time in Amsterdam. They disagreed on everything. So to put things right, Karan innocently kissed her… to confirm their friendship. But things went worse with the unstable Rhea and the meeting ended on a bad note.

    It’s been 10 years since their first encounter and they meet again and become friends despite their differences. Rhea has gone through some personal tragedies in her life, lots of ups and downs but Karan has always been there for her. During this time, she has moved all over the place, from Mumbai to Paris to New York and back to Mumbai. But despite their mishaps, destiny has bigger plans for Karan and Rhea.

    For further information please contact:
    MAX
    Bhharati Kabre
    Email: bhartia@setindia.com

    Genesis Public Relations
    Princy Sebastian/ Preeti Hingorani
    Tel: 91-22-24911783/85
    Fax: 91-22- 24911788
    E-mail: psebastian@genesispr.com
    phingorani@genesispr.com
     
  • Disney completes Pixar acquisition

    Disney completes Pixar acquisition

    MUMBAI: Advancing its strategy of developing outstanding creative content, The Walt Disney Company president and CEO Robert A. Iger announced today that Disney has completed its acquisition of animation company Pixar. In the all-stock transaction, 2.3 Disney shares will be issued for each Pixar share.

    Former Pixar president Dr. Ed Catmull will serve as president of the new Pixar and Disney animation studios, reporting to Iger and The Walt Disney Studios chairman Dick Cook.

    In addition, former Pixar executive vice president John Lasseter, will be chief creative officer of the animation studios, as well as principal creative advisor at Walt Disney Imagineering, where he will provide his expertise in the design of new attractions for Disney theme parks around the world. Lasseter will report directly to Iger.

    Former Pixar chairman and CEO Steve Jobs has joined Disney’s board of directors as a non-independent member. With the addition of Jobs, 11 of Disney’s 14 Directors are independent.

    “For the last 15 years, Disney and Pixar have shared one of the most successful partnerships in entertainment history. From Toy Story through The Incredibles, the success of these animated films was due to the creativity, innovation and immense talent of the phenomenal Pixar team, led by Steve, Ed and John. We also fully recognize that Pixar’s extraordinary record of achievement is in large measure due to its vibrant creative culture, which is something we respect and admire and are committed to supporting and fostering in every way possible. As we begin the next chapter, all of us at Disney are pleased to welcome the incredibly talented Pixar team to our company to continue to create quality entertainment for audiences to enjoy around the world,” said Iger.

  • AOL signs deal with Clearwire for broadband

    AOL signs deal with Clearwire for broadband

    MUMBAI: American Internet service provider AOL and Clearwire Corporation announced an agreement to offer American consumers in select markets “AOL High Speed – Powered by Clearwire.”

    Consumers will now be able to access the AOL service with high-speed wireless broadband access for $25.90 per month.

    AOL president access business Joe Redling says, “Clearwire’s wireless high-speed service brings a differentiated offering to AOL members moving to broadband. This innovative approach to broadband access offers consumers additional levels of freedom and flexibility in how and where they experience AOL’s content and services – and stands to be a promising feature for new consumer segments.”

    Clearwire’s co-president and chief strategy officer Ben Wolff says, “This truly complementary relationship offers customers access to AOL’s premium safety and security features and content with a simple, fast wireless connection.

    “Clearwire’s reliable wireless broadband service combined with AOL’s wide array of content and services, presents an appealing option for online users to leverage the power of the Internet.”

    Key features of the AOL High Speed powered by Clearwire include:

    – Wireless High Speed: In addition to high speed, wireless access offers mobility, freedom and flexibility.

    – Fast and Easy Setup: Plug-and-play installation makes establishing a wireless Internet connection quick and easy.

    – Customer Service: Help that’s available 24/7, including help via phone, e-mail or instant message.

    – Safety: A comprehensive set of safety and security tools available to keep users safer against viruses, spyware, identity theft, and other online threats for no additional charge.

    – Content: AOL-exclusive and original programming including commercial free radio, streaming video and music are all more enjoyable than ever.

    – Storage: Additional benefits like unlimited email and picture storage on AOL.

    This service connects to the Internet using licensed spectrum and eliminates the confines of traditional cable or phone wiring. A small wireless modem makes connectivity easily portable and movable within the Clearwire coverage area, allowing customers to use the service throughout their home, office or favourite local coffee house.

  • CNN to examine sleep and dreams

    CNN to examine sleep and dreams

    MUMBAI: News channel CNN delves deep into the realm of sleep and dreams this month. The documentary CNN Presents Sleep airs on 13 May at 11 30 am and 7 30 pm and on 14 May at 11 30 am. The programme will be hosted by CNN’s senior medical correspondent, Dr. Sanjay Gupta.

    Sleep reveals what sleep deprivation can do and its links to accidents. Dr. Gupta then explores various sleep disorders including ‘Parasomnia’, a condition where the mind is asleep but the body continues to move.

    Using the latest scientific techniques, Sleep sees researchers debate whether dreams are random or if they pose any significant influence on waking life. Dr. Gupta examines the meaning of dreams in past and present cultures.

  • Intel and NDS to collaborate on protected WiMax-based TV multicast

    Intel and NDS to collaborate on protected WiMax-based TV multicast

    MUMBAI: Intel Corporation and NDS Group plc., have announced a trial system to demonstrate the TV and video services for fixed WiMax technology.

    Using the WiMax IEEE 802.16-2004 standard and the soon to be ratified IEEE 802.16e, Intel and NDS will also collaborate on industry and market development activities. The companies will engage in demonstrations to service providers and the industry to show how WiMax can offer more than broadband access with pay-TV services.

    The pre-WiMax implementation takes place at Intel’s Wireless Competence Center in Kista, Sweden and demonstrates the first system to show WiMax TV services including live TV, VOD and integrated electronic program guide (EPG) delivery to an Intel Centrino mobile technology based notebook over 802.16-2004 and 802.11.

    The current demonstration uses fixed pre-WiMax equipment to deliver content to the customer premises equipment (CPE) and then WiFi to send content to the notebook. Companies intend to enhance the system to support 802.16e standard in the future and to make sure that security requirements protect the interests of content providers in an aim to demonstrate pay TV services delivery over mobile WiMax to Intel based PDA and notebook devices.

    NDS VideoGuard conditional access protects the business and content of the service provider and:-

    >Prevents the valuable TV channel offering from being received by subscribers who have not paid for it.

    >Protects content delivery efficiently using content entitlements, authorizations and tier packaging.

    >Enables content purchasing scenarios (e.g. Pay-Per-View)
    >Supports Video-On-Demand by enabling secure content purchasing, protecting content delivery sessions, and enabling content business scenarios like DRM.

    Intel Wireless Competence Center director Anders Huge said, “Demonstrating multicast TV to notebook computers articulates the way forward for mobile computing – extending the range of services offered by WiMAX to include broadband internet access, VOIP and video. Intel Centrino mobile technology based notebooks are great entertainment devices and offer consumers the ability to take their home entertainment experience on the go.”

    NDS vice president product marketing Yossi Deutsch added, “We are happy to work with a major force behind WiMax technology and getting a clear message out that it is not only about broadband access but rather a full range of lucrative services, enhancing the very model behind WiMax future deployments.”

  • Bertelsmann reports strong growth in first-quarter revenues

    Bertelsmann reports strong growth in first-quarter revenues

    MUMBAI: International media company Bertelsmann recorded considerable growth in its revenue and operating results for the first quarter of 2006.

    Consolidated revenues rose by 17.3 per cent to €4.5 billion, versus €3.8 billion in the first three months of 2005. Bertelsmann achieved growth both in its European core markets and in the US.

    An essential contributor to this positive performance were the acquisitions made in 2005, which were not yet consolidated in the first quarter of 2005. Adjusted for portfolio and currency effects, revenue was up by 4.5 per cent. Operating EBIT grew by 35.2 per cent to €215 million (2005: €159 million), an increase that is attributable to positive business performance in the divisions. Bertelsmann confirms its forecast of a significant year-on-year improvement in revenue and result for fiscal year 2006.

    Bertelsmann’s CFO Thomas Rabe said, “Bertelsmann got off to an excellent start this year. The record first-quarter results continue the positive business development of 2005. Building on this strong foundation, Bertelsmann is well-equipped to meet the challenges of the future. We will pursue outside opportunities and continue to rely on healthy core businesses, systematic acquisitions and expansion to new markets.”

    Net income nearly doubled year on year, reaching €90 million after €48 million in the first quarter of 2005. Investments during the first quarter of 2006 amounted to €309 million (2005: €200 million). Economic debt at 31 March 2006 was €3.9 billion as expected (31 December 2005: €3.9 billion). The number of employees increased to 89,409 (31 December 2005: 88,516).

  • BSkyB to share EPL TV rights with Setanta; total bids hit ? 1.7 billion













    MUMBAI: A move that was forced by a tough European competition commissioner has ultimately yielded a veritable bonanza for Britain‘s top soccer clubs. And broken the monopoly Rupert Murdock‘s DTH operator BSkyB enjoyed over English Premier Leagus (EPL), home to such clubs as Chelsea, Manchester United, Arsenal and Liverpool.

     

    BSkyB has won the telecast rights to four of the six EPL packaged that were up for grabs for three years starting from 2007. But it has had to cough up a staggering ? 1.314 billion for the privelege. The six broadcast packages generated ? 1.706 billion ($3.16 billion) in total, with Irish pay-TV operator Setanta‘s ? 392 million bid winning it the rights to the two remaining packages. The bidding was for 138 games in all.


    BSkyB will be paying nearly twice as much per game (?4.8 million as against ?2.5 million) and losing the 14-year stranglehold it has had on top flight soccer in the UK in the bargain.

     

    The upside for Sky is that it has been able to cherry pick the best four of the six packages on offer. It has won the coveted “A” package of matches, which are played late on Sunday afternoons. It also has the rights for early afternoon Saturday and Sunday matches, as well as a group to be played midweek and on bank holidays. Additionally, with Setanta a broadcaster that is already available on its platform, it will still be able to offer its subscribers the “total football” promise that has been the underpinning of its success.


    As far as Britain‘s soccer bosses are concerned, there is more to come from its EPL property since the rights it has auctioned were for just the UK territory. According to media reports, the sale of remaining rights – overseas, near-live, highlights, mobile – could swell the final figure to as high as ? 2.5 billion.


    The biggest loser from all this, however, could well be the viewer, which would negate the logic that was behind the European competition commissioner‘s insistence that the Premier League end Sky‘s monopoly on live television rights in the first place – introduce more choice for viewers. The ?1.7 billion tab that Sky and Setanta have toted up between them will ultimately mean that fans will ultimately pay more to watch matches in the UK.

    Also Read:
    Sky bags English Premier League rights

  • Sun TV to bank on pay revenues and radio biz for growth

    Since Kalanithi Maran started his media business 13 years back, he has been fighting against one rival: himself. Now, after years of staying almost unchallenged in the southern region, he is setting himself up for battle in newer markets.

    He has an expanded war chest of Rs 6.03 billion which he raised through an initial public offering (IPO) of Sun TV Ltd (STL) to pledge his new bet on private FM broadcasting. Also in the pipeline is a direct-to-home (DTH) service through Sun Direct TV, a privately held company.

    Holding 90 per cent stake in STL, Maran is worth Rs 78.28 billion. And the market cap of STL has hit Rs 86.98 billion in a brief span of two weeks, enjoying a 44 per cent premium over its IPO price. In media business, only Subhash Chandra‘s Zee Telefilms has a higher market cap with Rs 110.9 billion.

    Indiantelevision.com takes a close look at the ambitious plans Maran has to grow his media empire and the challenges that lie ahead of him as he heads a listed company.

    Concern for topline growth

    At question is Maran‘s ability to counter slow growth from his traditional revenue lines – advertising sales and broadcast fees. To squeeze more out of matured channels who enjoy a very high level of audience share can turn out to be a challenging task.

    Ad revenues have stayed flat for two years, sitting at Rs 1.55 billion in FY04 and Rs 1.56 billion in FY05. Broadcast fee (time slots that Sun sells to content producers on its channels) has also seen small change, going up from Rs 458 million to Rs 495 million during this period.

    Maran has attacked this somewhat in FY06. Advertising income was up 24.7 per cent to Rs 889 million in the first half of the fiscal, as against Rs 713 million a year ago. This was the period when Sun‘s combined audience share for all its Tamil channels (Sun TV, Sun News, KTV and Sun Music) went up from 60 per cent in FY05 to 70 per cent in the first half of FY06. In Kerala, the company‘s aggregate audience from its Malayalam channels (Surya TV and Kiran TV) rose from 29 per cent to 34 per cent during this period.

    The growth could escalate for the year-period (Sun has not yet announced its FY06 results), fuelled by a rate increase for Sun TV channel by seven per cent in September 2005. This is the first rate hike the channel has come up with in the last three years.

    Analysts also expect Surya TV to put up a better show in FY06, estimating its revenues to touch Rs 450 million. The Malayalam channel, facing stiff competition from Asianet, was raking in close to Rs 300 million. Other channels like KTV have also the potential to stimulate marginal growth.

    But several content producers and marketing agents associated with Sun network feel the potential to exploit more ad revenues from existing channels is limited. “With such a dominating viewership, Sun has been commercially exploiting its slots to the optimum. There is very little scope to raise ad or auction slot rates. This is particularly true of Sun TV, the Tamil flagship channel. And in case of Surya TV, the main Malayalam channel, Maran has to take into consideration the presence of Asianet as a strong competitor,” they say on request of anonymity.

    For speeding the growth engine, Maran has a multi-pronged strategy. In the short run, he expects pay-TV revenues to climb significantly once he takes flagship channels Sun TV and Surya TV pay. And in the medium-term period, the radio operations should be able to generate substantial cash flows to drive the company‘s topline growth. Also adding to the kitty will be the three yet-to-be launched channels and rise in international revenues with new alliances in overseas markets.

    “A master tactician, Maran has protected himself adequately from any slowdown in growth. Topline growth can see faster growth if Sun gets into movie production as well. Pay revenues will also fatten Sun‘s profitability,” an analyst in a leading equity firm says.

    A drag on the company‘s profitability, Maran has hived off his cable distribution business ahead of the IPO. Kal Cable, which operates under the SCV brand, was separated from 1 April 2005. In FY2005, SCV‘s revenues stood at Rs 156 million while costs were at Rs 301 million. The FY06 results will, thus, exclude the financial performance of Kal Cable.

    A result of this: net profit has surged to Rs 614 million in the first half of FY06, up from Rs 322 million a year ago. Rich profits have always been the strength of STL. On a turnover of Rs 2.9 billion for FY05, net profit stood at Rs 778 million. In fact, net profit as a percentage of total income has averaged 27.6 per cent over the past five financial years.

    “STL, the dominant broadcaster in the South Indian languages of Tamil and Malayalam, enjoys a phenomenal net profit. With a slot auction model for the main channels, programming expenses are in any case low,” says an analyst at a brokering firm.

    So how do the revenues pile up? Several estimates by analysts are available, ranging from Rs 7.5 billion to Rs 8.4 billion by FY08. Conservative estimates put it at a little over Rs 6 billion. Net income is also estimated to jump to over Rs three billion in FY08.

    A lot of these projections, however, will depend on how much growth takes place from pay-TV revenues and on the success of Maran‘s FM radio expansion.

    Sun to ramp up pay revenues

    Keeping flagship channels Sun TV and Surya TV free-to-air, STL has clocked pay-TV revenues well below its potential. In FY05, it stood at Rs 398 million, up from Rs 325 million a year ago.

    Maran wants to change all this by turning Sun TV and Surya TV into pay channels. Currently, it has three pay channels – KTV, Sun News and Sun Music. But in Chennai which is a conditional access system (CAS) market where consumers can view pay channels through a set-top box (STB), all these pay channels are free-to-air.

    Sun is yet to ramp up its pay-TV revenues. Analysts estimate revenues from pay-TV to go up progressively from Rs 500 million in FY06 to Rs 1.1 billion in FY07 and Rs 1.7 billion in FY08. This calculation is based on Sun TV going pay in the middle of this year and Surya TV converting from the free-to-air mode later in the year.

    “There is going to be a definite and substantial upside for Sun TV Ltd‘s pay revenues. Sun can scale up its pay-TV revenues by converting flagship and new niche channels to pay mode. The number of cable households, paying subscribers and pay channel rates are also expected to go up,” an analyst says.

    Sun TV, which is expected to be priced at Rs 15-20, is expected to ramp up STL‘s current 2.8 million paying subscriber base. Taking Surya TV pay, however, will be a difficult task if Asianet decides to stay free-to-air.

    STL‘s pay revenues will also come from its content contracts with direct-to-home (DTH) operators. Revenue from DTH consumers is estimated at Rs 260 million, putting the company‘s subscription revenues in the neighbourhood of Rs two billion by FY08 at the optimum level.

     

    Radio to tune in growth

    FM radio will be Maran‘s first media vehicle to have a national footprint, taking him outside the southern language market. He will operate 46 stations across the country through Sun TV Ltd‘s two subsidiaries, Kal Radio and South Asia FM.

    The investment required: over Rs 3.3 billion. Kal and South Asia FM will, in fact, require an approximate of Rs 1.83 billion towards acquisition of broadcasting equipement (FM transmitters, FM antennas, payment of common infrastructure), setting up of local offices and radio studios.

    But Maran realises this is where his big leap in revenues for Sun TV Ltd will come from. Though profitable, the revenues from the four operating stations are small. In Tirunelveli, for instance, Sun earned revenues of Rs 28 million in FY05 and Rs 13 million in the first half of FY06. And in Coimbatore, the income stood at Rs 56 million and Rs 32 million during this period.

    Some analysts, however, expect radio operations to contribute to 20 per cent of Sun‘s total revenues by FY08, compared to around five per cent in FY05. Sun‘s radio revenues are expected to leapfrog from Rs 147 million in FY05 to Rs 1.97 billion in FY08. In the southern language markets, Sun has the advantage of dominating ownership of movie rights which it can leverage for its radio business. But it remains to be seen how successful he can be in new markets outside the southern region.

    The structure that Maran has outlined for FM radio looks somewhat like this: Kal Radio (where Sun TV owns 89 per cent) will operate in the southern language states, while South Asia FM (Sun has 94.91 per cent equity) will take up stations beyond the Southern markets.

    Maran has not bid in Delhi, Mumbai and Kolkata, leading to speculation in the market that he may have some understanding with Astro (Sun has a JV with Astro for launching language channels). These are the cities where Red FM, which was acquired by a consortium of NDTV, Value Labs and Astro from Living Media Group‘s Radio Today, operates. But no official confirmation is available on this and it may be a matter of pure coincidence.

    Maran‘s plan is to consolidate the radio assets. The existing licenses of the four operational radio stations are, thus, being transferred to Kal Radio. While Suryan FM has licenses and operates in Chennai, Coimbatore and Tirunelveli. Udaya TV Pvt Ltd. runs Vishaka FM in Visakhapatnam.

    Analysts say Sun‘s design to operate the FM radio business through subsidiaries is to separate radio from other segment revenues for licence fee computation (4 per cent of gross revenues). Besides, Sun will have the flexibility to rope in a joint venture partner.

    Sun‘s ownership of rights of a vast number of films in various South Indian languages will provide it with a unique advantage to grow its radio revenues and earnings strongly over the next few years.

    Flexing muscles for cable distribution in South India

    Maran may be the king of content but he realises the importance of having distribution in his winning mix. Which is why he wanted to acquire Indian Cable Net (formerly RPG Netcom), the largest multi-system operator (MSO) in Kolkata, ahead of launching Bengali channel Surjo.

    Maran was so confident of the deal sailing through that in an earlier interview with Indiantelevision.com he admitted he was “on the verge of closing it.” But, as events rolled out, Subhash Chandra beat him to it and Siticable snapped up Indian Cable Net. Surjo‘s launch was shelved and the media king of the south is yet to gat a foothold into the northern market.

    No major investments have been made into the cable business for over a year. Maran did try to expand GCV‘s presence in Hyderabad but without much success. He even explored talks with Siticable to work together in that market but nothing conclusive came up. Sources say Siticable, which doesn‘t have signals from Star and Sony, is finalising plans on how to revive its network independently as it has lost market share in the city to Hathway Cable & Datacom. Maran will, thus, have to come out with a different formula even as he nurses ambitions to spread GCV‘s tentacles across Andhra Pradesh.

    In Tamil Nadu, the story is entirely different. SCV dominates cable TV operations, so much so that chief minister Jayalalitha introduced legislation in the state assembly that would allow the state to acquire and take over bigger cable TV networks in Tamil Nadu, including MSOs and optical transport systems. Though controversial, a lot of how things shape up will depend on who wins the assembly elections.

    Control of the distribution chain has put Maran in a unique position in Chennai, a conditional access system (CAS) market. The low offtake of set-top boxes (STBs) has meant that CAS has more or less been killed in this market. Sun has indirectly benefited by the virtual blackout of all the English-language channels like Star World, Star Movies and HBO. Hindi channels, in any case, did not have much of viewing in this southern-language market.

    “All the other channels have lost their business models here. Sun with its strong language content channels have become more powerful in this market,” the head of a large broadcasting company says.

    In a corporate restructuring, Sun has terminated its cable TV distribution agreement with Kal Cable from 1 April 2005. The reason: cable was losing money. “Unlike MSOs operating in the Hindi belt, SCV will have very less carriage fee. For digital to get a push, Sun TV has to go pay in the Chennai market,” says an analyst.

    Gearing up for DTH

    It is a slice of the business many players are keen to lay their hands on. In India, it doesn‘t matter if you run cable TV or IPTV operations. DTH promises to bring about addressability and better quality of service in a distribution chain that has been dominated by an unorganised cable TV industry.

    Maran hopes to kickstart DTH operations this year even as Insat 4C launches in July. Having booked space on the satellite, he is negotiating with the Indian Space Research Organisation (Isro) for eight Ku-band transponders. Initially, he had asked for five transponders on the satellite which could later be ramped up to nine.

    Sun Direct will join the race after Tata Sky launches its service. Already in existence are Dish TV and Doordarshan‘s DD Direct Plus, which offers subscribers free-to-air (FTA) channels. Soon to follow will be Anil Ambani‘s Blue Magic service, which has also booked space for its own DTH plans.

    So how will Maran stand out in this crowded market? He may come out with a specific south language package, keeping the pricing low. Along with this basic bundle, he can add sports and the other language channels to consumers who want more. Tata Sky and Dish TV as national players will find it difficult to compete in a target-specific market. Even if they match the pricing, they may not be in a position to offer all the south channels due to lack of transponder space.

    For broadening the menu to South Indian audiences, Maran will have to create more niche channels. Also necessary is to have Sun TV and Surya TV as pay channels by then. For those subscribers he fails to tap in DTH, he will try to retain through his cable network. But whatever DTH plans he has, no information is coming out from the company.

    Finding favour in the stock market

    Some analysts feel STL is an expensive buy with the stock price quoting at around Rs 1260 per share. But there are several indicators one should consider before taking a final view.

    a) There is a scarcity premium on the stock. With Maran offloading just 10 per cent stake, there is a chase among buyers.

    b) Sun enjoys a clear leadership position and there is no credible competitor emerging to challenge this status. Asianet is a strong contender but only in the Malayalam market. Maran is adequately protected with his breadth of channels. He has also developed extensive programming assets and holds rights for 2,650 movies (60 per cent are Tamils and 40 per cent Malayalam). He is in an ideal position to exploit content across all platforms including DTH.

    c) There is a growth trajectory in radio and pay-TV business. The success in these two areas is crucial to STL‘s future earnings and valuations.

    d) Profitability is the most attractive element in Maran‘s business and this is likely to continue

    e) Launch of kids and documentary channels will further add to STL‘s topline growth. Maran is in talks with Hungama TV for partnership in the kids space. While he will take care of the distribution infrastructure, the programming and other support for the southern version of the channel with initial focus in Tamil language will be handled by Hungama TV.

    f) Maran can also create a slew of channels for DTH which will allow him to increase bandwidth.

    g) These fresh investments run the risk of facing failure in the marketplace. But investors are currently betting on Sun more for its strategic than growth value.

    h) Maran has the flexibility to do a private placement and get in a strategic investor. The Foreign Investment Promotion Board (FIPB), in fact, has formally cleared STL‘s application for issue of preferential allotment of shares to foreign investors. No allotment has been made so far.

    i) Sun can also expand internationally through a $25 million joint venture agreement with Malaysia‘s Astro All Asia Network. The JV plans to collaborate in content creation for filmed and other entertainment products in Indian languages including Tamil, Telugu, Kannada, Malayalam, Hindi and Bengali for distribution to international markets.

    j) The market expects Maran to merge Gemini and Udaya at some stage with STL. But these are speculations and could prove to be wrong. Incidentally, Maran consolidated his ownership position by buying out entire stakes of Sharad Kumar and Dayalu Ammal (wife of DMK president M Karunanidhi). In Gemini and Udaya, he still has minor partners.

    k) When actor-cum-politician Sarath Kumar quit DMK to join AIADMK, speculation was rife that wife Radhika would walk her production house Radaan Mediaworks out of Sun TV. Since Radaan is the leading producer for Sun network with popular shows like Chithi and currently Chelvi, this would have an impact on STL. Nothing has happened so far and Radaan has not started making shows for Jaya TV. If it does, then it can‘t make content for Sun as Maran has a policy that disllows production houses from making shows for rival broadcasters. Will that be a severe blow for Sun? Analysts feel broadcast platforms have far higher long term strengths than production houses, particularly when competing channels are so far behind.

    Sun’s IPO may set the trend in the South

    Sun‘s IPO may have a ripple effect in the southern region, inspiring several broadcasting companies to tap the market.

    A strong case in point could be Asianet, though it has not expressed its intent to get listed so far. But Hyderabad-based Maa TV, which has been struggling to raise funds, is considering taking this route. Even Raj TV is closely observing the market trend.

    “We realise we have to add up channels so that we grow to some size. For our expansion, we require funds. We have been trying to raise private equity but have failed. We may plan for an IPO,” says a senior company executive.

    South-based listed companies like Radaan, Telephoto Entertainment and Pentamedia have actually spoilt the market with their poor financial performance after the IPO. A healthy company like Sun can open up the capital market for other players to step in.

    The problem is that companies of the size of Maa TV may not attract investor confidence unless they work out better business models. And those like Raj TV may not want to change the way they run their closely held business.

    But a transition in culture may well be on the way. Media organisations will have to keep pace with the changing times if they have to grow and flourish.