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Tag: Ashwin Pinto

  • “I, nor my co-promoters, are wanting to exit KXIP”: Kings XI Punjab co-owner Mohit Burman

    “I, nor my co-promoters, are wanting to exit KXIP”: Kings XI Punjab co-owner Mohit Burman

     For Kings XI Punjab last year came to a good end with its dispute with the BCCI being amicably resolved. This means that it will finally break even this year according to Kings XI Punjab co-owner Mohit Burman. Next year is when it will start making profits.??Burman is also adamant about the fact that none of the co-owners are looking to exit. While the franchise will have sponsorship growth of 30 per cent there is still room for improvement says Burman given that the base is small. Indiantelevision.com’s Ashwin Pinto caught up with Burman to find out more about where the franchise is at and about the company’s plans.

     

    Excerpts:

     

    Q. What targets has Kings XI Punjab set for itself this year?

    A. We will break even this year. Next year is when we will start making profits. The legal cost, bank guarantee cost are not there this year. We will get more from central revenue.

     

    Q. Now that the issues have been resolved I assume that the co-owners are free to exit. Are you looking to do that?

    A. No! None of the co-owners are looking at selling a stake or exiting the team. I am not a seller at any price. In the past, too, there have been rumours of stake sale which turned out to be untrue.

     

    Q. What would be the valuation of an IPL franchise today?

    A. It is difficult to provide figures. However, a sort of benchmark has been set with the new franchisee Hyderabad Sunrisers.

     

    Q. Given that Sun TV is paying much more than what the Deccan Chronicle did, isn’t it surprising that stake sale deals have not happened?

    A. A lot of people say that a franchise’s valuation has gone down a lot from what Sahara had paid. I am not surprised that other deals have not been done. I don’t think that there are that many people in the market willing to pay these types of prices.For people who came in at the start, the Central pool revenue covered them even if local revenue took time to grow. That has not been the case for people who came in afterwards. You don’t get so much from Central revenue compared to what Sun TV is paying.

     

    ‘They (BCCI) should work more closely with franchises though. The franchises’ health is not always on the top of their agenda’

     

    Q. How do you see Sun TV faring?

    A. I don’t think that they will break even for at least three to four years. But I don’t think that they are expecting to. We are breaking even after six years. No business model allows you to break even so soon. Sun TV would have calculated their business model with a five to a 10 year vision.

     

    Q. Are there lessons to be learnt from Kochi’s failure?

    A. I don’t think that there are lessons to be learnt. When Kochi bought the team I told those guys that they would lose Rs 1 billion a year. If you project revenues that are not possible what is the lesson? It is a simple business model. Your franchise fee and player costs are fixed more or less. Your central revenue is fixed. The money you can make from ticket sales and local sponsorship can be calculated. It is not difficult to figure things out. Having done all that if you are still going to pay so much money ($333 million) you are not going to survive. It is not rocket science.

     

    Q. Is it fair to say that at one point a bubble was created?

    A. I would not say that. I would say that the people who originally came in paid sensible prices. But because of the hype that was built up the two new teams that came in – Sahara and Kochi paid prices that were unsustainable. Clearly the third new party that has just entered – Sun TV has come in at a more realistic price.

     

    Q. Does the BCCI need to work more closely with franchises and understand their needs so that they are more economically viable?

    A. The BCCI has done sponsorship deals at a higher price this year. Pepsi has come in as has Vodafone. The idea is that the BCCI is also trying to bring value for all the teams.

    They should work more closely with franchises though. The franchises’ health is not always on the top of their agenda but the BCCI also has the onus of doing a successful tournament.

    Obviously their premier objective is to make profits for themselves. We come a little bit below. I don’t think that it is understandable but it isn’t surprising.

     

    Q. Keeping costs under control is paramount in this regard. How do you do this?

    A. We are into the sixth season of the IPL and have an experienced management in place. The good thing is that we know how things work and what is required. We use our funds judiciously and in keeping with the standards that we have set for ourselves.

     

    Q. Could you shed light on the preparation that goes before the season starts?

    A. When it comes to preparing for an IPL season all activities related to aspects such as sales and marketing, ticketing, venue operations, cricket operations, branding etc start approximately five months in advance of the due date of the start of the season. The IPL is a five-month activity of planning for us. What you see during the 45 day season is the culmination of a lot of effort. The sales and marketing part includes sponsorship sales, associations and partnerships, ticketing plans, licensing and merchandising. Other aspects include creatives, photo shoots, the social media, website and app plans.

    In terms of venue operations we have to look at things like security, government licensing, hospitality, and stadium upkeep. From a logistics point of view one of this involves getting the best hotel and airline deals. We also prepare the season matrix.

     

    Q. From a cost control point of view are you in favour of player retention and the current auction cap?

    A. There are operational and player expenses. I think that the player costs are much higher than what they should be. I think that it should be a closed auction as then it would be fair to everyone. If it is a closed auction then the cap does not matter. In terms of player retention, if you are inviting new franchises then allowing player retention is not fair. At the same time as an existing franchise I want a certain amount of retention as teams to an extent are identified by key players. I would not want a completely new team next year. It is a catch 22 situation. But after the Sunrisers no new team will come in. So player retention is fine as nobody is at a disadvantage. If each team is allowed a few players it is not a problem.

     

    Q. Doesn’t player retention raise your costs substantially? 

    A. But the player cost will also go up through open bidding. If you want to get a certain player back you might pay more compared to having done it through retention. This is a call that you have to make.

     

    Q. This brings me to the issue that teams change frequently. Again next season the composition of all the teams will mostly change. Doesn‘t this create a challenge in terms of building team loyalty as there will again be confusion next year among fans as to who is playing for which franchise?

    A. In my opinion, cricket is a team game and is not led by an individual. Therefore, fans have greater loyalty towards the team then an individual player. However, players do have their own fan following but if a franchise has established connect with its fans then player movement does not make a significant impact.We shall take a call on team composition post the culmination of the coming season.

     

    Q. What is the revenue split between central and local?

    A. I would say that is 65:35 in favour of central revenue. Central will always be more. The amount that the BCCI can negotiate from central sponsors will be more than what we can do from selling inventory on our shirt and other things.

     

    Q. How has Kings XI Punjab fared in terms of sponsorship?

    A. We were targeting a 30 per cent revenue growth in terms of sponsorship this year. But the base is low. So there is a lot of room for improvement which will happen next year now that the uncertainly about whether we will take part in the IPL is not there.

    Having said that Mumbai, Delhi will always get more sponsorship revenue. Shah Rukh Khan’s team will also get more. We are a small catchment area. Also, due to factors beyond our control, like termination, companies were a little scared that we might not play. Now we are on a clear wicket. Next year we will get better amounts from sponsors.

     

    Q. How much of your local revenue comes from sponsorship?

    A. Almost 65 per cent of our local revenue comes from sponsorship. We got eight new partners this year in addition to the six existing partners which have renewed sponsorship deals.

    This year NVD Solar is the title sponsor. The other companies with us include Lux Cozi is Official Comfort Partner, ACC, Arise Inverters and Batteries, Raindrops Basmati, USL and McDowell’s no. 1 as Official Team Partners.

     

    Q. Did you approach sponsorship in a different manner this time around?

    A. We were not happy with the revenues we managed last year. We felt that there was scope for improvement. So we dealt directly with sponsors this year rather than going through agencies. We created a team that approached companies, which made a big difference. Half of the deals done were managed by directly talking to them.

     

    Q. Did it take a lot of convincing given the economic environment to get partners on board?

    A. Some deals took three weeks to close this year while others took a couple of months. Some deals are for a year while others are for three years.

    At the end of the day it is a question of sitting down with clients and understanding their business objectives. We have to match their objectives with our marketing parameters. We see if there is synergy in what we are doing and if a tie up is mutually beneficial. Different companies have different goals some want visibility, others want activation while some want to use our platform for better fan engagement.

     

    Q. Could you give me an example of this?

    A. NVD Solar came on-board as title partner since it is expanding its operations to North India. They are launching products using the franchises players as a platform. On the other hand, Lux Cozi does activation with their wholesale and retail people. They run gratification contests where people can see matches.

     

    Q. Have you approached ticketing and hospitality in a different way this time around? 

    A. We have set a benchmark for the services we offer at the stadium and very closely monitor feedback on ‘customer experience’ to try and make it even better every year.

     

    Q. The licensing and merchandising part has been slow for most franchises. How does Kings XI Punjab plan to grow this area with Miroma Entertainment?

    A. Licensing and merchandising (L&M) is an integral part of our campaign as it is a valuable tool to reach out and connect with our fans. To give our fans a chance to adorn their favourite team‘s merchandise, we ensure that we offer them a variety of merchandise and licensed goods. We have a good long-term deal with our L&M partner and are on the right path. From the revenue perspective too there shall be an increase in returns from our L&M programme.

     

    Q. What things do you do to keep the franchise alive during the off season?

    A. We have undertaken a number of activities in the catchment area with the intent to strengthen our bond with our fans and these have been very well received.

     

    We had organised The Kings XI Punjab Cup in the catchment area, which like every year saw huge participation and was a platform to promote cricketing talent at the grassroot level. We have also launched a mobile application for iPhone/iPad and android phones to keep our fans updated about information related to the players, live match data, music, photos, news and event updates, fixtures and the KXIP YouTube channel stream. Apart from this, a live in-app FanWall is available to allow the fans to engage with each other and the team by posting comments, likes and photos on Facebook and Twitter. For us, our fans are at the forefront of any activity that we undertake.

     

    Q. Is Kings XI Punjab also looking at playing matches in foreign locations against clubs of other countries?

    A. Yes! We are currently planning for such games overseas in ICC associate countries under the guidelines laid down by the BCCI.

     

    Q. What impact do you think twenty20 leagues in countries like Australia will have on international cricket?

    A. I don’t believe that globally so many leagues can work on one sport. The BCCI has stated that no Indian player can take part in any other league. So the other leagues are disadvantaged. Indian players are integral for a league to be successful.

    Secondly I don’t believe that there is a window where many leagues can take place with all the good players. The other leagues will have second tier players or they will be bad copies of the IPL.As far as the IPL’s impact on Indian cricket is concerned it gives youngsters a platform to show how good they are. They will not choose the IPL over the country. But they will use the IPL as a platform to play for their country.

     

    Q. The Champions Twenty20 League has not got the desirable viewership numbers. Where do you see it going from here?

    A. Unfortunately it has not managed to get the numbers. I don’t know if it will continue to be there. I have my doubts. But if it continues then it is good for the IPL teams.

     

    Q. What is the challenge that it faces?

    A. The challenge is that people get confused. Players can play either for their home team or their IPL team. So suddenly teams become disjointed. Key foreign players in an IPL franchise might play for their local franchise and vice versa. There is confusion on which team is from where. Maybe it needs more time.

     

  • ‘There are no plans to sell stake’ :KKR CEO Venky Mysore

    ‘There are no plans to sell stake’ :KKR CEO Venky Mysore

     Having won the previous edition of the IPL, Kolkata Knight Riders (KKR) is gung ho about defending the title. On the business side, the franchise is protected from the economic slowdown having done three-year deals with sponsors that will only expire at the end of this season.

     

    KKR CEO Venky Mysore has focused on making sure that KKR functions like a corporate. That means putting in systems and processes both on the revenue side and on the player front.

     

    Indiantelevision.com‘s Ashwin Pinto caught up with Mysore to get his take on the franchise‘s progress. Contrary to media reports, he maintains that the franchise currently doesn‘t have any plans to dilute stake.

     

    Excerpts:

     

    Q. Reports indicate that KKR might bring in a strategic investor?

    A: There is no truth to that at all. It does not make any sense whatsoever. There are no plans to sell stake.

     

    Q. Were there challenges early on in the first few seasons in terms of brand building and perception with KKR not doing well on the field?

    A: It is a fact that we were not performing at our potential. After three seasons we were the worst performing team. Over the last two years, the journey is something that we are quite proud of. A transformation took place. We changed the entire team. For the first time we qualified for the playoffs and Champions League Twenty20. Then of course, we won the event last season. The brand has also grown as a result.

     

    Q. With your appointment KKR‘s aim was to corporatise things. Is the franchise being run more professionally now?

    A: That is what we have aimed to do. We have looked at KKR as a business. Sports entertainment is our product. Behind the scenes, the aim has been to run it as a team and as a genuine business. The franchise model of the IPL is exciting and fascinating.

     

    There is a huge opportunity to leverage the brand we have built. We also want to continue building on our foundation which is the fan base. On both counts we worked hard, put a lot of new initiatives in place to build fan base and extend our brand so that sponsors who associate with us have the opportunity to benefit from the brand.

     

    When we do this, new revenue streams are generated. It has to be run as a team business as governance requirements are quite significant these days. We have to pay attention to that. We are proud of what we have done across the board but there is still work to be done.

     

    Q. I believe that after coming in, you overhauled systems and processes to an extent on the business side. Could you shed light on that?

    A. A big chunk of revenue comes from sponsorship. The key was to create a portfolio of brands that we associate with. In an ideal world you want brands that have synergies with each other and not just with KKR. You build a common platform on which each of the brands can jump on.

     

    You can run events and activities that are common to brands like a meet and greet and press conferences. We have the largest number of brands among the IPL franchises – 22 that we work with. This has helped us not only generate new revenue but also leverage and activate our brand that the association with each brand has been strong.

     

    ‘I do not know about other franchises, but our revenue generation through sponsorship and ticket sales is significantly higher than central revenue’

     

    Q. How is having Shah Rukh Khan as an owner helping? Is he hands on in terms of operations?

    A. If he wanted to be hands on, he would not have brought in somebody like me. We have to do our job, but having him is a fantastic experience.

     

    Q. Are sponsors still coming on the back of Shah Rukh Khan?

    A. Shah Rukh is Shah Rukh. You cannot take anything away from that. We have the association and strength that comes from him being in the background. But our endeavour was to make sure that we bring in sponsors on the strength of KKR. We have succeeded largely in that area.

     

    Q. Does the fact that you do not have a big corporate house backing you mean that you have to be prudent in spending?

    A. Of course! You run it like a business. There has to be a lot of discipline. One just has to manage it like any other business and work through budgets and keep going.

     

    Q. Your aim is have revenue growth of 25 per cent. What is the gameplan to achieve this?

    A. It has to be a combination of efforts. One is to increase the existing revenue streams. Another is with ticketing. There are new opportunities for packaging and improving the fan experience further. On the other hand, it is also about looking at new streams of revenue like merchandising and licensing.

     

    Q. Where does the franchise stand in terms of sponsorships?

    A. We are fortunate that when we did deals in 2011, it was for three years. Therefore there are no new sponsorship deals other than Pepsi which came in this year. After this season we will figure out what happens. Most of our sponsors are likely to continue. Other companies have expressed interest.

     

    Q. How do you cut through clutter?

    A. There is no clutter. Each brand that is with us has its own target markets and strategy. It is the association with us that takes this to another level.

     

    Q. Could you talk about how the Nokia association has benefited both?

    A. Nokia has been with us from day one. Nokia has said that the KKR association has been hugely beneficial. We have also benefited greatly because of the manner in which Nokia activates the brand.

     

    Q. In terms of local revenue, is your ticket revenue more compared to other franchises as the stadium is bigger?

    A. I do not know about other franchises, but our revenue generation through sponsorship and ticket sales is significantly higher than central revenue.

     

    Q. Could you talk about developing licensing and merchandising?

    A. It is an on-going process. First, you build your fan base and your brand. It is only on the basis of this that licensing and merchandising will pick up. We have a range of products. We have a KKR store online. There is a tremendous potential for growth.

     

    Q. How did the new slogan ‘One Team. One Pledge’ came about’?

    A. It is about a marketing strategy. Last year we had ‘New Don New Knights’ which was a new theme. Now the emphasis is on the team and how we take it to the next level. The alignment of the team being one pledge means it will go out and give its best. That is the whole thought process behind it.

     

  • ‘Our goal is to make UFC the No. 2 property for Six after IPL’: UFC Chairman and CEO Lorenzo Fertitta

    ‘Our goal is to make UFC the No. 2 property for Six after IPL’: UFC Chairman and CEO Lorenzo Fertitta

    Founded in 1993, the Ultimate Fighting Championship (UFC) has gone on to become the largest Mixed Martial Arts brand in the world. Having established itself in markets like US, Canada, and Brazil, the UFC has made its first big push in India through a broadcast deal with Sony Six.

     

    Apart from having a television presence in the country, UFC also plans to build the sport with on-ground activities and talent hunt initiatives. Its ultimate aim: to make UFC the second biggest property for Sony Six after the cash-rich Indian Premier League (IPL).

     

    Indiantelevision.com‘s Ashwin Pinto caught up with UFC Chairman and CEO Lorenzo Fertitta to find out the organisation‘s plans for India and the strategy it will be following to grow the sport in the country.

     

    Excerpts:

     

    Q. When you bought UFC in 2001 what was the aim and to what extent has this been achieved?
    A. At that time what we wanted to do was create a combat sport organisation that had some structure and brand around it. We looked at boxing as we have always been boxing fans. Big fights occur in Las Vegas.

     

    But what we found is that boxing was very fragmented. There was no brand and structure which a lot of times prevented the sport from putting on the fights that fans wanted to see. So we saw an opportunity in the UFC to take combat sport to a new level because there would be an organisation, structure and a brand.

     

    Our vision was to take the UFC from a niche sport to a global brand. We wanted to create a great entertainment product for the fans. We have accomplished our aim. We are the largest combat sport organisation. We are broadcast in 150 countries to a billion homes in 22 languages.

     

    Q. You once said that when you bought UFC it was the worst brand in the US because of all the negativity. Could you talk about the strategy followed that helped the company turn things around?
    A. Firstly we developed rules and regulations that we now call Unified Rules of Mixed Martial Arts. We worked with various state governments to have them recognise those rules and UFC as a sport. The third thing was really promoting the athletes and presenting them as being world class. The previous owners really focussed on the violence and spectacle of the sport.

     

    We focussed on the athleticism of the fighters and the competition. The aim is to have athletes compete in a safe way. The sport is a combination of martial arts like Judo, Jujitsu, Boxing and Taekwondo.

     

    Q. As per research how is the UFC brand perceived in India and globally today?
    A. Globally we are looked at as the market leader in mixed martial arts. We are seen as the premier organisation. In India it is too early to tell. I don’t think that there is a lot of awareness in India about mixed martial arts. I think that people are intrigued about the success that we have had around the world. The question is can we replicate that success here?

     

    Q. What would you say is your USP vis-a-vis other events like Bellator and boxing?
    A. Relative to other sports, what we do is put on fights that fans want to see. All fighters are contracted by us. It is easy to put matches together. Our aim is to never have a mismatch. So we put fighters in an event who are evenly matched. Most fights don’t go to a decision. Matches are fast paced and you have outcomes that are very definite and defined.

     

    Boxing is one dimensional. In the UFC, on the other hand, you can grapple, kick, punch and put the opponent in a submission hold. It is interesting from a strategic standpoint and more fast paced. That is why younger people like it. In 2006 UFC overtook boxing as the biggest provider of pay per view events. Last year in November over nine million Americans watched a heavyweight fight on Fox. Bellator would be lucky to get 90,000.

    ‘We liked the approach that Sony was going to take. We also liked being affiliated
    with the IPL. And we wanted to be on a sports channel‘

    Q. So is MMA more mainstream compared to a decade ago?
    A. Without question! In the markets where we have a presence in, it is a mainstream sport. We produce more than 30 live events in a year.

     

    Before we acquired the UFC mixed martial arts was a fringe attraction, largely unregulated and unable to appear even on pay per view platforms. All that has changed.

     

    Q. MMA like soccer is a sport that works everywhere, unlike cricket which works in some markets, NFL which is only present in the US and baseball which is only present in the US and Japan. Is that because viewers can identify with the aggression and competitive nature of the fighters?
    A. I think the reason is that it is simple and easy to understand. A lot of other sports have rules. If you have not grown up watching cricket or the NFL, you will never understand how the game is played.

     

    When you put two athletes in the Octagon and make them compete everybody gets it. It is not hard to explain.

     

    Q. Is there an entertainment quotient in the UFC or is the focus just on the sport?
    A. The way we present the product is very important. We spend a lot of money putting on a big show. At the end of the day it is the fighters, the action and the quality of the fights that sells. We broadcast all our events in HD. We have aired some events in 3D. We look at emerging technologies to make the viewer experience better.

     

    Q. What revenue growth does UFC expect this year and how much comes from television fees?
    A. Sixty per cent comes from television fees. Then you have live ticket sales. Beyond that you have sponsorship.

     

    The US accounts for over half our revenue. Canada would be second, Brazil third and Europe next.

     

    Q. Which are the top three markets for UFC?
    A. The US is number one. Canada is number two and Brazil is number three. We see a lot of similarities between Brazil and India. Both are emerging economies. There is a growing educated class of younger people who are looking for a new and exciting sport. We think that is what the UFC represents.

     

    Q. How big is Europe?
    A. Europe is big, particularly the UK as well as the Baltic states like Sweden and Denmark where the UFC is very popular. We are just starting in Italy, France, Spain and Germany and we plan to bring events to
    Central Europe sometime next year.

     

    Q. Where does Asia fit in the scheme of things?
    A. 2013 and 2014 are important years for us in Asia. We did our first event in February in Tokyo and it was a success. Our second event was in Macau in November. Then we want to do events in the Asian capitals like Shanghai, Singapore, Taipei, Hong Kong and Kuala Lumpur.

     

    Q. How did the deal with Six come about and what are the terms of the deal?
    A. This is a four-year deal. Hopefully we will be able to extend it and make it a long term relationship. Our goal is make UFC the number two property for Six after the IPL.

     

    We came to India two years ago. We started looking here and have worked for a long time. We have had interest expressed from every major media company here. We have had discussions with companies like Zee, NDTV and Star.

     

    We liked the approach that Sony was going to take. We also liked being affiliated with the IPL. And we wanted to be on a sports channel.

     

    Q. What is the gameplan to grow the UFC brand in a country where WWE is hugely popular?
    A. When we started the UFC, WWE was popular in the US. But people figured out quickly that while we were real, the WWE was fake. We were, thus, able to migrate a lot of fans over to the UFC.

     

    In India, we see the same thing happening, particularly with the younger demographic base. Once they see how exciting the UFC is and that it is real, they will migrate from WWE.

     

    The gameplan is firstly using the distribution of Six and airing live events. They also use our library to educate fans on what is going on in the UFC. Then there is the reality show ‘The Ultimate Fighter’.

     

    This will develop Indian fighters and is the most important thing for us. In order to be successful, we have to have Indian fighters that can compete at an international level. We appreciate Sony‘s dedication in producing ‘The Ultimate Fighter: India’ with us.

     

    Q. Could you talk more about Ultimate Fighter?
    A. This is a reality show which is in its 17th season. We have done versions in the US, Australia, Brazil and the UK. It is about 16 young fighters who live in a house together. They train together. At the end of each episode there is a fight and the winner progresses. The event takes place over 13 weeks.

     

    The Indian edition takes place next year. The two semi finalists fight together to determine who gets the UFC contract.

     

    Q. When does the first season kick off?
    A. We are looking at a time frame of September next year. We will spend the next six months looking at different fighters around the country and do casting calls. In terms of venues, Mumbai and Delhi will be important. We will be looking at facilities that a city can provide.

     

    Q. How did the idea of doing reality television come about?
    A. When we bought the brand, it was tarnished. People associated it with violence. We knew that we needed to do something that was different that explained why it was not about violence and why these athletes were so special.

     

    We created the reality show so that people were not just watching a fight. They were watching how these guys lived, interacted, what their background was, their family life, and how they train. It helped change the perception of the sport. This show has changed the face of mixed martial arts.

    ‘When we started the UFC, WWE was popular in the US. But people figured
    out quickly that while we were real, the WWE was fake. We were, thus, able to migrate a lot of fans over to the UFC. In India, we see the same thing happening, particularly with the younger demographic base‘

    Q. Is there cross viewership happening between UFC and WWE as athletes like Brock Lesnar and Ken Shamrock have competed in both?
    A. There is some cross viewership. Our TG is males 18-34. WWE skews a little bit younger – teenagers. I see UFC’s appeal spreading across India including in the wrestling belts in the rural areas.

     

    Q. Has UFC considered launching its own TV channel?
    A. Not yet! We felt that we needed to make an investment and grow the brand before making this move.

     

    Q. What growth has there been in the amount of content UFC offers in the past three years?
    A. We have increased it significantly. A lot of this is driven by our television deal in the US with Fox. We went from being on a one cable channel which was Spike TV to being on the Fox platform which includes programming for four networks that they own. Our programming has tripled year on year.

     

    We felt that there was a demand that people wanted to see more fights. We wanted our product on multiple platforms in the US. We are on a free to air channel Fox, on a cable channel FX and on a smaller sports cable channel which is called Fuel TV. Hitting every tier within the US media market was important to help us continue to build our brand.

     

    Q. What challenges does the economic slowdown pose for UFC?
    A. We have been fortunate that we have not been affected very much by the economy. The reason for that is that no matter how bad things are, people still want to consume entertainment. All sports whether it is
    the UFC, NFL, NBA are doing well.

     

    Q. Sports entertainment outfits like Super Fight League have come in. How do you think it will push the sport in the country?
    A. It will boost popularity. Competition is a good thing. We come in as a premier organisation which if we succeed will help other leagues.

     

    Q. There is a view that UFC has followed NBA’s approach to grow which lies in buying rival promotions. Is that a fair assessment?
    A. I don’t know that we are following anybody’s strategy. We have over time acquired a number of leagues to get their athletes over to the UFC. We also got their library. Strategically it made a lot of sense. The biggest acquisition was Pride Fighting Championship which was based out of Japan.

     

    We also bought Strikeforce which was based in the US. Female fighters take part here. We could license these rights to Six as well. There is potential for that. As all these athletes are under one company it allows us to put on fights that fans want to see.

     

    Q. How do you view new media platforms like Internet and mobile?
    A. Our core customer base is very proficient online. They consume a lot of their entertainment on YouTube. They are on Facebook and Twitter; it is important to our strategy. We have a large portion of our library online. You can subscribe and go back and watch fights, interviews, updates etc. We try to use Facebook, Twitter to market UFC and spread the word about the upcoming fights.

     

    Q. Has China been a difficult market to crack due to government regulation?
    A. We are taking it very slow. We have not had any issues or any problems. China is the birthplace of martial arts. There is a huge appetite for this sport there.

     

    Q. Where do you see the UFC in India five years down the line?
    A. I think that we could be the number two sport after cricket. In Brazil we are not just the number two sport but are also getting close to the popularity of soccer. Many times we get more viewership than the Brazilian national soccer team does.

  • ‘India is the only market where we pay carriage fees for our channels’ : BBC Worldwide Channels, Asia senior VP, GM, Mark Whitehead

    ‘India is the only market where we pay carriage fees for our channels’ : BBC Worldwide Channels, Asia senior VP, GM, Mark Whitehead

    BBC Worldwide, the commercial arm of BBC, has decided to shut its two channels in India. This will mark the closure of BBC Entertainment and CBeebies from 1 December and reflects the difficulties that niche channels have in growing their business in an analogue cable TV driven market.

     

    In an interview with Indiantelevision.com‘s Ashwin Pinto, BBC Worldwide Channels, Asia senior VP, GM, Mark Whitehead explains why.

     

    Excerpts:

     

    BBC Entertainment was refreshed last year. What went wrong?
    The nature of the Indian market for pay-TV channels make the economics of running channels very challenging at this time. We have reluctantly concluded that we need to close our channels.

     

    Could you talk about the carriage costs that had to be incurred versus revenues that were earned?
    India is the only market where we pay carriage fees for our channels. We can’t go into commercially sensitive detail on our revenues.

     

    BBC Worldwide was talking to platforms like the One Alliance. Why did talks fall through?
    We did not choose to comment on speculation at the time and I’m sure you will understand that we won’t be doing that now.

     

    Was the decision to exit part of the overall cost re-structuring exercise that is going on?
    This decision has nothing to do with the overall restructuring of BBC Worldwide. We took the difficult decision to close the channels for commercial reasons.

     

    Some of the reasons included the uniquely challenging pay TV market in India and the delays to digitisation.

     

    ‘India is a uniquely challenging market and decision to withdraw CBeebies and Entertainment is not part of an Asia-wide view‘

    Didn‘t BBC Entertainment have an edge over competition as it covered three genres – entertainment, factual and lifestyle?
    Both channels – BBC Entertainment and CBeebies – have been exceptionally well received by the Indian audience. However the uniquely challenging pay TV market in India made the economics of running them very difficult at this time.

     

    CBeebies was ad free. Is running an ad free channel in India unviable at the moment?
    Advertising is currently a major source of revenue for pay TV channels in India. Without that revenue we found it unviable to run CBeebies in India at this time.

     

    Having said that isn‘t this the wrong time to exit given that the digitisation process has just started with Mumbai, Delhi already switching off analogue signals?
    Digitisation has been slow and the long term impact on the economics of running a channel is unclear at this stage. If those economics improve with digitisation, we will reconsider launching the channels.

     

    Is BBC Worldwide Channels looking more carefully at the cost structure across Asia and are you exiting other markets to an extent?
    India is a uniquely challenging market and our commercial decision to withdraw the CBeebies and Entertainment was not part of an Asia-wide review. We have no plans to close channels in any other markets at this time.

     

    There have been a lot of changes in the BBC such as a new DG and COO. How will this affect the functioning of the channels business?
    The international Channels business is part of BBC Worldwide, the commercial arm of the BBC.

     

    BBC Worldwide has a strong focus on international markets, and our channels business remains an important part of that strategy for growth. We have a clear leadership structure running the channels business with David Weiland as acting Managing Director of Channels and I (Whitehead) running the Asia business.

     

    Is there the chance that BBC might re-enter India in 2015 when digitisation is complete?
    We believe India is an exciting market and in the event of changes in the options available to us, we would certainly consider re-launching our non-News channels in the market.

     

    BBC Worldwide remains committed to India, where BBC World News – the BBC’s international news and current affairs television channel – continues to be available across the market, along with the bbc.com and bbchindi.com websites, BBC Hindi radio and Global India, a new primetime programme produced by BBC Hindi TV which launched on five ETV channels this month.

     

    In addition, BBC Worldwide operates a TV production business, a content syndication business and Lonely Planet in India. BBC Worldwide is also evaluating the potential for a number of digital initiatives which have been successfully developed in other markets. BBC Entertainment programmes will also continue to be available on other channels in India – both terrestrial and cable, as well as digitally on our YouTube channel.

  • ‘Sun will breake ven from the first year of IPL operations’ : Sun TV Network CFO V.C. Unnikrishnan

    ‘Sun will breake ven from the first year of IPL operations’ : Sun TV Network CFO V.C. Unnikrishnan

    Kalanithi Maran-owned media conglomerate Sun TV Network has won the Hyderabad Indian Premier League (IPL) franchise putting in the highest bid that was 23 per cent more than the second bid for the same team.

     

    Sun bid Rs 850.5 million a year while the next bid was for Rs 690.3 million from PVP Ventures.

     

    Sun will get to own the franchise for a period of five years till 2017 paying Rs 4.25 billion as franchise fee to the Board of Control for Cricket in India (BCCI).

     

    Sun plans to invest in the region of Rs 1.3-1.4 billion in a year and bets on leveraging its popular television and FM radio stations to make a success of the newly acquired IPL property.

     

    In an interview with Indiantelevision.com‘s Ashwin Pinto, Sun TV Network chief financial officer V. C. Unnikrishnan talks about what led the company to bid for the IPL team and how it plans to profitably run this new line of business.

     

    Excerpts:

     

    Q. Sun TV Network‘s bid at Rs 850.5 million was 23 per cent higher than the other bidder PVP Ventures. In hindsight, do you think you bid a bit higher?
    We are comfortable with the price that we bid. Our strength is in the south market. Our ability to leverage the property on TV and radio is much higher. We are confident that we will be able to make money.

     

    Q. How much does Sun plan to invest annually in the IPL property?
    A. We know our franchisee fee amount but other expenses like the IPL players are not frozen yet. Our early estimate is that our spends would be in the region of Rs 1.3-1.4 billion a year. Even given that broad number, I don‘t think that making ends meet would be an issue for us at all.

     

    Q. Does that mean that you will breakeven right from the start?
    We expect to breakeven from the first year itself. The profits may be small but will grow as we go along. We have proven our track record when we have entered into other lines of business like movie production. The major difference between us and the other players is that we have stepped into different domains quite successfully. We have strength in other areas of entertainment. IPL is just another major area of entertainment that we have stepped into.

     

    Q. For an IPL team franchise, there isn‘t much scope to drastically up the turnover. Will Sun stand to gain in valuation rise of this property say within the next three years?
    Sun has a market cap of Rs 140 billion and ended on a consolidated revenue of Rs 18.47 billion for the fiscal ended 31 March 2012. We won‘t depend on the IPL to add sizeably to our top line growth. The big growth driver will be digitisation. For every broadcaster, digitisation will trigger big growth.

    ‘We won‘t depend on the IPL to add sizeably to our top line growth. The big growth driver for us will be digitisation‘

    Q. The IPL franchisee purchase will also lead to a confidence among the investment community that Sun is going to be aggressive in its media business despite all the recent controversies. Do you see the share prices getting corrected because of the new IPL team purchase?
    The stock price getting affected is something of a market sentiment and perception. We were always very focused about our business. The IPL is a new line of business and we will draw in a lot of synergies. We are in the entertainment and media business. And cricket is entertainment.

     

    Q. Why didn‘t Sun bid for the Deccan Chargers when it came up for auction under the aegis of the BCCI? Was Sun waiting for a clean IPL francise?
    The BCCI came out with a tender. And we decided to participate in a direct offer.

     

    Q. Will Sun‘s team consist of players from the Deccan Chargers?
    We will take some players from that team. There are also some players that were not sold during the earlier auction but who have potential. We will look at them as well.

     

    Q. How will this process of getting players work?
    The BCCI has to decide on the modalities for the process and we will follow it. After the next season, the players go back for an auction.

     

    Q. In terms of revenue many franchises still heavily depend on the central pool. How do you plan to grow the local revenue pool?
    We have a clear business plan. It is too early to reveal details. But the business lines have been drawn.

     

    Q. Only two parties including you bid. Was this a surprise?
    It was a surprise. In the market the names of Videocon, Jaypee Group and Adani were floating.

     

    Q. Is Sun TV looking at making a play in the sports broadcasting business?
    We have no interest in entering the sports broadcasting genre. Sports channels are not profitable. That is why while we are present in a variety of genres, sports is an area that we have stayed away from. We are not interested in getting the telecast rights for any sports property. In any business decision, the aim is to make money.

  • ‘India is the biggest market in which SPT Networks, Asia operates’ : Sony Pictures Television Networks Asia executive VP, GM Ricky Ow

    ‘India is the biggest market in which SPT Networks, Asia operates’ : Sony Pictures Television Networks Asia executive VP, GM Ricky Ow

    AXN Network has recently created a new position to focus in its biggest growth market. Sunil Punjabi has been appointed as the business head and will be handling AXN and Animax in India.

     

    Punjabi will lead the team in developing the go-to-market strategy for new channels as well as oversee the development, acquisition and production of a content mix for SPT’s networks in India. He is also charged with driving marketing strategies to grow the channel brands and to pursue further distribution opportunities.

     

    In an interview with Indiantelevision.com‘s Ashwin Pinto, Sony Pictures Television Networks Asia executive VP, GM Ricky Ow talks about the growth prospects, particularly as India enters the digitisation era.

     

    Excerpts:

    Q. Has India become more of a priority market for SPT Networks Asia in the wake of an economic slowdown which has affected other Asian markets more like Japan and Singapore?
    While we are not able to discuss matters relating to revenue, India is the biggest market in which SPT Networks, Asia (AXN, Animax) operates. So India has always been a high priority market for us as evidenced from the fact that we have always had a dedicated service for India that has enabled us to programme, schedule and promote differently from the rest of Asia and be more relevant to our Indian viewers. The fact that India is still expected to see an economic growth, between 5.5. – 6.5 per cent this year only serves to reinforce the importance of the market.

    Q. So is India gaining importance in terms of business for SPT?
    Our key focus this year is to really understand the evolving Indian consumer. We’ve been doing business in India for 15 years now and there have been some dramatic changes in India … be it the rise of consumerism or media consumption behaviour.

    This year we’ve invested in research and made a big effort to understand the change in the Indian viewers in the context of the rapid changes in the Indian pay TV landscape with digitisation and the huge increase in new players entering the market.

    Q. What does the research show so far as AXN is concerned?
    The AXN brand is still extremely strong among consumers. With increasing competition in the English General Entertainment television space, we believe the key to success is to really understand what the viewers want. Listening carefully to what the viewers have told us, we’ve found that they prefer an AXN that sticks closely to the original high energy, thrilling entertainment formula.

    Consequently, we have kept this in mind as we programme, schedule and promote the channel, which has helped us maintain AXN’s position as the No.1 English GeneralEntertainment channel in India despite the tremendous competition.

    Q. Is that why AXN Network has created a new position and appointed a business head to run the India operations?
    Yes, we have appointed Sunil Punjabi to lead the Indian operations for AXN and Animax in India. We and our partner Multi Screen Media believe that our business in India deserves more resources and have, thus, expanded the team to capitalise on growth opportunities in India.
    ‘We and our partner Multi Screen Media believe that our business in India deserves more resources and have, thus, expanded the team to capitalise on growth opportunities in India‘

    Q. In India we are seeing more players entering the English entertainment space due to anticipation of digitisation. How will this impact viewership?
    India is a huge market with the biggest English speaking population in the whole of Asia. AXN being the number one English GE channel in Asia and India for the last 15 years has not been an easy task. There has always been competition and the future may bring even more competition but it is certainly not a stranger to us.

     

    Digitisation will offer the consumers more choices not only in the number of channels but also in the quality of their viewing experience which was not possible with the current analogue system. We are already seeing some of the impact of digitisation in some of the semi-digitised metros like Mumbai and Delhi where viewers are spending more time with the genres of their choice as well as heading straight to their favourite channels rather than having to surf through channels to get to their final destination.

     

    In a fully digitised world channel brand recognition and what they stand for will become paramount. Fortunately the AXN brand is still very much loved in India and we have become synonymous with the action genre which continues to be extremely popular in India.

    Q. Are you strengthening your localisation strategy?
    Asia and India-specific production initiatives like ‘Amazing Race Asia‘, ‘Cyril Family Vacation‘ and ‘India’s Minute to Win It‘ are an important part of our localisation strategy that helps us to not only differentiate ourselves from other channels but also build a stronger connection with our viewers.

     

    So we’re not relying on acquisition alone for tent pole programming. Our original productions enable us to have better control of our own fate, the relationship we have with our viewers and key stakeholders and partners.

    Q. Are content costs escalating with more demand for content and how do you judge whether or not a property is worth an increase in price?
    The English space in India has been very hot in the last 18 months and that will in general drive up prices. That being said, we continue to offer some of the best entertainment shows that viewers want, including the ‘CSI‘ franchise, ‘NCIS LA‘, ‘Supernatural‘, ‘The Voice‘, ‘So You Think You Can Dance‘, ‘The Amazing Race‘, while also producing our own shows like ‘The Firm‘ and our next upcoming major production, ‘Hannibal‘.

    Q. AXN Beyond was re-branded as beTV across Asia. What prompted this move?
    While AXN is doing well across region, outside India we also have two other successful brands — beTV and SonyEntertainment Television (in English). SET offers wickedly juicy entertainment that appeals to the modern female.

     

    beTV was previously AXN Beyond. A very well focused channel dedicated to fans of sci-fi, paranormal and horror programming.

     

    We made the strategic decision to rebrand AXN Beyond because we wanted to build a mainstream Englishentertainment channel that appeals to a wider audience. One that can be a complementary and companion channel to AXN and allowing us to offer a more complete portfolio of English entertainment channels. beTV thus offers easy viewing and engaging entertainment, a place for viewers to chill and unwind much like their favourite hang-out café or hang-out joint.

    Q. Are you launching this channel in India or are you waiting for digitisation to take concrete shape?
    We are always looking for opportunity to launch these brands in India and it is not appropriate for me to talk about this yet.

    Q. How is SPT Networks Asia leveraging HD and 3D and how do you see them enhancing the TV viewing experience?
    AXN is already available in HD in every market except Taiwan and India. Eventually we will be shifting our service to HD for these two important markets as well.

     

    Our distribution in India is much wider than the top 10 key cities, so the plan to roll out HD is a massive effort for us. In the US, Sony Corporation together with Discovery Communications and Imax Corporation has launched the world’s first and only 3D channel – 3net.

     

    For us, the key for launching HD and 3D is finding the right timing and formula that works for us.

    Q. Has the pay TV business across Asia been hit by the slowdown or are consumers still willing to pay a good price if they see value?
    From our experience, we have found that the consumer is actually more willing to pay for pay TV services in challenging times. It offers affordable entertainment at home for the whole family instead of spending a lot more money when a family goes outside the home for entertainment.

     

    We have also continued to see growth in our advertising business as pay TV is one of the more cost effective advertising mediums for marketers. AXN not only provides a quality environment that enhances advertisers’ brand image but also appeals to and reaches a very desired audience – the SEC A and SEC AB. Our audience is less affected by the economic crisis and continues to have considerable spending power, which is why it is important for marketers to continue investing with us.

    Q. In the US, new media is seeing people spending more time watching shows online rather than on the TV channels. Is this a challenge you are starting to face in India and Asia?
    While we are seeing an increase of online viewing, both illegal and legal, we also expect to see an increase in both time spent viewing and reach of pay TV as pay TV penetration continues to grow in many markets across Asia including India.

     

    The good news for advertisers is that pay TV, in spite of the wide choice available, is still less fragmented than the Internet and offers a well targeted, distinct brand environment for marketers to select. Pay TV brands command loyalty amongst viewer who have been relying on pay TV brands for the past 15 to 20 years and we believe they will continue to do so especially as shared family
  • ‘Our marketing spends will stay flat at Rs 6 bn’ : LG India VP marketing LK Gupta

    ‘Our marketing spends will stay flat at Rs 6 bn’ : LG India VP marketing LK Gupta

     

    A sluggish market and depressed consumer demand is not deterring consumer electronic major LG India to reduce its marketing spend this year. The drive will be to reallocate spends with print seeing a marginal dip. Television will stay flat while digital ad spends will jump 50%.

     

    The South Korean conglomerate will cut back its marketing spend on cricket, from Rs 1 billion in 2011. But it is still bullish on the game and believes addresses a wider consumer base compared to music or Bollywood.

    In an interview with Indiantelevision.com‘s Ashwin Pinto, LG India VP marketing LK Gupta talks about the company‘s thrust in pushing new technology products like 3D and the marketing strategy it is following to drive growth in sales.

     

    Excerpts:

    So far year 2012 has been difficult for LG and the consumer electronics sector. What are the reasons behind this slow growth?
    The market is looking sluggish because consumers are feeling less than confident about the situation – the economy, food and fuel inflation, interest rates and rising prices across categories. So, some consumers are postponing purchases of discretionary high-ticket items. We‘ve still had growth in AC and Appliances this summer while the rest of the industry has struggled.

     

    However, even though it has been a year of challenges so far due to difficult macroeconomic environment like inflation, dollar appreciation and constant hike in input prices, the good news for us is that LG has grown by 15 per cent in its core business of Home Entertainment and Home Appliances. There has been a growth of 30 per cent in Home Appliances business and 25 per cent growth in Flat panel business.

    By when do you see the situation turning around and what corrective measures are being taken by LG?
    This is an industry wide situation and a lot of things at a macro level have to improve. So it’s tough to say by when the situation will turn around. We do expect the festival season in the second half to improve the growth somewhat.

    At this point LG is launching flagship products across categories which will help in strengthening our product leadership via strong marketing campaigns. This includes LED, LCD TV, refrigerators, washing machines, Split ACs and microwave ovens.

     

    We are looking at a 25 per cent growth in sales overall this year.

    Could you talk about the impact of rising input costs due to the declining rupee value and how is it affecting the business?
    Input cost is certainly a concern and rupee depreciation is also alarming due to which prices were hiked across all product categories by 15 per cent in the past year and a half. This was not only in television segment but all categories.

    On a more positive note, there is increasing adoption and acceptance of new technologies like HD and 3D by consumers. How is LG tapping into this with new products?
    LG is expanding the 3D market in a big way with Cinema 3D Smart TV range and is now poised to offer the widest range of 3D entertainment products – 3D LED, 3D Ultra Slim LED, 3D Home theater systems and 3D Blu-ray players.

     

    Technology and design are key factors behind LG Home entertainment products. With our 2012 3D Smart TV line-up, we have been able to take a significant step forward, thanks to a series of new and upgraded 3D features led by the Cinema Screen Design.

     

    With the 2012 Olympic Games to be broadcast in 3D and more than 30 English and Hindi 3D movies to hit the Indian Cinema theatres, 3D entertainment is set to explode in India at a steady growth of 500 per cent. We are targeting business worth Rs 10 billion from 3D TVs and aim to consolidate our position in the Flat Panel TV segment with 30 per cent market share.

     

    To ensure the numbers we have an aggressive marketing strategy with a target investment of Rs 1 billion in Flagship product communication. This will be accompanied by experiential marketing campaigns.
    ‘This year we will spend slightly less on print and focus more on digital. Our spend on television will be similar to last year. We always look at efficiency for our marketing spends and digital platform is one where we can see good response. We have increased our digital spends by 50 per cent‘

    LED TVs are growing fast in sales. Is this technology superior to LCD TVs?
    The LED segment is growing at a faster pace with 500 per cent year on year growth (2011 versus 2010). The consumer preference is shifting to LED’s as CCFL and LED price gap is reducing. LED is perceived to be the latest, modern and eco-friendly technology. The LED segment contribution in sales was 35 per cent (in value) in 2011 and is targeting around 60 per cent in 2012.

    Will the slowdown affect your marketing spends?
    Our marketing spends will be Rs 6 billion, the same as last year. We are not reducing spends. We are only re-allocating spends to an extent.

     

    A slowdown scenario indicates that fewer consumers are willing to buy in the current time and many consumers, due to the prevailing market mood, start postponing their discretionary purchases.

     

    In such a situation marketing has to be focussed on converting the customers who are willing to buy. Accordingly, marketing spending will focus in the short term on in-store excellence.

     

    Investments will be geared to give consumers a better in-store experience via display, demonstration and branding visibility for flagship products. At the same time, advertising will be more streamlined to deliver higher efficiency within the same budget. This will impact the media choices in print and TV media. Digital media, which plays a very important role in the consumer decision journey of searching and evaluating products, will be given a bigger share to have an early influence on potential customers.

    In terms of LG’s marketing spend how does it split between TV, print, and radio? Will the slowdown force a change in the platforms that you use?
    This year we will spend slightly less on print and focus more on digital. Our spend on television will be similar to last year. We always look at efficiency for our marketing spends and digital platform is one where we can see good response. We have increased our digital spends by 50 per cent.

    Which medium is more impactful in terms of reach and brand recall?
    All mediums have their own role to play. Some work better to create awareness, while others are important to drive consideration and even comparison with other brands.

    But isn‘t it true that when consumers are hesitant companies need to be more aggressive in marketing? Does LG agree with this?
    Yes! We have an aggressive marketing strategy in our flagship product communication so that we achieve our goals within the set budget.

    A couple of years ago LG aimed to change its brand perception from a mass to an aspirational brand. Did this work?
    We have managed to grab a bigger share in categories across the product portfolio. We are leading the market in side by side refrigerator, Front load washing machines, convection microwaves. Our image is much better compared to five years back. This effort to change and improve brand perception, though, is an on-going process. Our products are more modern and more high-tech, which has helped improve brand perception. We have single-handedly carved out a premium LED 3D segment where we sell the most TVs.

    Have any new campaigns been lined up and could you talk about the thrust?
    We have rolled out two campaigns. The first one is for our flagship product LG Cinema 3D smart TV and second is Eco health campaign for Home Appliances. We have started out Home Appliances Above The Line campaign Eco friendly which showcases eco friendly technology in LG HA products.

     

    Simultaneously we announced a digital interactive campaign on Facebook called My Eco Home which will allow Facebook fans around the world to create and share their own personalised, virtual dream homes. An industry first, LG’s My Eco Home Facebook app reflects the company’s effort to interact with today’s customers in new, innovative ways. We also rolled our new TVC for the latest range of Cinema 3D Smart TV. LG Electronics India is betting big on Flat panel category and you will see a 360 degree campaign across to strengthen this portfolio.

    When LG partnered the ICC and then renewed the deal what were the objectives? To what extent have these objectives been met?
    We have a long association being the Global Partners of ICC, promoting cricket among its billions of passionate followers. We are proud to be associated with this great sport and with ICC. Through the global platform provided by ICC events, we will enhance the joys of cricket with our own innovative programmes and campaigns. Lead 11 is one such initiative to celebrate the national spirit by giving platform to our young future generation to lead the Cricket Stars in ICC World Cup.

    What role has the ICC relationship played in giving you leg up on competition?
    The association has helped us in establishing a strong relationship with the consumers. With our unique consumer engagement programmes, we have actively established the brand as a young, sporty today‘s brand.

    How much of your marketing spend goes towards cricket and has this been rising year on year?
    Last year almost Rs 1 billion of our marketing budget was spent on cricket. This number is lower this year since there is a smaller ICC tournament and also we didn’t participate in IPL broadcast advertising this year.

    Why did you stay away from the IPL? 
    This was a wise decision, given the decline in viewership. We felt that under the circumstances this year, the IPL would not have been cost effective given that rates have increased every year. So, our decision was the right one.
    As a platform how does cricket compare to other avenues like music and Bollywood?
    Certainly cricket is a far bigger platform and it addresses a far bigger consumer base as compared to music or Bollywood.
    Will the monies that cricket gets this year from advertising be affected as it requires high expenditure by companies who are fighting a slowdown?
    Not really! In India cricket fortunes swing with Indian team’s fortune. If the team does well, advertisers will continue to invest behind cricket.
    Apart from cricket, which other sports is LG involved with?
    At present LG is associated with cricket and at the global level with Formula 1. In cricket, we like to develop innovative consumer engagement programmes.
  • ‘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.
  • ‘We have no intentions of selling Deccan Chargers currently’ : Deccan Chargers COO Venkat Reddy

    ‘We have no intentions of selling Deccan Chargers currently’ : Deccan Chargers COO Venkat Reddy

    For IPL franchise Deccan Chargers, it has been a story of ups and downs. The team had a miserable run in the inaugural season but bounced back strongly in the second edition to walk away with the title.

     

    Even off the field, Deccan Chargers had to deal with uncertainty what with the main shirt sponsor changing hands every year. However in the fifth edition of the IPL, the franchisee has finally found its true calling striking a multi-million dollar three year sponsorship deal with Emirates besides roping in a host of other national and local sponsors.

     

    The franchise has also been in the news frequently that it is on the blocks. Deccan Chronicle Holdings had mandated KPMG Corporate Finance to find a buyer and was looking at a valuation of $250 million in 2008.

     

    In an interview with Indiantelevision.com‘s Ashwin Pinto, Deccan Chargers COO Venkat Reddy clears the air about the team’s sale reports by asserting that it is committed to the team and is not planning to presently sell the team. Reddy, a man of few words, also said that the franchise has broken even and is looking at good revenue growth this year.

     

    Excerpts:

    Will Deccan Chronicle sell IPL franchise if the valuation is attractive or will you wait for it to mature further?
    Presently, we have no intentions of selling the team. Deccan Chargers is very much owned fully by Deccan Chronicle Holdings Limited.

    Deccan Chargers posted revenues of Rs 1.15 billion in 2010. What has the growth been since then and have you operationally broken even?
    We have achieved break even and expect the growth to be good this year. It is an exciting season for us and we have got good response from sponsors.

    How did the deal with Emirates come about? Which are the other new sponsors who have joined?
    IPL 2012 is a huge opportunity to leverage revenues with the Deccan Chargers being a well known and growing brand. Strategic trading in auction without compromising on the team balance has brought in sizeable revenue in its kitty. We are privileged to have Emirates as our team sponsor. And our other main sponsors are Jaypee Cement, TVS Motors, United Spirits, Kingfisher, Xenoh and Puma. We were associated with Jaypee for the inaugural IPL season and are pleased to have them back. We are reaching out to our fan base, taking the matches to the catchment areas of Vizag and Odisha.

    Is the Telangana issue going to affect your ticketing revenues once again?
    This year we have three confirmed cities as Deccan Chargers home grounds – Vizag, Cuttack and Hyderabad. Our matches are well distributed in these three cities, which will see a considerable growth in gate revenues. Added is the special hospitality seating areas created for the spectators to enjoy the matches and have a great experience. The match entertainment is also very carefully planned, keeping the local flavour in view.
    ‘We have achieved break even and expect the growth to be good this year. Emirates is our team sponsor. Our other main sponsors are Jaypee Cement, TVS Motors, United Spirits, Kingfisher, Xenoh and Puma‘

    Given that it has been four years since IPL started, has licensing and merchandising become a serious revenue stream or is there still a long way to go?
    Yes, it is and there are challenges yet to be faced.

    Has Deccan Chronicle got what it aimed at when it decided to be involved with the IPL franchise?
    Deccan Chronicle has always supported sports and has nurtured the Deccan Chronicle cricket team for years. IPL was a great opportunity to get into big league and cricket is religion for us Indians. We are now a well known sports brand globally and want to extend further. T20 cricket is challenging. We have emerged as winners in 2009 after suffering a major setback in the inaugural season. We believe in working hard and motivating our team to perform well without putting any pressure. We have seen a tremendous growth trend in our fans base, which continues. As per the latest study on Top Ten Social Media Influencers by DataQuest, Deccan Chargers has been in the Top Ten Indian Brands.

    How do fans perceive the Deccan Chargers and how do you maintain a relationship with them across the year even after the IPL season gets over?
    Deccan Chargers is always full of surprises. We have a loyal fan base that supports us thick and thin. We maintain interaction through the social media sites like Facebook and Twitter.

    What marketing activities are being done to create excitement?
    Our local campaigns have already started. We recently organised events in Hyderabad and Vizag like the See U in Blue event, Buildings lit in blue, Cycle rally, Beach Corporate Cricket etc. A separate fans blog, selecting some active fans on social media sites and giving away DC goodies and many other fan engagement activities are lined up. unstoppabulls.deccanchargers.com/ featured a contest to find “Super Blogger, Photographer & Videographer” who‘ll be part of DC Crew to follow & cover team DC.

    Could you talk about your deal with My Rewards International?
    We have agreed to market membership based programmes under a co-branding arrangement. This will give our members and their family access to the My Rewards benefits which are available throughout India and the world. Similarly, over one million My Rewards members throughout India, Australia, Hong Kong, New Zealand and the Philippines will have the opportunity to join the Deccan Chargers and enjoy all the benefits of being a member of one of the premier IPL teams. I am sure our fans will enjoy the plethora of rewards.
  • ‘For strong ROI in India’s TV biz, price controls must go’ : Fox International Channels president & CEO Hernan Lopez

    ‘For strong ROI in India’s TV biz, price controls must go’ : Fox International Channels president & CEO Hernan Lopez

    Price controls are limiting the revenue growth for broadcasters in India as they earn net income of $700 million from subscription after paying out carriage fees of $400 million. Investments in programming are muted and, as a result, India is not able to export television formats and finished content while software, music and animation is travelling overseas.

     

    In an interview with Indiantelevision.com‘s Ashwin Pinto, Fox International channels president, CEO Hernan Lopex says price controls have to go if the industry is to see strong ROI. He also talks about the company‘s growth plans worldwide.

     

    Excerpts:

    Q. Do you see India‘s television broadcasting industry growing at the right pace?
    Broadcasters in India earn net income of $700 million from subscription after paying out carriage fees of $400 million. This is holding back investments in programming. India, as a result, is not able to export television formats and finished content while software, music and animation is travelling overseas. If the industry is to see strong ROI which would encourage greater investments in programming, then price controls must go.

    Q. What you are suggesting is that pay-revenues should scale up. What is the ideal revenue mix between subscription and advertising revenues?
    It should be in equal ratio, which is what it is in the US. But in India it is heavily skewed towards advertising. Broadcasters generate $2.6 billion a year in advertising. Subscription income is dismally low in comparison.

     

    Relative to the size of the Indian economy as measured by GDP, this is only 0.04 per cent, and this ratio keeps declining. By contrast, in Colombia, a country with 1/25th of the population, broadcasters get over $200 million in subscriber fees. That is equivalent to 0.07 per cent of the GDP in Colombia, and that ratio keeps rising – partially due to the efforts that Colombia is doing to fight content theft and subscriber under-declaration.

    Q. So India should learn from Colombia and allow its content industry to flourish?
    Price controls lead to creative shackles. At Fox we buy formats and content from different markets, but India is not there. This is surely not due to lack of talent, ambition and vision.

     

    In Colombia a TV episode costs $150,000 compared to India where an episode costs around $20,000. The turnaround there was the emphasis on creating a dual revenue stream. New channels were launched for underserved audiences. Consumers also wanted content in Spanish and Portugese.

     

    That is because Colombia has a strong system of TV production, has great writers, animators, actors and the country also fights strongly against piracy. In India under declaration, along with controls, means that the broadcasters are getting squeezed.

     

    Q. But ARPUs (average revenue per subscriber) are low in India. How do you make consumers pay more for quality content?
    When consumers see that spending more money results in better content, then they will be happy to pay more. In some markets, initially consumers thought that cable and satellite services were not worth paying for. But as more options were added, they realised that they were getting value. I am looking forward to a time when my children, when searching for content, find choices that come out of India. I am keen on buying Indian formats that can be shown elsewhere.
    ‘We have seen double-digit growth year-on-year. We run a profitable business in India that is based on strong fundamentals with dual revenue streams of affiliate and advertising‘

    Q. So you are not happy with FIC‘s growth in India?
    We have seen double-digit growth year-on-year. We run a profitable business that is based on strong fundamentals with dual revenue streams of affiliate and advertising, which are both showing a steady upward trend. Currently, we have six of our channels in the Documentary and Lifestyle space in India.

    Q. As a market how is India different from the rest of Asia in terms of challenges and opportunities?
    We run our channels in over 100 countries around the globe. While there are big similarities across markets, each has some of its own peculiarities and challenges. I think that the challenge of scarce bandwidth for channels coupled with price control and carriage fees put a limit on the revenue potential. However, India is a land of huge opportunity and with mandatory digitisation in the Metros slated to kick off in 2012, we believe that a very bright future is ahead.

    Q. With digitisation set to take off in India, do you see the carriage fee structure being rationalised based on the experience in other markets or will disputes happen with big operators like what happened in the US with Comcast?
    We believe that digitisation will help all the stakeholders in the business to realise the true value – Last Mile Operators, MSOs and broadcasters.

     

    There will be teething issues like in any new technology, but market forces will aid the stakeholders in arriving at an understanding.

    Q. News Corp restructured the Fox Networks Group last year. What was the aim and how did this impact Fox International Channels?
    The goal was to foster stronger cooperation between various units. As a result, Fox International Channels has strengthened its ties with the US networks in entertainment, factual and sports.

    Q. Aren‘t you looking at doubling operating profit and reaching $1 billion by 2015? 
    The gameplan is very simple: to continue to deliver to platforms, advertisers and viewers a portfolio of must-have brands.

     

    This is what we call “brands with fans” – and get a fair share of wallet for it. In order to do that, we are investing more in content (both global and local), marketing and our teams.

    Q. How much revenue does Fox International Channels contribute to News Corp’s TV business and what growth has been experienced year on year?
    In FY‘11, we made a little over $1.5 billion in revenues and we‘re growing at double-digit rates.

    Q. How do you split up the global market into regions and which are your three biggest markets globally?
    We run Latin America and US Hispanic; Italy and Germany; the rest of Europe and Africa; and the Asia/Pacific/Middle East. We don‘t disclose the ranking at the country level.

    Q. Globally what is the split between subscription and ad sales and which area do you see growing faster?
    About two-third of our revenues come from subscription, with the balance coming from advertising, syndication, and other fees. We strive to make all revenue sources grow at the same rate.

    Q. Pay TV you have said is turning from a “nice to have” to “must have” service. How is this changing the dynamics of your business?
    Whereas in the past we programmed primarily shows produced in the US, we are now broadening the scope of our lineup. The aim is to include more local shows, as well as different genres.

    Q. What challenges is the current economic slowdown posing?
    In a handful of cycles we‘ve seen ad revenues decline, but overall our profits continue to increase.

    Q. Has Fox International Channels done recent research to find out what consumers globally want and how they view your brands?
    We are indeed finalising a brand audit in 10 countries as we speak.

    Q. Digitisation globally is allowing FIC to have more specialised offerings in genres like Crime. How has their offtake been?
    Very positive! Fox Crime, for instance, is the number one channel in Italy, surpassing even Fox.

    Q. Are there any genres that are currently underserved globally? If so, how do you plan to service them?
    Our portfolio globally includes entertainment, sports, factual and lifestyle – we‘re quite content with it.

    Q. What role does sports play in your portfolio as it is a challenge to control costs given the intense competition for rights?
    Sports is the ultimate must-have content. But because of it, there is intense competition for rights.

     

    We simply must be disciplined in our approach, but we have the benefit of a wide portfolio of channels – includingentertainment channels – that can both contribute to and benefit from having sports in the portfolio.

    Q. Globally, how has FIC expanded?
    These are exciting times! We now have 1.1 billion cumulative subscribers, and have a presence in 57 offices. I have been to 40 of them.

     

    We have added Fox Sports to our portfolio in Latin America, and continue to increase ratings at the National Geographic Channels. And yet there is still so much more to be done.

    Q. How difficult is China due to government regulation?
    We have a small but profitable business in China.

    Q. New media is growing globally. Are you launching channels for the mobile and Internet?
    We are launching mobile extensions of our TV brands, like the Fox Movies Premium Player in Asia.

    Q. How is Fox International Channels leveraging high definition?
    My goal is to launch nearly every TV channel from now on simultaneously on HD and SD.