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The big news currently seems to be around how Hindustan Lever is significantly increasing spends on your network. You have even been on record as saying you are looking at a growth of at least 100% on Lever spend in FY08 over FY07? How do you justify that optimism?
Levers is the biggest client in the television space and we have channels across all genres, Levers is a good client for consumption also because they are perennial clients. There has been rate correction but we have also given them big properties. At the same time, Levers buying process over the last two years has changed, initially they used to buy slots that appeared at a particular time band but now they have started buying quality as well so they would necessarily have to pay for that. Therefore, there has been a jump in ad sales rates this year over the previous year.
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When you say ‘rate correction’ – what do you mean?
The Zee network itself is very under-priced, so we are continuously correcting our rates. I have over my tenure here (which is two years) revised my rates three times, but no rate correction is very drastic, it’s really a gradual correction.
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After all we are still in a World Cup year and although India is out of the tournament, we will see loads of other cricket action as well?
As a network, we haven’t suffered at the hands of cricket. However a lot of money is diverted there. But thanks to cricket and sport, I believe that the overall PUT (people utilizing television) will also increase, because of World Cup TV sales will also increase, so the whole space is only going to expand.
It will eventually benefit us also, but my only concern and what I see as a challenge this year is that the unofficial currency is cost per rating point (CPRP), which has to move cost per thousand (CPT). CPT is more important and with Tam’s expanded panel the absolute number of people watching has increased by 50 per cent and we as an industry should be paid for that. Even more, if you are a listed body you also should subscribe to the CPT model, which will happen sooner or later.
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But how soon do you think the transition from a CPRP model to CPT model will take to materialize?
The IBF and AAAI have already met on two occasions, the next one is in April. But at the end of the day this shift will benefit all of us. It’s not that it is unfortunate for the client alone, as the television medium continues to grow the cost of programming, distribution, marketing and manpower is increasing every day. With the CPT model the ad rates will go up, infact most agencies buy on CPRP and give it to the client on CPT, but after expansion the minimum rate has increased. The recommendations of these two industry body’s should materialize within a month’s time.
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It has been previously stated that Cas impact only accounts for a 1- 1.5% drop in C&S 4+ level across TV. However, with moves to extend Cas to cover the full metros and then possibly go into other cities and towns this argument cannot be sustained for much longer. How does Zee view this situation and how do you plan to use it to your advantage?
Cas is here to stay but the thing is that Cas growth was marginal, across the Zee network the drop accounted for 2.5 per cent, which is very less in comparison to the kind of growth that we are experiencing.
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With Cas rolling out further, the pressure from media buyers on rates is only going to go up? Do you see the possibility of many channels, including entertainment channels, going FTA to protect advertising revenues? For instance, Peter Mukerjea’s Hindi entertainment channels will be FTA when it launches…?
Sometime we really wonder whom the media buyers really work for, the channel or the client. They will always pressurize us. Do you think they deal with rate hikes easily? They will fight for each rupee just as we fight for the same. But that is what makes our relationship so lasting.
India is the only market where ad revenues are more than distribution revenues, ideally it should be the other way round. It will be better for the industry if distribution revenue picks up. Worldwide the distribution versus ad revenue model is 70:30, but in India it’s about 35:65.
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What’s the viewership growth that Zee network has seen in 2006 over 2005?
It’s not only about Zee TV, but all our channels across the network have done well. In Marathi and Bangla we are number one, even Zee TV from Monday to Friday is delivering for us, as it is not just about one show alone. We have such a spread across our network and as a sales head I would rather have a couple of shows delivering 4 – 5 per cent ratings rather than one show delivering 10 per cent, as it helps my inventory giving us a properly defined FPC (fix point chart), because all our shows deliver within numbers in this region providing a complete media plan.
Sa Re Ga Ma Pa has been the mantra for the network, not only did Zee TV come back with the show but also Marathi and Bangla. I believe Zee Café is number one right now and with Zee Studio we are getting back to where we belong, which means we are getting close to HBO and Star Movies. Etc and Zee Music combined gives us better numbers than even MTV and Channel [V]. Therefore, we are trying to find ways of selling together.
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In Zee TV you now have a strong number two position sewn up? Which are the channels that you have achieved a clear leadership position with?
Percentage wise all the channels have seen growth, but in the cinema genre there has been a significant correction in GRP’s with the number of people watching cinema drastically increasing. Today 155 -160 GRP’s is equivalent to 210 GRP’s in the past, which is an absolute number of people. Movies generally give an average of 0.8 – 1.3 ratings, which points to the number of people sampling the channel.
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What’s the current order of importance of channels on the Zee network in terms of ad sales and how does it stack up percentage wise?
Zee TV is operating on GEC where the maximum revenue lies, it will always remain the top most from an ad sales point, followed by Cinema, Marathi, Bangla, then Café, Studio, Music and Etc will stack up accordingly. But value-wise and outlay-wise these four are the ones that deliver the maximum.
For example percentage wise Zee TV would range between 50 – 60 per cent, Cinema would be roughly around 25 per cent, while the others will corner the remaining share of the pie.
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‘Our differentiator is that we don’t compromise on the big channels just to accommodate weaker ones‘
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How is the selling done across the network? Is it broken up into Hindi entertainment, news, cinema, English entertainment and regional channels? Or is there some other formula you apply?
We work on a matrix, for which we have all India heads and branch heads. The obvious thing is to present one face of the network to the media buyer without losing the immediate focus. The differentiation in the way we work is that we don’t compromise on the big channels just to accommodate weaker channels. As part of our strategy we also do network deals with clients like HLL, Pepsi, Coke, Nestle, L’Oreal for which we provide a bouquet offer. In fact, we can replace a lot of other networks because we have a range of channel genres to offer from GEC, music, cinema, regional etc. Each of the channels within the bouquet has its own respective teams which go out and meet the market and keep updating media agencies and through SMS we inform the trade of current GRP’s.
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From a programming perspective, Zee TV has gained a strong foothold between the 8 and 10:30 prime time, and even with the arrival of KBC you have managed to hold your ground to an extent. Are there any strategies in place to really get into programming overdrive once KBC completes its run?
If you see, we did not panic at all when KBC was launching and didn’t resort to doing anything drastically different. We have a very close knit team for programming and marketing that evaluates the market and competition. Infact our primetime is not just 8-10.30 pm, we start at 7 pm and 7 – 11.30 pm is what we like to call primetime. All our properties are Monday – Friday that gives us a weekday skew of scheduling spots, which has been consistent in delivering an average rating between 2.5 – 8 per cent. Besides we also do plug repeats of Sa Re Ga Ma Pa, Shabash India and Johhny Aala Re.
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But what about the afternoon prime time? That is a band that Sony is actively looking at as well we’re told?
This is a place we are not currently at, but would like to be in the future depending on the decisions taken by the programming team. With KBC and cricket we noticed that suddenly the afternoon was doing well for us, causing the time band to grow big time across all out channels. We have plans that will be unveiled once budgets are approved by the management for the financial year April – March.
As for Sony, there seems to be confusion as to whether to go with reality or not. I strongly feel that soaps are the most important thing for a GEC because it gives you consistent viewers. I enter the fiscal in April with 60 per cent of my deals done in advance, on an assumption of X, that only soaps can deliver. As reality picks up only towards the end, you should have an ideal mix of soaps and reality, which as a network we currently have. This ultimately helps me sell well as I have more properties to offer to a client.
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Any significant weaknesses? And how do you propose to get it sorted out?
As a network the year has been very good but we still have miles to go. For Zee TV alone, its just been a year since we started doing well, besides there is so much to be done within this genre.
Also, the type of selling methodology is changing and we have to understand the move from CPRP to CPT. Going forward we would also like to focus on training people with skill sets because until now it was just fire fighting to grab the money that was lying in the market. |
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What has been the growth like over FY06 and has it been in line with the targets you set? What are the revenues you are expecting to close this fiscal at?
I can’t reveal growth figures but the growth has exceeded my predictions.
We have infact exceed our revenue target by 30 per cent. However, we keep revising our targets depending upon demand and supply, channel performance which are fixed standards for us. But usually these floating targets usually go up.
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And what about Zee Next? There was talk that it would launch by mid-year. Is that plan still on track or is the current view that another channel might be a distraction as far as Zee TV’s focus on getting further ahead is concerned?
It is still in the planning stage as there are various factors to be considered before launching a channel and we want to be fully prepared. But it is on our radar for this year. To say we are ‘on track’ largely depends on the market conditions and with KBC and so many channels actually coming in, it depends on how and when to launch.
Yes, currently the focus is on Zee TV because our FPC has changed slightly. We also have programme launches, Sa Re Ga Ma Pa will return at the end of April and a few more strategies that will help sales.
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The Zee Cine Awards in Malaysia are obviously a headline event for you. Could you offer a picture as to the big properties Zee will have in the coming months?
We are probably the only broadcasters that can say we own an award. In fact, the client gets lots of exposure by tying up with it across the network, that’s why there is a demand for it. It was within four days from the day we started selling, that we were sold out.
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How do you view the coming onslaught of channel launches? Wouldn’t the increased clutter only lead to further pressure on price points?
It will affect the TV space causing further fragmentation but with so many channels coming in the number of people watching TV will increase. The only bad side to this is that new entrants will spoil the market, causing marketing and distribution costs to go up. Additionally, discounting rates will also get affected. But please note, it’s not easy to launch a channel as after launch it is difficult to maintain, because how long can you bleed? You’re basically into business and not into charity, so lets see how many will last?
Yes, there will be pressure on price points. A situation will arise where there will be a lot of buying out of people as well as offering different credit periods to suppliers and this will ultimately spoil the market.
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If you were asked to offer a view on how the broadcast landscape will look over the coming year, what would that be?
My only request would be that people should be very careful and do their homework before launching a channel. We have a big bouquet of channels and we know what it’s like.
Just because somebody says GEC has got so much money and if I launch I will eat some of that pie, but at the end of the day it must make business sense.
Competition will always keep you on your toes, you can’t be complacent and you can’t take people for granted. Even if the channel is performing, you have to be there out in the market.
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