DTH

Driving growth & profit in a changing broadcast paradigm

MUMBAI: The television environment is changing constantly in India and now with addressablility coming in the form of more direct to home (DTH) platforms, which are scheduled to launch in the coming months; broadcasters have to constantly keep pace with the changing industry dynamics to drive growth and profit.

This was the issue that was addressed in the morning session of the first India Television Summit organized by Indiantelevision.com and Media Partners Asia (MPA). The panel discussion had Indiantelevision.com founder and CEO Anil Wanvari and MPA director of content and research Vivek Couto as moderators. The panel comprised Sahara Entertainment CEO Shantonu Aditya, Madison World CMD Sam Balsara, Sony Entertainment Television India CEO Kunal Dasgupta, Tam India CEO L V Krishnan, Star India CEO Peter Mukerjea and UTV CEO Ronnie Screwvala.

 

 

The question posed by the moderators was whether it was achievable to have the television ad market growing in line with the gross domestic product (GDP)? Krishnan said that 2004 was a year wherein we saw a lot of political advertising money coming in the market because of the elections. Balsara on the other hand said that we have to set our sights higher than the GPD growth, which was about 6 ? - 7 per cent.

"The advertising industry is adding a zero to its figure every decade and now the number stands at Rs 10,000 crores. Hopefully in the next decade, it will be Rs 100,000 crores. In the last decade, TV was the darling of every advertiser but in the last two ? three years due to fragmentation and fall in TVRs, advertisers are realizing that television ads are not giving them returns that it used to."

Mukerjea said, "The universe of television has grown but the unit cost of rate per second has not grown like that. There has been a 40 per cent growth in the number of people watching television and television ratings should be seen in that context. However, the numbers have to be in excess of the 30 per cent growth." He also added that advertisers were lifting the benchmark of what kinds of investments are being made.

To this Balsara said, "The advertiser is actually spending a hug amount of money but the fact is that the ads are getting much less out of that. Brining down the prices of channels is not working for the advertiser as it is not delivering value in terms of ROI."

 

 

Speaking on the growth aspect, Dasgupta said, "The fact is that we are not able to meet the demand. When there is a sufficient level of demand and there is competition in the market, we will not see that kind of growth." Screwvala, on the other hand said that he didn't think that there was a correlation between the cost of content and advertising. "At the end of the day, we are looking at the delivery of the programme," he said.

Aditya on his behalf believed that the growth was going to come from the smaller regional markets. "There are so many channels today and there is a niche out there in the smaller markets which will drive the business in the coming years. Cost per rating points (CPRP) is much cheaper now," he said.

Answering a question posed by Wanvari as to were the panelists satisfied with the TVRs that their shows were getting, Aditya said that he was at this point in time. "But the fact of the matter is that the country is not adequately represented by the number of meters that are there today. "Bihar, which constitutes 10 per cent of India's population, is not represented in Tam data. As a broadcaster, I would like to know the television watching trends in Bihar and the other states that are not represented." Mukerjea too concurred that there were not sufficient number of boxes at present to represent a diverse country like India.

Krishnan in his defense said that Tam realized that more boxes were needed to represent the new television universe but that funding from the industry was required to do the same. "We do need a bigger sample size and ensure that the universe is adequately represented," he said.

Moving on to the issue of how alternate platforms like DTH and broadband television were likely to affect business models of broadcasters, Screwvala said, "We have done well without regulations so far. DTH will be present but will not be as an alternative to cable. Broadband television is also likely to come in but not in the near future and hence it is too early to talk about it."

Dwelling on the controversial issue of carriage fee paid by broadcasters to cable operators these days, Dasgupta said, "With the minimal amount of Rs 250 that cable operators get per connection, they have no incentive to upgrade their systems and hence they are very happy with the carriage fees that broadcasters are willing to pay them. It is an alternative source of income for them and as more and more channels come in, there will be more carriage fee. If this carries on, then instead of profits, broadcasters will face losses.

While cable operators will be lining their pockets harder, the bigger broadcasting networks will survive and the smaller ones will perish."

Mukerjea concurred with Screwvala saying that broadband television would take some time to set foot in India and then too just a few thousand people will have access to it and it won't have the high quality that DTH will be able to provide. Once DTH comes in full strength, the cable industry will see a sea of change and the quality of product and its price will depend on competition in the DTH arena.

Krishnan emphasized that with the coming in of DTH; the era of content marketing will arrive in a big way.

Screwvala said that today $200 ? 300 million was going into the carriage fees business. In such a scenario, the ideal business model for smaller channels would be syndication and it will also help to hop on to a existing big bouquet of channels.

Mukerjea predicted that as time goes by, further syndication was bound to happen and there will be more fragmentation in each category. "Like different kids channels which cater to different age groups, there will be the same kind of segmentation in other genres like music and movies too. The aim will be to address specific audience groups in the future when addressablility comes in."

When asked as to what was the percentage contribution of syndication to the overall revenues of the companies; Dasgupta said for Sony it was 20 per cent, for Star Mukerjea said it would be around 5 ? 10 per cent, Aditya pegged it at 30 per cent for Sahara and Screwvala put the number at 35 ? 40 per cent for UTV.

 

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