Television

"PAY TV IS NO EASY OPTION"

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The bearded Kunal Dasgupta has indeed come a long way. The once-luggage company finance chief today is firmly perched in his seat as CEO of Sony Entertainment Television, an entertainment firm. That‘s about as far as chalk is from cheese. But he‘s done the job well and earn the plaudits of the whole television community. Sony is within arm‘s distance of catching up with Zee TV, which once led it by more than a length. Dasgupta spoke at length about the state of the Indian television market, Sony today and in the future. Excerpts:

What do you think of what is happening in the television market?



If you look at television you will notice that we are in the second round of an explosion in content. 1995-96 witnessed the first round and then there was a shakeout. Since then, there has been a large scale increase in the number of channels. There are many more general entertainment television channels. In the next few months you will have more than a 100 channels. It‘s a good thing for the consumer. But the fact is each entrant has to find his market, his niche. The risk is 10 times greater than it was earlier. Look at Zee TV and its performance on the stock market. IT has totally lost its steam.





What about the ad market?



The ad market is growing at 15 per cent annum. Yes, some of the new players will try and take away shares but the earlier ones are going to fight tooth and nail. The worrying fact is viewership. Some years ago, DD could get TRPs (viewership rating) of 50. Two years ago, a 15 rating was the best show‘s performance with the explosion in satellite. Today, getting a TRP of nine is a tough task. Tomorrow that is expected to fall to four or five. That means a fight for advertising. Therefore subscriber revenues have to grow if advertising cannot keep pace. But even here there is trouble. Everyone thinks that putting decoders is going to yield money; there‘s a buzz that pay TV revenues are the way to go. But they are sadly wrong!!!





Why?



As more channels are encrypting, competition is pushing price down. And the battle for the cable operator‘s licence fees is getting even more bitter. ESPN is the king of pay TV, it can get Rs 7 per sub per month and with eight million subs it means it is getting Rs 56 million per month. It had the first mover and great content advantage. But since then the price you can get out of cable operators has been going down; no one is close to ESPN and Star Sports. A couple of rupees, even as low as 70 paise, which is about a cent and a half is what people have been able to get. Even an HBO is having a tough time, one of the world‘s better known pay services, in India, it is barely getting a few rupees. In fact, AXN is faring better than it, because HBO is a latecomer. The smaller guys are going to have a tough time. It is an interesting time to be operating in.



What is SET‘s plan in such a scenario?



SET will consolidate. We will focus on both advertising and subscription. We will also move out more internationally and into the Net. On the international front, we have just signed on with Astro in Malaysia and are on Cakrwarta in Indonesia. We are getting a couple of dollars per sub from Astro. Also, we have just signed an agreement with Echostar to make a comeback in the US on satellite. We are opening up South Africa soon to be followed by Australia. We also think there is a good deal of scope for Set Max in west Asia and we will take it there. We already have a revenue of around Rs 600 million from our international operations.





What is your key concern area?



One of my key concern areas is content costs. Too many people are coming in hence costs are going up and business is looking tough. Revenues are not going up in tandem as much as the costs.



What content costs?



The Hindi movie segment is big and it has been hot and is getting hotter. Star Cinema is launching soon. B4U Movies is expected to debut. Then we have Zee Cinema, Set Max, and the cable channels CVO, CCC. Costs are going haywire. The Hindi movie maker has never had it so good. Today, even before a movie is launched people are buying the television rights for Rs 20-30 million. This means that the movie maker can recover his investment even before he makes it just by selling the television and music rights. Whatever comes from theatrical earnings is cream for the movie maker. The movie channels are, however, not perturbed and they have started this mad rush.



Isn‘t cricket a concern area?



Not really. We had promised 21 days of live cricket and we should be able to fulfil that promise this year. We have the Sri Lanka tour in June-July, Singapore in August 2000 and Sharjah in October 2000. Yes, we won‘t have the rights after the Sri Lanka tour but we will bid again and we should get them.



What about TV series?



The pressure is on us to become even more creative. More savvy in our productions. I believe the core to any television channel‘s survival is the creative edge and knowledge.



We have to create slicker shows at lower costs. We are proactively moving in this direction. As of last year we had 26 people in our creative department; today we have 80. These 80 creative minds are working on developing products and outsourcing them. We have stopped the practice of accepting pilots. We want strong concepts. We ask for details going up to even 100 episodes. Once we get a worthy project, we put together a team to produce it for us; we bankroll the project.



This helps us have a lot of control over the genre portfolio we can show on the channel, storylines, costs and helps us even make adaptations based on viewership ratings. In the pilot scheme of things, if we got 48 Love story pilots, two thrillers, when we actually wanted two thrillers, two sitcoms, two romance, two talk shows. We had little control, we were in the clutches of producers. Now we can take the same producer‘s assistant and ask him to put together a team, which helps us bring things under control. I believe we are investing in designing an inhouse design boutique. The core team working on products is myself, Sudesh Iyer (a SET director), and Raveena (programming chief).



How far have you progressed with your digital bouquet?



We have got four channels already and are in conversation with several other groups, actually four of them. Two of them will come on board before the end of the year.

 



Language product is lacking in your portfolio. How do you plans on plugging that gap?



I am not interested in language product now. Talk to me in two years. Too many of them are coming up and they are going to bleed in a couple of years. And they will be available for cheap then. I will pick them up then. I am telling myself and the team: let us concentrate on our key exiting properties and eke out even more revenue from them.



The Internet does not figure in your scheme does it?



Of course it does. But we will have to cut the hype. Cable TV delivered Internet is a mirage so far; how many people have promised Internet but have not come up with a concrete product. The problem is the high cost and the cable TV operator who is not willing to give up the last mile. Until this is sorted out - and it will take a long time - cable TV delivered Internet will be all talk.





As far as we are concerned, Sonnet of Japan is launching its ISP services here. We will have a Sony portal being set up by Sony Music, Sony Entertainment, and Sony India. It will have 72 verticals with everything from television to entertainment to streaming video to games to fashion.





However, we do not expect revenue from the Internet for another two to three years.



What are your revenue targets?



For this year, our revenue targets are Rs 8,000 million. I expect Rs 1,000 million from overseas subscription and sales. Rs 1,000 million should come in from local distribution. Rs 5,500 million from advertising (we did about Rs 3,730 million last year) and Rs 500 million from the theatrical releases of films we have on the floor now.



There has been a reorganisation at SET. Who‘s looking after what?



I am overall responsible for SET and all its activities. Kacon Sethi looks after Set Max. AXN, domestic distribution and international sales are the responsibility of Rajesh Pant, the COO. Anand Desai looks after CNBC India. We are looking for somebody to head the film, Internet, technology and legal units at the company.

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