Television

'We see the kids' space as a marathon race and not a sprint' : Frank Brown - MTV Networks Asia-Pacific president

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MTV Networks India is eyeing growth through acquisitions, be it in the area of local language TV channels, radio, print, production facilities and digital media. And to exploit the MTV and Nick brands, the company is setting up two revenue streams: digital new media and consumer products.

After Alex Kuruvilla quit MTV Networks India, MTV Networks Asia Pacific president Frank Brown has taken up the task of finding a CEO and COO to handle the company's ambitious growth plans. In an interview with Indiantelevision.com's Sibabrata Das and Manisha Bhattacharjee, Brown talks about the company's focus areas and how he feels it is strategically poised to "boom as the market in the music and kids' space booms."

Excerpts:

MTV Networks is finding it difficult to scale up revenues. How do you plan to speed up growth in India?

We see enormous potential for organic growth. We are in a fantastic strategic position as India has a huge population under the age group of 35 years, just the kind of audience we target. The cable and satellite homes have increased to 61 million and television advertising is on the upward curve. The affiliate revenue opportunities are immense as we have just got started on that. We are also interested in making acquisitions to build a complete growth strategy and scale in this market.

MTV launched a soap for the first time on the channel as part of the drive to boost organic growth. Was it a mistake?

We did many things with it - a talent hunt, a reality episode. We then spun it into a soap. But we went a little off track as the soap went into too many parallel stories, which was not youth focussed. We have learnt a lot from our experience.

Will soaps not surface on MTV again?

We will continue to develop long form programmes but its content has to be relevant to our youth audience. It also has to be true to the MTV brand.

Is it commercially viable for a music channel in India to invest on soaps or non music content like Channel [V] did when it wanted to position itself as a youth brand?

Once you engage in general entertainment programming for youth, the problem is you have the cost of general entertainment but you are targeting a niche audience. And you can only add in revenues of a niche channel. We know from our experience around the world that it is essential to stay true to your brand, to your music base, and to develop around the edges some content that has a different role to play - whether it is soap, movie or fashion programming.



You have to be careful on how far to go and how to do that in anything that actually takes a lot of your budget to develop; you build it out and there comes a natural equilibrium. What we are not to do is to say that we going to be a general entertainment channel, spend loads of money, and make these expensive shows only to find out later that the advertising revenue hasn't changed. You need to be careful and draw the balance as you put in creative ideas to press for organic growth.

Where do you see Nick today?

We have already taken the route to localisation and have around 15 and a half hours of dubbed Hindi programming. We have also produced local content here with Jo Bhole Jadoo and Dum Dumma Dum. We have started to localise interstitials and promotional spots. The channel has grown in distribution and viewership. The next stage would be to do more of local marketing for Nick.

'Interested in making acquisitions to build a complete growth strategy and scale in this market'

Surely you can't say Nick has had a successful run in India?

Well, Nick has been more like a shelf space holder over the last few years. The kids' market wasn't very big in India. We did not want to invest too much money ahead of the market. So we kind of planted the channel in, but didn't necessarily invest a lot of money into the development of Nick till date. You need to get distribution in place before you can pump in local content. As the market gets bigger, it gives you a much bigger growth opportunity and that's the time to start to invest. Actually, it is a good thing to rise with the rising tide. As the market booms, you boom with it.

But competitors are putting in place more than one channel to aggregate audiences. Cartoon Network has Pogo while UTV is planning launch of two more channels in this space. Won't you feel handicapped to wrestle with just one channel?

The trouble is that there is not that much of audience width in India that you can aim channels specifically at preschoolers, 4-9-year-olds and kids till 14 years of age. The economic viability of each of these channels which Ronnie Screwvala is planning is very questionable; the time has not come in India to segment kids' channels according to age, given the size of the market.



In the case of Cartoon Network, Pogo was launched more as a flanker channel; and as fragmentation takes place, Pogo is expected to take away share from that. The idea of offshoot channels from the main product (like we have Nick in the US) is viable in markets where there is a big enough audience with heavy spending power to drive in revenues from advertising and retail business from the brands. I think it is too early in India to have that model work here. It is better to have one strong channel rather than three weak channels.

Is the space getting too crowded?

A few players will emerge as relatively equal before the leadership is really won. You can't have so many players. I believe the revenue and audience will be split among three big players. Probably, you will have the same three main players - Disney, Turner and us - battling it out in India as is the case in the rest of the world. The industry will have shakeouts, mergers or acquisitions. We see the kids' space as a marathon race and not a sprint.

What makes you bullish about India?

In the kids' space everything is growing - the number of TV sets, the percentage of that population, and the advertising market. And as retail grows in India, the kids' retail will become a part of that business opportunity. We do not have an overnight plan to become huge in India. It is more of a long term development.

'Nick has been more like a shelf space holder over the last few years'
You have been in talks for long to sell programming blocks of Nick to other channels. Have you made any progress?

We are in number of conversations for block for Nick with various partners. There is no rush in these things. We want to make sure that we work out an arrangement with our partner that is a solid win-win situation for both of us in the long term.

As far as acquisition goes, what are the areas you are looking at?

We are interested in radio, print, production facilities and digital media - anything that would have a strategic fit with our vision. We are also interested in the local language TV channels, both for MTV as well as for Nick. We plan to have at least 2-3 acquisitions over the next three years. We are even open to joint ventures and not necessarily total buyouts.

Are you not pursuing the acquisition of Southern Spice (SS) Music?

We are not pursuing talks now. At the moment, it is on hold. But this does not necessarily mean that we will not open them up again.

Are you eyeing exploitation of content on mobile devices?

The next phase of our development is to launch digital new media business. The boom has already happened in Japan and Korea. It is happening right now in China and next up will be India for the digital boom of mobile content. We are probably in a better position than other companies to benefit from that boom as we have two brands in MTV and Nick that are targeted directly at the young consumers.

Do you still believe merchandising and licensing can become big in India?

The new business unit that we would be expanding into next is licensing and merchandising of consumer products. The way retail growth is taking place in India now, we see a fantastic growth opportunity in consumer products. Both for MTV and Nick these are big businesses overseas. A lot of consumer products will come out on the back of Nick. So as Nick grows and becomes stronger and successful, the consumer products opportunity around that will become huge. We will have a business head for each of our digital new media and consumer products businesses.

Will there be any organisational change to keep pace with such ambitious plans of the company?

We have been looking for a chief operating officer for long. And after the exit of Alex Kuruvilla, we are also looking for a chief executive officer. The COO will be responsible for day-to-day management, while the CEO would focus more on strategic development, new launches, acquisitions, joint ventures - more on scale development side of the business.

Do you think Vh1 has come late into the market?

We have had a very good start, though it is early days yet. Distribution has been good and advertisers will soon come on board.

Are you planning to get more channels in, particularly with direct-to-home (DTH) throwing up new opportunities?

We are looking at a lot of ideas, including some potential channels for DTH. We are eyeing the launch of new genres of channels. We would like to explore some original channels in India and then probably use it as a test case for launching in other markets.

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