'In 3 yrs, there will only be 2 sports b'casters who will have any kind of market share' : Harish Thawani

Could you talk about what your investors 3i and Deutsche Bank bring to the table?

From our point of view, getting the entry of these two firms to provide finance to the parent company has been a very strong move forward. They are world class institutions. It is nice to get additional rounds of financing into any growing company.

To get it from a typical private equity investor in a hot market is not difficult. But to get it from blue chip firms is good. 3i is the only listed private equity firm in Europe. It manages tens of billions of pounds. Deutsche is a leading bank. It convinces our partners, managers, media, analysts that the company is on a solid growth track.

They have also helped us to expand our ambitions. They recognise now that securing finance for deals worth one or two billion dollars is not difficult. They have also brought wisdom.

They deal with hundreds of companies across the globe either as lenders or investors. The robustness they have brought into our business planning process, our key performance indicators is amazing. The processes in the company have been made more scientific and helped us take corrective action when things are not getting adequate traction. All in all, it is fantastic to have them in the company.


Could you give me an idea of the calculations that went into offering over $600 million for the rights to India cricket?

Firstly there is a prime need for a cricket centric channel. It should have been done earlier. Why no one has done it before beats me. It may have been a vision issue.

We are looking to charge a premium price. Broadcasters so far have not had the guts to charge the price that they feel reflects the true value of their product. What I can confirm is that our pricing will be considerably higher than ESPN Star Sports.

Neo Sports is premium not just in cricket but also in product feel, the technology investment we are making. We are building up for high definition ready. We are the first company to install complete station automation software for the channel from day one. When you invest and create a premium product you expect premium pricing.

Secondly, we felt that DTH would arrive before we launched and it has. The two platforms are rapidly rolling out. It is good for everybody. We also took a punt that cable growth momentum will not slow down and it has not.

The biggest punt that we took though, was that advertising would explode and will continue to do so particularly for premium product categories. CNN IBN and NDTV prove that.

There are four new sectors coming into cricket. Real estate entered ahead of our forecast mind you. Though there are only two players it is enough to change the landscape. Retail will enter in the next couple of months with Reliance and Pantaloon. Insurance will also pick up with Tata AIG, Reliance and Bharti. Allianz Bajaj took title sponsorship for the India Pakistan series.

The fourth sector that will start advertising on cricket in a big way are diversified corporate groups looking for a corporate identity. They have to consolidate their identity to create tertiary industries. This together with the 11 existing cricket advertising sectors makes it 15.

Think about it, you only have eight sponsorship positions to sell. Price is not determined by value. It is always determined by perception and by the supply demand equation. If we reduce inventory from 5,400 seconds for an ODI to 4,200 seconds, the price will rise as demand will outstrip supply. At 5,400 seconds on an ODI the demand and supply equation is balanced. If you go to 6,000 seconds you run into the danger of oversupply. But 5,400 is a very comfortable level. And you can make the same amount of money with 4,200 seconds (by hiking rates) of advertising and the viewer will be satisfied.

New sectors coming in to cricket advertising means that the demand supply equation will change. Our internal benchmarks are a soft launch on 1 October, commercial launch on 1 November. 1 January 2007 is when we want to arrive as a globally benchmarked competitive sports network. Before that date comes I can say that we will have eight sponsors locked in on five year contracts. They want it. People approach us and say, "When do we sit down and do a five year deal?"

Between the eight sponsors that we will have locked in 60 per cent of the channel's inventory will have been snapped up.

They do not believe in the artificial division of three and a half or four years. The momentum anyway gets carried to the next period. The eight charter partners will enjoy the best positions and exclusivity on cricket advertising. We are not going to shut shop.

Even if we do not have BCCI rights, after four years there will be other rights that we will have accumulated over the years. If you look at Kyunki Saas Bhi Kabhi Bahu Thi, the ratings have been declining over the past three years. Is the product weak? No. It is just that consumer interest in that product is declining. Cricket ratings have been stable but in terms of audience delivery it has grown as the size of the audience has grown.

Once we introduce more stickiness through language, technology, on screen stuff, you will find that the cricket audience will grow in relation to steady decline and fragmentation in other product categories. Other sports too, are starting to deliver like football, racing, albeit in small numbers.

Another factor is the increased supply of cricket rights. Cricket rights supply is elastic. It currently is double to what it was five years back. ICC for instance, is doing one event a year. Earlier, it was doing one in two years. BCCI has increased their product supply by 50 per cent. They may increase it by 100 per cent.

Having said that, my response to the surprise people expressed at the price we paid for the cricket rights is that it is a tyranny of small minds. This prevents people from being able to grasp a larger vision.

If the industry at large expects us to discuss our revenue model and our business plans through the media and take approval from our competitors before bidding then it is an unreasonable expectation. We have surprised people before and will continue to do so both by our strategy and by our implementation abilities.

'There are four new sectors coming into cricket. This together with the 11 existing cricket advertising sectors, makes it 15'

When Neo Sports launches, apart from India cricket, what are the other properties on its plate?

It is a cricket channel. There are three to four international series lined up in the calendar year.

The domestic cricket season has been expanded. We also have the Afro Asia Cup. I can't see much more room for international cricket and if we do then I cannot see more room to monetise that. The average time spent on a sports channel is 17 minutes a day when there is no live India cricket.

Why should I have eight hours of programming every day? I think that there are some popular myths that need to be revisited. Cleverer scheduling needs to be done. There has been a theory of tentpole viewership, apointment viewership. We will take the judicious mix of trying to create different kinds of viewing whether it is tentpole, appointment, dip in and dip out, interactive, sampling. We have to see what is doable and what the consumer is seeking. Does he want a half an hour dose of the world of tennis on Friday night or does he want cricket going on endlessly? Some answers are there in ratings while others we have gained through proprietary research. Some things we will learn along the way.

While we might make mistakes we do not want to wind up making expensive mistakes in other areas where the revenue models are as yet unknown. In cricket the revenue model is known. It is a question of stretching the boundaries and also being able to cleverly stretch the boundaries of viewership. We will come out with surprising innovations on how we will push for more viewership.


Could you give me an example?

For instance we will not just provide multiple languages we will also provide split runs. Advertisers who do not want to buy the whole country but only an HSM focus have the option. We are setting up a facility at Malad for this purpose. Once that is done we will come up with innovations in terms of buying media and viewing media. It is true that cricket sells. The advertiser will buy it, the viewer will watch it and the cable operator can be pushed to carry the feed.

The challenge is to find stickiness. This is a key opportunity area for us. The average viewing of a cricket match is 58 minutes. I do not need more viewers to double my ratings. I just need them to spend more time and this is an area we are focussing on. In long form programming like cricket how do you compel a viewer to watch it for longer?

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