Television

''Economically sensible model is a combination of CPT and correction of income growth' : Paritosh Joshi- Star India President

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It's now a known fact that HLL has pulled its advertising off the Star India Network, but whether a non co-existence and exchange between the biggest advertiser on television and the top rated television network in the country is a healthy proposition for either of the two parties, is the moot point?

Even though TRP rates have declined across the network by 1-1.5 per cent after the implementation of Cas, it is also true that the television universe has grown drastically. And the truth is, Star has been singled out, leading one to question if there is a larger issue at stake here between the two mammoth corporations in this face-off that kicked off in March this year.

Star president advertising sales and distribution Paritosh Joshi says that it is more than just an individual client issue but part of a larger debate for which the industry cannot behave like a cartel because that is unethical.

Presented here are comments made to Indiantelevision.com on the matter by Star India president Paritosh Joshi. Additonally, relevant comments made in earlier interactions with Indiantelevision.com by HLL GM - Media Services Rahul Welde and Zee Network executive V-P Joy Chakraborthy have been provided in an attempt to offer a more rounded overview of the issue.





Excerpts:

How do you propose to address the issue that HLL has put the forth through its boycott of the network and rejection of Star's advertising rate card?

A solution to this will emerge as a fallout of the understanding of two dramatic developments in television. First the growth in television homes in the Hindi speaking markets of the East, West and North but not the South that is already saturated.

Secondly, the GDP, which is estimated to grow by 8.9 per cent year on year. However, there is a disproportionate income increase in which the top 60 per cent of the population absorbs this growth. Out of the 120 million TV homes, 70 million are C&S, therefore with the kind of growth in disposable incomes that the country is seeing, the number of C&S homes will grow by twice that rate.

The aggregate value of television ad sales is likely to see 20-22 per cent Y-O-Y growth. If this is not reflected as an industry then we are under monetized.

Is CPT is the answer?

I believe an economically sensible model is a combination of CPT and correction of income growth.

Should broadcasters be united on this front?

The industry cannot behave like a cartel because that is unethical. We have to, as individual broadcasters, explain this to the client in a sensible manner and get them to recognize and find merit in the argument.

But how then do you fill up the bulk of your inventory?

The Cricket World Cup has in some ways contributed to clients looking for a more reliable, robust and stable inventory. With April to June being a buoyant period with new category launches and the new financial year, there are enough interested clients. We are seeing high activity from the skin care sector, bottled beverages, refrigerated foods and air conditioner brands.

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'Money is shifting from the big to the small or from the leaders to the challengers'

With HLL always known to be television heavy, what happens in the case of mass channels and niche channels, what strategy would you follow in that case?

Well, we do spend on niche and mass channels, but with the whole area of fragmentation of audiences with multiple channels emerging, where stickiness is a challenge and competition is high. Now what it really means for us is that segmentation and multiplication of channels provides the opportunity to peg note and talk to the consumer.

Unfortunately, the costs have increased and given that the overall advertising pie is fixed. The ad pie doesn't grow because there are more channels, but what is happening is money is shifting from the big to the small or from the leaders to the challengers.

The growth of channels, we will see an increase in the number seconds, but what is often interpreted is that spends are also increasing in the same proportion. It is of course a big challenge as fragmentation makes the task of planning even more difficult, where agencies will produce software and optimizers making the process more sophisticated. This scenario is good for segmentation, bad for costs. Thus I don't know whether to call it a 'happy situation' because after a point of time your returns become sub-optimal when costs are high. Then that becomes a worry.

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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.

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.

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.

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.

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.

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.

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