Television

'It is better to play in the tier 1 GEC game and go out with full ammunition' : Rajesh Kamat - Colors CEO

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Viacom and Raghav Bahl-promoted Network18 are furiously working together to create an entertainment conglomerate in India. The central piece in their build-up plan is a Hindi general entertainment channel (GEC) that would support other blocks like a Hindi movie channel and a clutch of regional entertainment channels.

Colors has had a dream nine-month run, ending Star Plus’ nine-year rule to become the No. 1 GEC for two consecutive weeks. Puffed with big reality format shows and movies, the channel has made a mark with “disruptive” and “differentiated” content. Family dramas like Balika Vadhu, which are contrarian to Balaji Telefilms’ “K” soaps, have been lapped up by audiences.

Driving Colors’ growth is Rajesh Kamat, the strategist behind the big bang theory who loves to fire at his enemies from all sides. Crafting a plan built on costly but calculated bets, Kamat has shown that a direct play in the tier I GEC space is safer than a cautious, cost-conserving approach. Playing in the tier II game can extend the channel’s break even by four more years while the revenue upside for the tier I GEC is huge, he says.

No wonder Colors is eyeing a revenue of Rs 5 billion and a fourth-quarter break even this fiscal as the channel sits on a stable GRP (gross rating points) base of over 250.

Timing has been key to Kamat’s success as has been the ability to take risks. When Colors launched last year, TV audiences were already showing fatigue symptoms with an overdose of look alike, urban soaps. The movie syndication business had also caught on, allowing Colors to line up a formidable “second run” movie strategy within reasonable costs. Studio18, a sister company engaged in the movie production and distribution business, also churned out hits during the year.

Having spent his previous years at Rupert Murdoch’s Star India, Kamat has learnt the art of scaling up. He is ready to stitch advertising deals that would place Colors in the big league with revenues of over Rs 5 billion, kick in pay income, and take it to the international markets.

The distribution deal with TheOneAlliance, which has Indian Premier League (IPL) content through Max channel, will help Colors in making a smooth transition to pay. Besides, the deal guarantees the Viacom18 channels of Colors, MTV, Nick and VH1 a subscription revenue of Rs 3 billion over three years.

In an interview with Indiantelevision.com's Sibabrata Das, Colors CEO Kamat talks about the challenges that Hindi GECs face in a ring that has three close competitors.

Excerpts:

How significant a feeling is it to end Star Plus' nine-year rule as the No. 1 Hindi GEC and yet continue to fight weekly for the top slot?

For a challenger brand like Colors, it was important to breach the psychological barrier and feel life at the top. But we realise we are entering into a bloodbath as there would be no undisputed leader in the Hindi GEC space. From now on, it will be a weekly battle as Star Plus will not give up its nine-year rule so easily. Zee TV is also in the race. Like in the US, we are headed for a confused leadership status with dependence on spikes and seasonality.

So you are still in an uncomfortable position?

Not really. We have reached a stable base of 250 GRPs (gross rating points) from our programming. And we are not banking only on Balika Vadhu, which is the biggest perception driver show for us, for our ratings. We have a basket of shows that rate over 3 TVR. With movies, we are stable in the 280-300 GRP band.





There are other healthy indicators. Our reach at 73 per cent is higher than that of Star Plus. Our prime time GRPs are also higher.

Movies seem to be a divider between Star Plus and Colors at this stage. But isn't this a fickle GRP base?

Even if we fall by half, we will have around 25 GRPs from movies. And then there will be spikes. We have created a stable base for us. The idea is to grow from this.

Are you in a position now to play first run movies on your channel?

Absolutely. After establishing a base of over 250 GRPs, we are in a position to upgrade to a first run of movies on Colors as we can monetise our investments on such big premieres. Our plan is to have at least eight premieres in a year. Ghajani and Jaane Tu...Ya Jaane Na are steps in this direction.

There is also the flexibility of launching the afternoon band. When will you be playing this card?

We do 22-23 hours of weekly programming as against 33-38 hours done by Star Plus and Zee TV. Our weekends are not full blown and we have the afternoon band to create. So when the need arises, we can increase original content on our channel to drive in more GRPs.

We were actually tempted a couple of months back to firm up our afternoon strategy. But we decided instead to replace our weaker prime time content at 9.30 pm and 10.30 pm as they were not delivering to the potential. The rejig strategy worked for us as Naa Ana Is Desh Ladoo started delivering. Since the afternoon slots are also doing well with repeats, we can launch an assault with original shows when the need arises. That part of the arsenal we are yet to use.

'After establishing a base of over 250 GRPs, we are in a position to upgrade to a first run of movies as we can monetise our investments. Our plan is to have at least eight premieres in a year'

Stable GRPs, movies, afernoon band yet to launch - are these the selling points to advertisers?

When we launched last year, we were clear in the head that we would only do short term ad deals and at rates we were comfortable with. The channel, in any case, was growing and we believed our product offering was worth much more. We did not want a hangover of the old deals. Come 1 April and we are operating on effective rates which is clearly off old deals. It's a free run this year and we have stitched new deals at rates which have come from a position of over 250 GRPs. Yes, we tell advertisers that we are stable on GRPs, we have 14 hours to launch, and we have these rockets in form of reality shows which are to come up each quarter.

Is Colors targeting a revenue of Rs 5 billion and a fourth-quarter break even this fiscal?

I can't comment on the financials, but monetising of GRPs is our primary task now. This year will become the base and benchmark for us. For our big properties, we have already signed with Idea as title sponsor for Khataron Ke Khiladi (Fear Factor) and Maruti Suzuki for India's Got Talent.

Is it true that Colors' programming budget this fiscal is Rs 4.25 billion and the running cost is at 20 per cent above rival GECs?

When I was at Coca-Cola, I learnt how they used to pump in 70 per cent of their ad budgets in seasons. That is what we did; our annual budget is like the other big GECs while the perception we have built in the market is that we spend big monies on content. You either pump in the money upfront or spread it out. When we launched, we had Khataron Ke Khiladi and backed it with Bigg Boss 2. We fired two missiles, hoping at least one would hit. As it turned out, both became hits. And we used Akshay Kumar for our content, which also helped in marketing our channel. Obviously, non-fiction can't sustain on weekdays. But we used Bigg Boss to build Uttaran.



Also, our concept of cost control is reducing the number of hours of original content. Unlike conventional media thinking, we provided alternative time slots for our prime time content and introduced repeats in the afternoon band. At a time when there is so much of audience fragmentation, this worked and maximised our reach. The afternoon repeats got us good ratings.

Considering the Hindi GEC ecosystem, is it not strategically imperative to go for a big bang theory than fiddle in the mid-rung space with low costs?

It is better to play in the tier 1 game and go out with full ammunition than take a cost-conserving approach and prepare for gradual growth. The revenue upside is much higher if you have touched 250 GRPs. By playing in the tier II race, you are effectively pushing back your break even by four more years. You would probably save in programming costs, but distribution expenses would be the same for both the players. And if you haven't quickly moved from a consumer push to a pull situation, you would continue to pay high on distribution. In case of Colors, we will be actually reducing our payout to cable operators in the second year. On top of that, we could turn into a pay channel.

Were you not fortunate in that viewers were looking for a change from the 'K' soaps (Kyunki..., Kasauti... and Kahani...) and nobody was willing to take a risk in providing differentiated content?

The time was favourable in that there was a fatigue built in for the kind of soaps that were running on Indian television. We made disruptive and differentiated content our main plank. We were willing to take a calculated risk; our concepts were different and on the riskier side. But they worked.

Even the movie syndication business caught on at the time of your launch. How helpful was this?

The strategy was to go second run on movies. We could play on that gameplan because the syndication market opened up. This made it feasible for new players like us to keep our movie slot alive within reasonable costs.

How was the content strategy drawn?

Broadly, between 7 to 9 pm, we placed shows that had strong appeal among non-metro masses as that is the time zone which attracts viewers from smaller towns. The 9-10 pm slot had content tailored for smaller towns as well as metros as there is an overlap of viewership. The more urban shows like Fear Factor and Sajid's Superstars were placed at 10 pm.

More specifically, we knew there was a vacuum, particularly among the Gujarati viewers, in the 8.30 pm slot after the exit of Kasauti. We placed Jai Shri Krishna (JSK) in that time slot. we worked out such micro details while planning our programming grid.

When Star Plus launched Kaun Banega Crorepati, it built lead-in slots. Wasn't your strategy different in that your showpiece programme Khataron Ka Khiladi was at 10 pm while the other main shows were before that?

We couldn't have launched Khataron Ke Khiladi at 9 pm; it had to be 10 pm. It was our differentiator show and Akshay Kumar gave it the scale.

Our first task was to get noticed, invade into single TV households in prime time, and shake up the house. Outside this, we built slots through a different kind of programming slant. Balika Vadhu, for instance, was a family drama based on child marriage and carried a social message. What followed was the lead-in concept. We now own 8-9 pm and 10-10.30 pm.

Any specific strategy for timing the launch of Colors on 21 July?

Since IPL (Indian Premier League) was in April-May, we knew it would disrupt GEC viewership. We saw that as an opportunity to launch Colors post-IPL. It was also 2-3 months before the Diwali season, a hot time for advertisers. That gave us a window to settle in.
The market talks of Rs 800 million as your distribution cost for the first year?

Without getting into figures, let me tell you that we took a conscious decision to take space on cable networks next to Star Plus and Zee TV. That outlet was reasonably expensive, but it gave us strategic reach.
Why did you decide on TheOneAlliance to distribute Colors when it turned pay?

Besides the monetary offer (rumoured to be Rs 3 billion over three years for the Viacom18 channels of Colors, MTV, Nick and VH1), it was the IPL that swung the deal in favour of TheOneAlliance. Since we turned pay on 1 April and the IPL kicked off on 18 April, it was a good window to make the transition and yet not see impact on the ratings.
Will there be any revenue inflow from subscription this fiscal or will it be offset against carriage fees?

We may not see any net gain from pay revenues this fiscal, but we have a step up plan and the second and third years would be crucial. For the first six months, in fact, what we payout will be more than what we collect. If the cable operator switches us off, he will stand to lose more. This will act as a disincentive for him to switch us off. Importantly, we have done almost 80 per cent of the cable deals.
Is Colors planning to spread its wings outside India?

We will be launching in the US within 3-6 months. We then plan to reach Dubai before we land in the UK. International revenues fall straight into the bottomline.
Colors has also opened up syndication revenues with JSK being licensed to Raj TV. How aggressive will you be on this?

We are looking at syndicating our other shows like Balika Vadhu. We are getting queries from Doordarshan and other networks for some of our content. We are also eyeing the global syndication market. But we have to be careful and conscious that this doesn't jeopardise our beam syndication plans.
Will Viacom18 launch a Hindi movie channel and enter into regional language channels?

Before diversifying into new products, we want to build on Colors. We want the international distribution and market to stabilise before we launch anything. We will prioritise then, based on which is the most growing pocket - a Hindi movie channel or regional channels. That is a call we will take at that stage.

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