Cable TV

"WE LOST EIGHT YEARS BECAUSEOF THE HINDUJAS" : ETC's Yogesh Radhakrishnan

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Yogesh Radhakrishnan is an important part of Indian cable TV history. He is among the four young cable TV operators who approached the billionaire Hinduja family with a dream to set up a large cable TV network straddling the whole of India way back in 1991. They managed to convince them to invest in the project and grew InCable into a 2-3 million subscriber strong MSO with a presence in the major cities.

After four years of working together, the four youth decided to part ways with InCable because of disagreements. They then cobbled together a bunch of investors to be a part of their vision of putting together a channel that would offer non-stop Hindi music to an audience sick of yuppie veejays on rivals MTV and Channel V. ETC Music was launched and was followed up by ETC Punjabi, a Punjabi language channel. A third channel - ETC News is expected to hit Indian TV screens by early next year.

The trio - the quartet lost one of its members to a hail of bullets in 1998 - also rolled out WinCable, a cable TV network, which would compete with InCable. It is now owned 50 per cent by MSO Hathway Cable & Datacom. WinCable has head ends in Mumbai and Delhi, and plans franchisees in North and Eastern India.

Another company offering LAN-based broadband services goes to make up the ETC Network group. The Indian Cab&Sat Reporter‘s Indrajit Lahiri spoke to the young and good-looking Yogesh Radhakrishnan about ETC‘s evolution. Excerpts:

Q:WHY DID ETC TURN FROM MUSIC TO FAMILY ENTERTAINMENT?

An:We decided to do this in January 2000 because we saw the writing on the wall: music can get you only so much audience. There was clutter in the back-to-back music channel game. There was Zee Music, B4U, MTV, Channel V. They all had pitiable TRPs of 4-5.

We are going about changing the profile of the channel slowly. 85 percent of the channel is still music. We have inserted a couple of movies on weekends, and a daily news bulletin at 10 pm. We have also done some low cost programming around poetry and the arts.

We were in our decision. Today, we are sitting pretty with a seven percent all India reach. We are playing a rate game. We are touching Rs 1,000 per 10 seconds. We hope to increase ad rates to Rs 2,000, maybe Rs 3000, with incremental reach that we can provide over a two-year period.

Q:WHY DID YOU LAUNCH A PUNJABI CHANNEL?

An:ETC Punjabi would have never come up. Because I feel that regional channels don‘t have a market in India. Whoever believes in it, is fooling himself, fooling the investor and fooling the public. Because every regional channel north of the Vindhyas has to compete with Hindi prime time channels. Because in all these areas, the viewers understand Hindi.

It‘s going to be a very difficult market for the regional players. In the present infrastructure, the regional channels have to compete with high quality programming. The cost of creating a Punjabi program is as expensive as creating a Hindi show. Except the high prices you pay for the artists or the stars. The basic fixed cost is same - transponder rentals, equipment, tapes and the crew. It‘s not going to be easy at all.

The reason we launched the Punjabi channel, is that we received the rights for Gurbani (the recitation of Sikh prayers held at the Golden Temple). We paid a very high price for acquiring the rights.

Gurbani is very dear to the Sindhi and Sikh population globally. It will help us in a great way in getting into the overseas market. It‘s a goldmine that we have with us. We also have soaps and serials, not on prime time.

These run between 7.30 pm and 8.30 pm. Plus we have music, which is low cost programming. We have a lot of Punjabi folk culture based show. According to Intam‘s figures of 15 minute reach, ETC Punjabi is at 1.98 percent viewership across India, way ahead of Alpha Punjabi which is at 1.26; DD Jalandhur at 1.18 and Lashkara at 1.03.

Q:WHAT INVESTMENTS HAVE YOU MADE?

An:Totally, we have invested Rs 400 million. Rs 100-120 million for ETC Music. An additional Rs 300 million in additional funding has gone into our infrastructure, our studios, ETC Punjabi, our South based properties- Kotteswaran, the game show and other programs that we are doing.

We have a flagship company, ETC Networks in which we have consolidated all our businesses. We have ETC, which is No 1 in music, ETC Punjabi, which is No 1 in Punjabi, we have an infrastructure to launch a news channel by 1 December on Thaicom-3. It will be a 24-hour news channel in Hindi. We attract Rs 35 million in ad revenues every month.

Our news bulletin is doing well: Aaj Tak has at 1.2 TRPs and we are have .4 at an all India level. We have bought 4 DSNJ equipment from HFCL, we subscribe to Reuters, ANI, PTI.

We are in distribution. With ETC‘s strength in distribution, we will be able to distribute it in a much better way.

Q:WHAT ARE THE EXPANSION PLANS FOR YOUR STUDIO?

An:We have completed two floors right now. One floor is occupied by our news division. The other floor is being used for our in-house production division.

We had planned to build the studio in our backyard. It will reduce programming costs for us. I save a lot on studio rentals, costs, electricity, and conveyance. We do 80 percent of our programming in house, and 20 percent is commissioned outside.

We have invested around Rs 80 million in the studio including studios, equipment and V-Sats. We will invest another Rs 200 million in another three months for two more studios for news, and a ground station for up-link.

I have invested in JVC D-9s. We are moving from Beta to D-9s. It is the closest to Digi - Betas right now. We are looking at going in for Quantel Edit boxes for special effects - one for our news division, and one for our other channels.

Q:WILL YOU GO DIGITAL?

An:We will continue to be analog. There are only 28 towns covered by the television metering system Intam. While Rajasthan, Bihar, Jammu, Haryana, Orissa, and Assam don‘t even have people meters. There are no digital channels in these places, because they don‘t seed them with decoders. Today, advertisers understand the difference between analog and digital. They know that when it‘s analog it‘s in far greater number of homes.That‘s our advantage and USP, and I don‘t want to let go of it.

Q:WILL YOU LAUNCH NEW CHANNELS?

An:We plan more channels, unique channels that will add value to the group, and make money. We may throw some surprises in the first week of January.

Q:HAVE YOU RECEIVED AN UPLINK LICENCE?

An:The Amritsar uplink has been cleared, the Bombay clearance should happen anytime now. The moment we receive the clearance, we will have the equipment installed in our backyard. It will save costs of six people in Bangkok, courier costs for tapes. Logistically it becomes easier, we can go live anytime. It will cost us Rs 60 million per channel as basic capital costs. Replay equipment and reflectors will cost a little extra.

Q:WHAT ARE YOUR INTERNATIONAL DISTRIBUTION PLANS?

An:We are very keen to launch Gurbani internationally. Because the highest spending power amongst Indians overseas is with the Sindhis and the Punjabis. They are the biggest buyers of Indian products abroad. We are planning to consolidate a channel - ETC International - a Hindi and Punjabi mix. Sony and Star have talked about partnering use with ETC International. We are also looking at a third platform independently. We should be making an announcement next week who we will tie up with.

Q:WHAT ARE YOUR CURRENT REVENUES AND PROJECTIONS?

An:We have ended up with Rs 190 million in revenues for the first two quarters. The first quarter was Rs 80 million, while the second quarter was Rs 110 million. The big spending season is in this quarter.

Agreed, the revenues may not be big in numbers compared to Star/Zee TV. But remember ETC Punjabi is just two months old. We haven‘t tapped international audiences either. Our game shows (Koteeswaran-in Tamil and Malayalam), and three Tamil series are starting this quarter. Plus my subscription market has not started. We should get bigger numbers by the end of the financial year.

Q:WHY HAVE YOU SET UP A MARKETING DIVISION FOR SOUTH INDIAN PROGRAMS? WHAT‘S THE STRATEGY?

An:I come from Tamil Nadu. I go a long way in television, with 15 years of experience in the business. I know that market extremely well. My business associate and partner -Suresh Aiyar is a Tamilian, and has been in the Tamil market for the past 12 years. He pioneered the Tamil market with Multichannel in 1988 and Q-Com. With my knowledge, infrastructure and money, I think it will take us a long, long way.

We have tied up with Sun TV network‘s four channels. We will not work with any other channel. We have a strong relationship with the Sun TV management. We will invest money in properties, and take them forward in a very, very aggressive way. We will buy a slot on Sun, hire a production company or produce it ourselves, and market it. We will own the final product.

We also plan to distribute these products internationally. It is not a very big market, but it definitely is a market. Year one, I am expecting Rs 200 million from the southern language products, and next year probably about Rs 800 million.

We are consolidating our Hindi products as well. We will go very aggressively into new products, looking at niches, which I am able to identify.

The only worry is that we are eight years too late in this market. I went to the Hindujas in 1991 to start a channel in l991. We started our own channel in 1999. The sad part is that we have lost eight long years.

Q:WHAT IS YOUR RECRUITMENT POLICY?

An:One, rollouts keep happening. We recruited six people from Channel V, who were terminated yesterday. But at the top bracket, we have a CEO for each division -for ETC Entertainment, ETC Punjabi and for the news channel. A managing director for my Tamil operations, and a CEO for Internet services. I don‘t look at the day-to-day operations of any of my channels. I meet each CEO in weekly meetings twice a week, we analyse and try and help them in any way we can.

Q:WHAT IS THE STRATEGY FOR WINCABLE, AND HOW DO YOU SEE IT GROWING?

An:We started off WinCable with a vengeance, but we have consolidated big time, since then. Despite the Hindujas trying to thwart our plans, we have taken away close to 40 percent of their market share in Mumbai. We have taken away more than 75 percent market share in Delhi.

We did not look at further market expansion. But we are looking at six cities in the North and East for further expansion. I can‘t give you the names for confidential reasons.

The three partners and I were responsible in launching 22 cable networks in 1988. Today, we have a 26 percent investment by Star in WinCable. Our investment figures are confidential.

Q:WHAT IS YOUR BROADBAND STRATEGY?

An:We own a 100 percent subsidiary called Broadband Spacenet. It operates a LAN based delivery ISP, unique to Indian conditions. If CMTS is a Mercedes Benz, then LAN is a Maruti 800! We have done pretty well. We have about 14 installations in India with 8,000-9,000 subscribers. We have put in close to US$1 million so far. We want to invest another US$ 5 million and take Broadband Spacenet to another 100 centers in the next three months. With a sub base of between 50,000 to 100,000 subs, we will talk to potential partners.

We offer uninterrupted 24 hour Internet service with no dialup charges, at Rs 800 to 1,000 a month, without a cable modem.

Q:ARE ALL ETC‘S OPERATIONS PROFITABLE?

An:Having learnt to work on high return projects with low investment is the biggest quality that our group has. Ideally, we design each of our projects in such a way that it would breakeven in year one. ETC Networks has broken even and is showing profits now. ETC Punjabi with international operations will break even in year one. News with certain associations will break even, given certain parameters. Our marketing arm, New Age is showing profits from the first month. With no real cost for backend bandwidth, Broadband will break-even soon.

Q:ARE YOU CONSIDERING AN IPO?

An:An IPO is not always an appropriate way to raise money. Our company being cash positive, we would like to raise debt, and service those debts. An IPO means an equity dilution. With so many good things happening to us, we don‘t want to dilute at this stage.

Q:WHY HAS ETC BOUGHT BACK C. SIVASANKARAN‘S SHARES?

An:Siva came to us when we broke away from the Hindujas with a certain amount of investment. He came to us at par. We returned him ten times what he gave us.

Q:WHAT ARE YOUR FUTURE PLANS?

An:In the media business, growth can be exponential. We have been in production, technical, satellite, we have seen them all. We have spread ourselves in these businesses. We are looking at huge valuations and huge growth in the next two years. Investment is a key issue. We have strong investors basically - private equity, financial institutions ready to back us. Funding is not an issue. But we have to develop a proper structure - transparent for the investor and everybody. And, if we are able to get the money from the Hindujas, we will invest Rs 10,000 million due to us from them in our company.

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