Television

Sony - playing it 'real' smart

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Great gambler! If there is one head honcho in the broadcast business on whom that title sits well, it is without doubt the broad-girthed chief executive of Sony Entertainment Television India Ltd Kunal Dasgupta.

His gamble on the ICC cricket rights is already the stuff of lore. Cut to the 2005 though, and it‘s been more about smart plays. Take Ten Sports, which on 1 April came onto the SET-Discovery One Alliance distribution platform. Early on, Dasgupta wasn‘t certain whether he would be able to cut a deal with Ten. Sure, he was making progress, but Subhash Chandra‘s Zee Telefilms was also in serious contention to strike an alliance with the sports channel that had in its armoury the prized property of the India-Pakistan live cricket programming.

Pressure was building up on Dasgupta in January after he lost premier English movie channel HBO, which was pushing Sony‘s bouquet among English audiences and the southern language markets. Worse, Zee-Turner had snapped up HBO while Star India had struck a distribution deal with Walt Disney late last year.

"Serious negotiations with Sony and Zee had spilled over to February," says a source familiar with the deal. ESPN Star Sports had by then dropped out of the talks, as Ten Sports continued to pursue negotiations for an alliance after terminating the distribution contract with Modi Entertainment Network on 10 August 2004.

Still, Dasgupta wasn‘t willing to sweeten his offer. He knew Ten Sports had decided to hook on to a distribution platform rather than fight the battle as a standalone channel. And he had more than a fair chance of winning in the end.

Dasgupta‘s calculations were right. On 22 March he made the announcement, with a chuckle on his face: The One Alliance (joint venture distribution company between Sony and Discovery Communications) would distribute Ten Sports from 1 April, making the combine of channels such as SET, Max, Discovery, AXN, Animal Planet, NDTV 24x7, NDTV India, MTV, Nik, Animax, Discovery Travel & Living and Sab TV a formidable distribution bouquet.

Just a week before the Sony-Ten announcement, SET announced that it had agreed to pay $13 million (Rs 570 million) to gobble up Sab TV, a niche humour-centric channel with a skew towards male audiences. Dasgupta‘s intention: to do battle on a broad front. While Sony TV would pitch high profile format shows like Indian Idol and Fame Gurukul to gnaw away at market leader Star Plus‘ audience base, Sab TV would get in new male audiences to the network while Ten Sports would add size and muscle to the distribution bouquet.

Next up is the launch of an English movie channel this year. Says Dasgupta, "What‘s missing is an English movie channel. The moment I find time later this year, we will create one using MGM and other libraries within the Sony fold." That would complete Dasgupta‘s ammunition this fiscal.

"Sony has grown by leaps and bounds. But the need of the hour is to be nimble footed and adapt to the changing landscape," Dasgupta is believed to have told SET India‘s employees who were gathered for four days at Budapest to rejoice 10 years of the company‘s existence.

No wonder the mood was jubilant for a CEO who had already spent nine years leading Sony in India. The network‘s ad revenues had grown 30 per cent for 2004-05. Though subscription income had stayed almost flat, the company was in a position to see fast growth this fiscal.

Question: Where will Sony put its big efforts this fiscal?

Answer: Distribution, Sony TV, Max and Sab TV; in that order.

DISTRIBUTION THE KEY

Having cobbled together a string of powerful channels, SET Discovery has set itself an aggressive target. Though senior executives in the company were not willing to speak, Indiantelevision.com has learnt that a 40 per cent spike in revenues to Rs 4 billion for 2005-06 is the target.

Now for the hard part: Cable operators will resist paying out more to broadcasters in an environment where space for accommodating more channels on networks is choked. "It is a tough terrain out there. But we will achieve our targets," says SET Discovery president Anuj Gandhi.

Optimism comes from two areas. First, the addition of Ten Sports will mean the One Alliance bouquet will have formidable cricket content till well into 2007, providing leverage to accelerate subscription revenues. Sony‘s problem was that it didn‘t have a strong cricketing property as a build up to the ICC World Cup in 2007, barring the Champions Trophy. Ten Sports will help Sony ride on a chain of events right up to the ICC World Cup. The crowning jewel in that line-up: the Indo-Pakistan series next year.

Admits Gandhi: "With Ten Sports and Max dovetailed, we will get our required push."

Which is why roping in Ten Sports was such a crucial link to Sony‘s growth plans. Says a senior executive, "Of course, the core channels SET, Max, Discovery and AXN would have been less impacted. But if Ten Sports would have gone to Zee, then the fringe channels would have been seriously affected."

Sony‘s calculation rests on a second factor: the price of the new bouquet at Rs 44 a month per subscriber would have brought in additional income. "We have the strongest second bouquet, powered by Ten Sports. Sab TV also has appeal, particularly in the northern belt," says Gandhi.

Cable operators are in no mood to let Sony run away with what they call the "loot" without resisting. The battle is just getting started. Multi system operator (MSO) Hathway Cable & Datacom, for instance, has not signed up with Sony, saying it is not in any position to increase payouts to broadcasters as subscribers are not willing to pay more.

SET Discovery‘s strategy is to stagger the pressure on cable operators over the next year. With the network having India cricket almost every quarter, that plan may fit in well. "We are not going to do a somersault. We will get our increases for the year gradually, culminating in the Indo-Pak series," says Gandhi.

That calculation can get upset if pubcaster Doordarshan gets the rights to share live telecast with Ten Sports. This is the reason why Ten Sports could not drive its pay subscriber base from the Indo-Pakistan cricket series; neither could SET Discovery push up its numbers on the Champions Trophy last year.

SET-Discovery is not just banking on cricket to up its revenues. The company will use Indian Idol for on ground promotions extensively this year. The marketing spend will also go up 20 per cent. "We have done such events traditionally with Max. We will use SET this time," says Gandhi.

If everything goes right, SET Discovery has the potential of marching ahead of Star India‘s subscription revenues.

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