Television

'IPL is our biggest property and we can't afford to undersell' : MSM president network sales, licensing & telephony Rohit Gupta

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Multi Screen Media (formerly Sony EntertainmentTelevision India) is beginning to enjoy a remarkable turnaround story. The Indian Premier League (IPL) has surfaced as cricket‘s most lucrative property, Sony Entertainment Television has climbed to the No. 2 position in the Hindi GEC (general entertainment channel) space andSab has grown beyond its flanking channel status.

The other channels have also moved up the hierarchy. English movie channel Pix has raced past HBO and AXN has protected its turf quite strongly. Mix, the pure music channel, has had a good start. Being the only channel in that space that has network strength, it has taken up the challenge to grow the market and ramp up revenues.

In an interview with Indiantelevision.com‘s Sibabrata Das, MSM president network sales, licensing & telephony Rohit Gupta talks about how the company is going to end this fiscal with a 40 per cent ad revenue growth and a 25 per cent growth in FY‘13.

Excerpts:

MSM raked in Rs 9 billion in ad revenue from the IPL last year. But is growth slowing down for the property due to a fall in ratings in the previous edition of the T20 tournament?

I won‘t comment on how much ad revenue the IPL earned last year. But, yes, there is a little bit of anxiety on how IPL will do this year as advertisers have to set aside a large outlay for advertising on it. The ratings were down last time but we are sure that with marketing buzz starting, the IPL will come back on track. There was high intensity cricket with the World Cup preceding the IPL and India going on to win the championship. This year it is a clean slate and we have already stitched a few big sponsorship deals.

Are we looking at a below double-digit growth as is evident from the deals that you have locked in so far?

We have got marginal increase in rates but I can‘t comment on whether we will post double-digit growth or not. Also, don‘t forget that the base is already high.

So has IPL as a property matured?

We grew 30 per cent last year and so the IPL has matured to a certain extent. But if ratings start climbing, we will again see high growth.

Hasn‘t it been a tough sell so far as by this time normally you manage to close almost 80 per cent of your ad inventory?

Yes, it has taken us a longer time as we usually keep aside 20-75 per cent of the ad inventory time for spot sells. We have sold around 65 per cent of our inventory. But we will not be dropping rates as it will set a benchmark for next year. We have worked hard to scale up the value and won‘t undersell.

The IPL TV rights are with us for another five years and it is our biggest property; we can‘t afford to discount its current value. T20 continues to grow in popularity; the formats that are not doing so well are the Tests and the ODIs.

"There is an entry barrier for new players as the cost of running a Hindi GEC is as high as Rs 5-6 billion. Which new player has that appetite after a few of them have severely burnt their fingers? This has helped us scale up revenues even as our own channels have grown"

So the new BCCI tender for international cricket played in India will not be as valuable as it was when Nimbus held the TV rights a few years back? Will that be the calculation when Sony bids this time?

Perhaps, Nimbus was not able to exploit the revenues as well as it could have. We have a strong ad sales team. We are a network and our distribution (as a JV with Discovery) has muscle.

When Sony launches a sports channel, it will have to acquire other cricket rights than just the IPL and New Zealand board. Can ad rates be driven further up to support aggressive bids at higher acquisition costs for cricketing properties than their current value?

We are not going to make irrational bids but evaluate properties from a profit perspective. We feel that some of the boards are overvalued and there will be some price rationalisation. Cricket seems to have plateaued off to a certain extent. A few years back, broadcasters could get massive rate increases . That led to steep rise in acquisition costs. We are not in that market situation today. Don‘t forget that some people have lost a lot of money on cricket.

Are we seeing some categories of advertisers retrenching from the sport due to the current tough economic environment?

Handset manufacturers are finding it difficult today. The auto sector has taken some hit. But though telecom service providers are under profit margin pressures, the intense competition in the sector will spur them to advertise.

When will MSM‘s ad revenues touch the Rs 20 billion mark?

I can‘t talk on financials. But as a network, we will post a 40 per cent ad revenue growth this fiscal. Between Sony Entertainment Television, Sab and Max we are the No. 1 network in the Hindi heartland. And in the Hindi GEC space, we have two among the top five channels. The best part is that each of them is commanding a different kind of target audience and not cannibalizing each other. We are looking at a 25 per cent ad revenue growth in FY‘13.

How far has SET contributed to this growth?

Our flagship channel has grown this fiscal and is today the second-ranked in the space. The rise of SET has increased our negotiating power. Kaun Banega Crorepati (KBC) is an impact property and is a strong revenue driver for us.

Fiction is what we had missed out for the last 3-4 years. But it has started doing well. We have an upscale, urban skew; our male viewership is also very strong. Advertisers chase this segment and our fitment is the best.

Will SET launch an afternoon band to create a new revenue stream or still have a primetime overhang?

We have no such plans; it doesn‘t make a big difference to your ratings and, hence, advertisers have little interest for it. Hindi GECs have preferred to expand their primetime and it now fills up the early evening from 6 pm right up to 12 in the night; there is a lot of viewership in that time band. The market exists in the evening-to-night slot and not in the afternoon.

Does Sab still play the role of a flanking channel or it has grown beyond?

It is not anymore just a flanking channel; it is a proper GEC, has a strong viewership and, as a family comedy channel, is uniquely positioned. Sab has helped our network revenues to grow.
Has the Hindi GEC ad revenue market expanded this fiscal and will we see more channel launches in this space?

It (Hindi GEC space) has now become a game for the big boys. There is an entry barrier for new players as the cost of running a Hindi GEC is as high as Rs 5-6 billion. Which new player has that appetite after a few of them have severely burnt their fingers? This has helped us even as our own channels have grown. Even in a digital environment, it will be tough for a new player. Segmentation is not possible because GECs have to be mass and can‘t be niche due to the huge costs involved to run it.

Is Max under pressure due to steep acquisition costs for Hindi movies?

The Hindi movie genre, pegged at Rs 9 billion, is under pressure from revenue as well as high acquisition costs. Viewership for the genre in terms of GRPs (GRPs) is not growing. Though Max will post ad revenue growth of 15 per cent this fiscal, costs have gone up. We did intelligent buying.

There is bound to be a price correction in movie buying. Though Star went overboard last year, that strategy won‘t work every year. Some broadcasters are looking at launching action movie channels keeping digitalisation in mind. We have no such plans, at least not this year. We will wait to see how digitalisation evolves. Like GECs, the consumption of Hindi movies is more mass.

Why did MSM decide to launch a music channel when the market is too crowded?

Though the ad size is around Rs 2 billion at this stage, it is a good genre to be in. Mix‘s positioning of capturing the various moods during the day has got accepted and we believe that we will be the leader. As a pure music channel, we are here to grow the market. MTV and Channel [V] have taken a different route and focus on reality shows as their growth drivers. While other players in this pure music space have a standalone presence, we are the only one to have the network strength and will be able to ramp up revenues.
Isn‘t the English entertainment space getting spoilt with new launches?

The genre is growing and is still undersold. It is an important space to be in and is sold not on ratings but on perception. AXN stands out in this genre. As digitisation grows, we will see more launches.
MSM doesn‘t have a footprint in regional-language broadcasting that is growing the fastest. Was letting TV18 Group acquire ETV a missed opportunity?

The acquisition has to come at the right price. We are not desperate to launch channels. We do not believe in width that does not give us profits.

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