Television

'The Hindi language channel will be only in 2006' : Kalanithi Maran - Sun Network chairman and managing director

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Kalanithi Maran is getting ready for his next big project. The Sun Network chairman and managing director has applied for a license to operate a direct-to-home (DTH) service. Meanwhile, he is growing his cable business. He admits he is on the verge of acquiring Kolkata-based multi system operator RPG Netcom, which will give him a presence in the West Bengal market. He is also planning to launch in September a Bengali channel, Surjo.

Clearly, Maran is planning a footprint outside his southern bastion. In his own turf, he has virtually killed all competition. Zee Telefilms, he says, has tried to penetrate the south three times but failed. He knows Star and Sony also will eventually try to spread across the four regional states. He has, no doubt, made it difficult for them. But, as he says, they have also made it "difficult for me to penetrate into the Hindi language market."

Maran has not tasted failure so far. The challenge now for him is to concoct a successful recipe in the non-south market.

In conversation with Indiantelevision.com's Sibabrata Das and Bijoy A K at the Sun headquarters in Chennai, Maran spells out his aggressive plans for growing his media business into a pan national empire.

Excerpts.

Are you buying out RPG Netcom?
We are on the verge of closing it. It is more or less in the final stages. It should happen in about 30 days. Ernst & Young is the merchant banker.

Is it a strategy that outside South, wherever you launch a channel, you will pick up cable?
In most areas, I don't have cable. I don't have cable in Bangalore or Kerala. Wherever we have found an opportunity, we are trying to work out deals. We saw an opportunity come our way in RPG Netcom. As we are in the cable business, it makes sense for us to get into areas where we are not there. We saw a good opportunity in the Bengal market and RPG may have its own reasons to exit.

How do you plan to turn around RPG Netcom when it doesn't have too many direct points?
It is basically a multi system operator (MSO) concept. I have my doubts if MSOs have direct points. Some MSOs do make such claims. But in percentage of the area covered, it would be less than one per cent. We have always operated on the MSO concept - and not on the direct points route. It has worked better for us that way.

But what is your plan for RPG Netcom, particularly when you are saying that you are not going to use it to support your broadcasting business?
Let us not forget that we haven't signed the deal yet. It will be better to talk about it once the deal is done. But broadly, wherever we have gone, we have tried to bring in more of fibre optics and less of coaxial. That is the same principle we will try to implement. We will also launch value-added services.

But isn't Kolkata an unlikely market for value-added services?
We have gone to markets where people thought it has the most unlikely potential. We started the first regional roadmap and launched a Tamil channel when people thought only Hindi is the market. We then went to Andhra Pradesh and Karnataka. Again, it was the same thing. Now people are saying South is such a huge market. I never go with the general perception. My opinion differs with the general perception of the market.

'I never go with the general perception. My opinion differs with the general perception of the market'

Are you in talks to acquire Manthan and Cablecom, the other two MSOs in Kolkata?
See, we have started with RPG. I am not going to say anything more than that. It is the two arms that we have - broadcasting and distribution. And it is the distribution arm which is going around doing this. Once the RPG deal is over, we may think of other things. As of now, it is only RPG. The reason I am commenting on RPG is because it is in the last stages and we are expecting to conclude the deal. It should get over in 30 days.

Recently, you announced a reduction in the cost of Set-top boxes (STBs). What is your cable strategy?
Cable is not that viable a business as long as you don't have the last mile. And we do not have the last mile; We are an MSO. Our cable is not a profit-making venture yet. But we want to bring digital services in all the areas that we operate in. That is the thinking we have in mind. I don't think the broadband fibre to home is going to happen now.

What are your plans for digital, particularly when it has not taken off in India so far?
We want to provide double services - analogue for low-end and digital for the high-end market. We want to offer more channels and better quality. In Chennai, we have done this. Our digital service provides 120 channels, more than what any of the MSOs are offering. We are providing this with a very interactive menu. We want to replicate this digital service everywhere. By providing a dual service, we are giving the consumers a choice.

Has the experiment in Chennai been depressing?
Worldwide, cable has gone digital. Analogue is a dead form of broadcasting. Except in India where we are still in the analogue mode. We have seeded 20,000 digital STBs. Our competitor has seeded maximum 5,000 boxes. But we have gone digital in Chennai. We plan to go digital in other areas as well.

You said MSO is not a profitable form of business. So do you see distribution as a form of power where you can bully rival channels?
Let me put it this way. Siti Cable is with Zee. Has it increased the TRPs of Zee TV? Ground is a different entity by itself. And now with direct-to-home (DTH) coming in, you don't know what the ground scenario is going to be like. DTH is a very powerful alternative platform to cable. It will take away a sizeable chunk of business from cable.

What is your plan for DTH?
We have applied for a license through a separate company called Sun Direct TV. It is a 100 per cent owned Indian company.

There are rumours that Sun and Star will form an equity partnership?
There is nothing like this. We have never even thought on those lines.

Why did you enter into a $25 million joint venture with Malaysia's Astro All Asia Network?
The joint venture is to provide Indian software for Astro's DTH service. We are forming two JV companies with them - Sun Astro Media for the launch of a Bengali channel and Sun Astro International for content creation in Indian languages to international markets. It is a bonding of relationship. And it gives an international flavour to the association.

Will you be launching other non South regional language channels through this joint venture?
As of now, this is the only deal we have with Astro. This joint venture stops with this.

Are you also pacing up the launch of a Hindi channel?
We don't jump into too many things at one time. We do one thing, succeed in that, and then step into the next project. Our plan this year has been finalised. We launched Kiran TV, a Malayalam movie and music channel. Next we are launching on 14 April Aditya, a Telugu channel. By September, we are planning the launch of Surjo, the Bengali channel. We are also planning a foray into print. We have not taken a decision yet on which language the newspaper will be in. The Hindi language channel will be only in 2006.

Do you think it is the right time for you to get into the northern market?
I have to keep going into new markets. While Zee, Star and Sony have their own plans to enter the southern market, I have to go that side. Whether I buy or start a Hindi channel is too early to predict.

Since you have such aggressive expansion plans, are you considering an initial public offering (IPO)?
We dropped our IPO plans long back when the market went bust. We are not reviving our IPO plans.

Are you looking at joint venture alliances to fund your growth?
Our funds position is comfortable for the next three years; it will take care of our expansion plans. We don't require funding from a third party. The association with Astro was our first JV we ever got into. And it was not for funding but to establish a relationship.

In 1999, you had expressed your intention to launch a Bengali channel. What took it so long?
At that time, we found that Hindi overflow was very strong in Bengal. If there was an Amitabh Bachchan movie on a Hindi channel and a Bengali movie would beam on another channel, audiences would go to watch the Hindi film. Now thanks to the new players, the market is emerging. But it is still not crystallised yet. We want to enter the market before it gets crystallised. And Bengali channels are now clocking good audience shares.

Surjo was planned for a 14 April launch. What has led to the delay? Is it because you are waiting for the RPG deal to get over before you launch the channel?
We are launching the Telugu channel in April. So we decided to launch Surjo in the third quarter of the year. As I said earlier, our cable and broadcasting businesses are handled by two separate companies. They are two distinct businesses. In any case, RPG Netcom has a 40 per cent market share.

 

Why then have you given Balaji Telefilms the sponsorship category programming on Surjo?
We received requests from 5-6 producers for taking slots. The only one we have cleared is Balaji Telefilms. Our fear is if the slot doesn't perform well for lack of money, then it will start reflecting on the channel.

In Bengal and the other regional language markets that you plan to enter, what will be your programming strategy? Will you be skewed towards movies?
None of my mass channels like Sun TV and Gemini have a movie component of over 20 per cent. Surjo will be what the other channels are right now. When we started, the scenario was different. There were no producers barring those who made for Doordarshan. When we came in, we were creating the industry itself. Now what people want to watch has changed. You can't run a general entertainment channel only with movies.

Late last year, you signed a multi-year agreement with Buena Vista International Television - Asia Pacific. This was Sun network's first ever deal with a Hollywood studio. Did the screening of dubbed movies work?
It didn't give in the TRPs which we were expecting. We tried it for five weeks on our main channels. Then we took it off. Even a blockbuster like Predator didn't give us huge TRPs. On Sun TV, for example, our best TRP is 30.1 while the minimum that we get is 12-13 TRPs. We didn't get such ratings for the dubbed Hollywood movies. So now we are showing it only on our movie channels like KTV, Aditya, and Teja.

Was it a wrong decision to acquire such a huge library?
It wasn't a mistake. It would have been, if we got no ratings at all. For our movie channels, the ratings are alright. We saw these movies doing well on theatres in Andhra and Tamil Nadu as well. Besides, we saw our competitors put these movies on their channels and they were doing fairly well. It is just that such ratings are not adequate on our main channels.

Sun Network has been in existence for 13 years. How has the audience taste changed over the period?
Audience tastes keep on changing. But the changing process is not very fast. What we have found universally in the south is that soaps sell well. In the region, there is a synergy. Chitti, for instance, was remade and taken to the other states in the south. The change in taste takes place every 3-4 years. There was a time when film-based programming was successful. Then super star heroes started clocking high TRPs. News programming also were doing well, followed by game shows. Now the preference is towards soaps.

How did Surya manage to get an edge over Asianet in the Kerala market?
Our competitor was skewed more towards current affairs and news-based concepts. We took the slant towards entertainment. Then we packaged news and the other content around it. We used our vast film library and had soaps done by big producers. Even the news cycle turned in that market. Asianet had news at 9 pm. We did it at 8 pm. They followed us. Then we took it to 7.30 pm. Now both the channels are airing news at 6.30 pm, a non prime time slot. This goes to show how the market has changed from current affairs to a soap-based programming concept.

How have you managed to maintain the local flavour in the four southern states?
The regional offices run our channels, wherever we have gone. If I don't do that, I can't be in tune with the local pulse of the people. This is one of the main reasons for our success everywhere.

What is the new genre of programming that you see emerging in the south?
Reality TV has still not come out strongly in this market. But I can't tell you definitely whether this will succeed. It will be only at that moment of time that you can tell what the trend is going to be. Broadcasting is a very fluid business, with audience tastes changing from time to time.

Is crime programming gaining ground?
Crime was started by us five years back with Police Diary. But we pulled it out as it was not working then. When we brought it back, it has started doing well. We keep on trying new concepts and genres.

'Our funds position is comfortable for the next three years; it will take care of our expansion plans'

Movie costs have gone up abnormally high. Do the high acquisition costs justify the revenue?
Movie costs undoubtedly have gone up. Besides, the number of hit movies have also come down. So the acquisition price for these movies have jumped. And the ad rates have not gone up commensurately. Movies are now too costly to support revenues. But still we have to acquire movies. We buy on an average 90 per cent of the movies that come out of South India.

A group of Tamil films producers are planning to launch a channel. Will this threaten your movie monopoly?
Competition only makes us shine brighter. Most of the film producers in Tamil or Telugu are tied up with us for at least five years.

How strong is subscription revenue for Sun Network?
The pay concept was started by the multinational channels. But we have Gemini, KTV and Udaya as pay channels. We first went pay with two languages - Tamil and Telugu. Then we took Udaya in Kannada pay. We don't plan to make Surya a pay channel as the market in Kerala is too small.

Do you have a language-wise rather than a channel-specific approach to a pay model?
Our intention is to have a pay channel in every language. In Tamil Nadu, we have three pay channels - KTV, Sun News and Sun Music. We haven't kept Sun TV in the pay mode as it is our flagship channel. We don't want to take chances with our flagship channel. We take a market-wise approach. We look at the potential and the market size before we take a call on the pay or free-to-air format.

Are we going to see further channel launches from your stable in the south market?
We have covered all the segments - general entertainment, movies, music and news. Our new channels at this stage are going to be in new markets, and not in the southern region.

Why is Sun not available on the DTH platform in the Middle East?
We haven't joined the Pehla bouquet. We are still negotiating on rates. There is a gap between what we are offered and what we are asking for. Also, the European company which beams our channel there is asking us to go easy on Pehla as the footprint falls over the Middle East belt. And in Dubai, we are present there through local cable.

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