Television
Report on Shemaroo

Sanjay Gupta on executing the new tariff regime, Star India’s strategy and channel pricing

Mass content is given a low pricing depending on the investment.

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MUMBAI: Star India MD Sanjay Gupta is a veteran of many high-stake battles. The one he’s currently involved in could be long drawn, unpredictable, unlike anything he’s encountered before and potentially his toughest in a while. However, as India’s broadcast bosses put their heads down to implement TRAI’s new tariff regime, Gupta and Star seem to be first off the blocks. Over the weekend, the network unleashed a nation-wide, multi-media and multi-starrer campaign to educate the consumers across about the radical changes.

While Star fought the TRAI order tooth and nail in India’s top court, Gupta and team deserve full marks for the sheer scale and speed at which they seem to have got things moving after an unfavourable ruling on 30 October. Gupta says his team at Star is ‘excited’ and sees the new tariff regime as an ‘opportunity’. More power in the hands of the consumer and transparency in the value are the two major highlights as India’s broadcast sector undergoes a facelift, he feels.

That’s not all. Gupta also articulated his views on Star India’s strategy, channel pricing, disruption in the value chain, the SLP filed by the TRAI in the SC, its implications and more as he fielded wide-ranging questions on a balmy Monday morning on the 37thfloor of Star House.

On the tariff order’s impact

The biggest change the tariff order is making is bringing transparency into the whole system of how content gets created to how content gets bought. The biggest change you’re going to see is the transparency, which is existent in almost every industry. It is the biggest shift this industry could have asked for and is great value from a consumer point of view. 

On preparedness of the system 

I think people will learn. Over the next two-four weeks, it’ll be an intense learning experience. The good thing in this country is people learn very well quickly. The biggest change in this tariff order is the transparency and power to the consumer.

On Star India’s strategy

Our strategy has been in delivering great value to consumers. You know that we invest in making marquee content. Be it our channels in drama, movie, sports, National Geographic or any other content that we deal with. And the question that we ask ourselves is how do we ensure that we provide great value to our consumer through our pricing. We offer content in every geography - be the drama we create with Star Plus and Star Bharat in Hindi, Asianet in Malayalam, Star Vijay in Tamil, we add movies to it in each of the markets, National Geographic – which has some of the best infotainment content to consumers - and on top of it sports. What we are trying to do is make the price affordable to ensure that every consumer has access to this content. Not only do they have power but it is power at a great value from a Star bouquet point of view.

On channel pricing

The reason we started the communication early, at Star and IBF, is to let the consumers know that a change is happening. I think it requires a lot of education and communication for people to talk to. To my mind, it’s critical and important. And we wanted to begin early, as early as practically possible. Our price is not led by sports but it is also regionally decided. So, we have a different price in Tamil Nadu as compared to Bengal. Depending on what we think is the strength of our bouquet and the quality of content we are offering. So there is differential pricing like in any business that you decide it regionally and locally. We have a strong channel in Asianet, we have a much weaker channel in Vijay. So we are trying to ensure that consumers get dramatic value in each geography.

For content with mass requirement, we have tried to make it as cheap as possible within the constraints of the investment we make in each of the businesses.

On weaker channels

As I said, the real big change is the power to consumers. They have a choice to decide. Less performing channels cannot come to consumers if they don’t like it. The business will be forced to perform better and better to meet consumer expectations.

On viewership and ad revenue

If the channels are powerful and the consumers want you, they will take that option. I think the real question is - Are the channels and content powerful enough? Great content will get viewership. It will force everyone to up their game in terms of the kind of content they offer.

On TRAI’s SLP in SC

It is up to the court to decide that. I think now as an SLP is in SC, whenever it gets picked up, the courts will decide. I don’t have a view beyond that. But at this moment, the current ruling is that there is no discount cap. It may change going forward depending on the SC ruling.

In case the court has a new ruling that discounts have changed, pricing needs to change, both a-la-carte and bouquet pricing in that case, because the distance between them has to be only 15 per cent. I think we are still awaiting the court’s decision and if we need to adapt to it, then we’ll adapt to it. But there will be a shift again in pricing if that comes through.

On whether distribution chain is ready

I think we will know closer to time. It is possible that they are all not ready at one time and at that point in time TRAI will have to take a view whether they’ll give more time for people to transit. For now, 29 December is the deadline and we are following the TRAI deadline fully in our intent, in our communication and our effort on ground. In the last few months, we have invested aggressively both in putting together our communication, putting up our pricing on the website, training our teams internally because this is such a massive change. All our internal teams need to get prepared too because this has never been done before. It requires a complete re-understanding within the organisation and briefing our partners.

On potential change in pricing

Pricing once defined will remain the same. This is the pricing we have published. People can change their pricing but once consumers pick it up, it applies for the next one year. You can’t change it then. This will also bring about discipline in the industry.

On the impact on advertisers

I don’t have a firsthand view on it. But I think this will mean some challenges in implementation. A massive shift of this kind brings out a bit of chaos in the beginning. But I think when I look back – when we went from analogue to digital there were similar concerns, and personally, I carry that worry more than anyone else. But if you look back, it happened more smoothly than what all of us anticipated. Given the enterprise of our partners and consumers, we find solutions to difficult problems quickly. So I think this transition will be a little chaotic but hopefully, it will settle down in a few weeks.

On disruption in distribution chain

Consumers are used to buying everything else on MRP and choosing. So, they are used to it across business and categories. It is a big shift for people who deliver content to them, i.e., all of us and distributors – both DTH and cable. I think I personally feel all of them have been working hard over the last few months to prepare.

On readiness of DPOs

I think DTH is ready in any case because they do this for a living. DTH covers around 60 million homes. They are fully ready. I think cable is ready from a technology point of view. I think from a people point of view they are getting ready. They have been working hard to get ready. I do hope that given the value this is going to unleash, given the power to consumer this is going to provide, our consumers will really come forward and adopt it and force the transition to happen quickly and smoothly.

On nature of agreements with DPOs

Now the nature of agreements is simple – there is no long term agreement. You offer your RIO, which is offered by all content owners on the website. People can download and sign it. Basis the number of consumers that you get every month and the price that you set, you get paid. So it’s a fully transparent way of working for everyone. There is nothing like a long-term agreement anymore.

On how content will be offered to consumers 

I think DPOs will decide that. But we are offering to every DPO a-la-carte content and bouquet content both. It’s the same price to DTH and cable. It’s a transparent price to all. They can now choose to make their own bouquets by using a-la-carte channels or they can combine bouquets of different broadcasters. I think that’s the strategy each distributor will define on its own. The interesting thing will be from a consumer point of view, you’ll know everything – what’s the a-la-carte price for a channel, what’s the DPO bouquet and what’s the content bouquet. This kind of transparency has never existed in content business ever before.

On impact on content offering

Low performing channels will be under pressure. It will put pressure on content to be better and better. Hence, everybody will have to invest in quality to ensure your channels become better. Content has to work well.

On consumer awareness

We have launched a big campaign across eight languages. We are doing a big digital push led by Hotstar and digital assets outside. We are trying to make a very simple communication, at both IBF and Star, to simply explain to consumers what is the change. I’m sure all DPOs and channels are investing equally. The amount of communication consumers will see on this front will be quite significant. So I think communication will be a big draw for both the distribution industry and the content industry in the next few weeks.

On the relationship between broadcasters and distributors

One big change that is happening is (and that is the power of the TRAI ruling) that pricing is the same for all distribution partners. There is no difference. It’s equitable and it’s transparent, which means more trust. I think this should help drive a much better and a deeper partnership with the distributors.

On measuring viewership

As consumers shift, each of them won’t behave the same way. Each distributor won’t behave the same way. Some of the challenges on measurement would be the sampling, which is an important backbone of any measurement, might go for a toss. Because there are 180 million homes measured through 40 thousand boxes. So if there is chaos in 10 thousand boxes, the ratings may not reflect. Hence the IBF made a request (to not release viewership data for two months) to BARC. Now the BARC board has to decide what the next step should be.

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