Need to use Covid2019 situation to create 21st century content delivery biz: Uday Shankar

Uday Shankar

MUMBAI: “We are in for a long, dark and scary winter,” says Uday Shankar, president, The Walt Disney Company, APAC and chairman, Star & Disney India, regarding the current situation, in an interview with ET Now. He dwelt at length on the Covid2019 crisis, its impact on the media, especially the TV business, and the road ahead.

Regarding advertising revenue, he said, April and May are the months when advertising climaxes. “This is the time of IPL. In the seven weeks of the IPL matches, it generates six to seven thousand crores of economic value just around the IPL. And all of that has become zero this year. A larger number of advertisers wait for IPL to launch special campaigns and products. All of them have stopped."

Regarding post-covid2019 world, he feels that life has changed a lot. “But the basics are remaining the same. We are still alive and still looking positively about priorities. We are running our businesses. We have to run our businesses very differently. We can't travel or go to the office. My portfolio stretches across the Asia Pacific region. So the level of my challenges is even higher. But one I think I realize is that people are extremely adaptable and they are trying to make it work."

According to him, the new ways of working and adaptability to them are pretty exciting, he states. The biggest challenge, he says, is that the economy has taken a massive hit, especially in India which is going through a lockdown.

Regarding the impact on advertising revenue, he said: "Leave aside sports, even entertainment too has come down: from the normal to down to 20-25 per cent. That's the aggregate level. The news business is holding up there."

Programming has stopped due to lockdown, but even when they restart it will be difficult.   

According to him, all broadcasters will have to aggressively revisit their programming costs. So those who are doing ten shows will start with four. The financial pressure will pose even bigger challenges. And there is only going to be so much advertising available.

“We make our money in this country disproportionately from advertising; the distribution income is still small. People advertise only because they realize that there is a market for their goods to be bought and sold. If nobody is going to buy a car, why would a car manufacturer advertise? So we are in it for a long and dreaded winter. Newspapers are going to face even bigger problems. And everybody thinks that it is a great time for digital, but I don’t think so. Digital advertising has taken a hit and it will continue to be like that for a while.”

Regarding sporting activity for which his company has invested heavily, he said: “Sports has taken a hit globally. There is nothing you can do. People’s health and safety come before everything else. It would be naturally selfish or immature on our part to even think that regardless of everything, sports should happen.”

He feels that once the situation is back to normal, live sports events will happen with massive restrictions on spectators’ presence. You can’t have a plan-B for live sports, he said.

Regarding cost-cutting across the media sector, he said that his organisation has also taken some measures. “We urged our senior executives to take a voluntary reduction in salaries. People have responded very positively to that.”

But some organisations, he said, have been forced to take measures as a last resort. Job losses will happen, he said.

According to him, the way the media works in this country is “very antiquated.”  Do you need so many people to shoot a show? Does everybody have to sit in one place? If supply chains are distributed globally, why is the entire media chain different?”

On what he is trying at this moment of crisis, he said: “I am trying three things. First of all, we don’t treat this as new normal. I believe this is a passage into a new world. Within the discipline of my company I won’t really put pressure on people to come to work every day even if everything becomes normal. Star has already taken some lead in that direction. We don’t have mandatory attendance. We don’t ask people to sign in at a time. Or we don’t have fixed leave. I think we were pretty liberal. We should actively encourage people to work from wherever they are. We should look at lighter ways of creating content, which is less resource-intensive, less human power-intensive, but very heavy on creativity and technology.”

“And I think we should revisit the whole concept of gigantic headquarters where everybody sits together. For our business television has always been under pressure, partly because of the shift that has been happening in the environment and also because of the fact that television in this country is unfortunate to have a regulator who has no understanding of the business and who is out to destroy the business. So the television business has been under pressure. And its odds for regaining its health are much less than I would like to think.”

So how can we make it lighter, nimbler, direct to consumer and use this Covid2019 situation to make a 21st century content delivery business in this country is the question.

According to him, regulation means that there should be an even-playing field and transparency. If businesses are not able to succeed, then nobody is going to invest, he says. “That’s the real risk of the TV sector in India. Advertising income was strong and the regulatory fees pressure that was value-destructive in the distribution side was sort of mitigated to some extent. Now it is a twin shock on the advertising and distribution fronts. It is going to be really tough for the television business. And it is very challenging for fresh investments. I don’t think people will come and pour money,” he explained.

As to why his company wants to invest in India, he said: “Star India is the number one media company in India. Everyone knows in the power of India. When I took over Star India the entire television business was much smaller, but today it is one of the biggest media and entertainment markets in the world despite all the challenges. We remain optimistic about the power of 1.3 billion people, the big market, and the creativity in this country. So those who have already invested, they will continue to be committed. But new people who have to start from scratch many of them will rethink before investing.”

Regarding the kind of content consumers will consume in the times to come, he said: “We give too much credit to ourselves and too less to consumer. Consumers may not be able to articulate it, but they are usually far ahead of the business. Our innovation usually catches up with where the consumers’ mind is. When we started Hotstar, people said I was being delusional and that we were going to lose money. And with the data revolution that happened we have seen the explosive change. In the next three year or so there will be 700-750 million people who will watch content on their mobile devices. And 250 million on TV. That’s where Covid crisis has taken us to. People are home, working but also catching up entertainment.” 

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