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Indian TV channels slug it
out
By Raju Bist
MUMBAI -
There is lot of action happening behind the small
screens that are perennially lit up in Indian homes.
The TV channels are going all out to grab a
larger share of the ratings, and, by extension, the
advertising pie. In the process, they are not hesitating
to try any trick in the book - and some not in it.
Among other tactics, the channels are inflating
their ratings, bringing in seasoned marketing veterans
from other industries to head their operations, tying up
with movie production companies and pinching seasoned
professionals from competitors.
The stakes are
high. According to one estimate, about 90 million homes
out of a population of over 1 billion in India have TV
sets. And this figure is growing rapidly. Over the
years, TV has been expanding very fast as a
communication medium, often to the consternation of the
print medium - at a compounded annual growth rate (CAGR)
of 15 percent. The end result: the TV media sector has
undergone a rapid transformation. A large chunk of the
advertising budgets of media planners is now slotted for
TV.
Until the early 1990s, the airwaves, like so
many other Indian sectors, were the monopoly of the
Indian government. Its channel, Doordarshan (DD), was
what any other government enterprise was supposed to be:
tightly controlled, heavily censored and lackluster.
News programming meant covering speeches of ministers
while they inaugurated bridges or flagged off a new
train in their constituencies. Entertainment was
provided by Chaya Geet, a compilation of Hindi film
songs. And the maximum amount of publicity was given to
agricultural programs like Aamchi Mati Aamchi Manse (Our
Land, Our People).
But things changed after the
government launched its economic liberalization program
in June 1991 and the TV sector was also thrown open to
private participation. The first one off the block was
Subhash Chandra in October 1992 with his Zee TV.
Always a pioneer, Chandra has, over the years,
made a name for himself by quickly spotting business
opportunities where others see none. He made his initial
millions exporting rice to Russia. He was India's first
manufacturer of laminated tubes and now runs the world's
largest operation in this activity. Essel World, a
gigantic theme park in north Mumbai, was the first of
its kind in India. Chandra is also the first Indian to
introduce online lotteries through his company Playwin.
For the harried Indian viewer, fed up of the
boring fare dished out by DD, Zee was like a breath of
fresh air and it was an overnight success. Zee catalyzed
the Indian industry into a high growth spiral. As was
expected, its success prompted several other private
players to enter the business. This resulted in
overcrowding since the advertising pie was limited, and
by the beginning of the new millennium, a much-expected
shakeout took place. Today, apart from Zee, the other
general channels that continue to make money are
Doordarshan, Sony and the Rupert Murdoch-promoted Star
TV.
Among niche channels, ESPN and Star Sports
are doing well as sports channels. But Ten Sports,
promoted by Abdulrahman Bukhatir, president of the
Emirates Cricket Board and the man who brought cricket
to the dry sands of the Middle East, has still to make
its mark. BBC and CNN are the foreign news channels that
are being lapped up. But this segment is also dominated
by a Hindi channel, Aaj Tak, promoted by the Living
Media Group, the publishers of India Today, the
country's largest selling news magazine.
MTV is
popular among music channels. But so is Channel V,
launched by the Star TV Group. HBO, Star Movies and
Zee-MGM are able to lure cinema buffs. And finally, the
troika of Animal Planet, Discovery and National
Geographic is able to have its impact among nature
channels.
But another segment of channels,
unique to multi-language India, has been able to survive
on its own: the regional channels. Most popular among
these are some in the Tamil and Malayalam languages of
south India, Punjabi (North), Bengali (East) and Marathi
(West). Many of these have been promoted by Ratikant
Basu, a former bureaucrat at Doordarshan who later
catapulted over to head the Murdoch camp when it began
its Indian operations before branching off on his own.
The top four mainline Hindi channels currently
corner over 60 percent of the total advertising revenue,
while the remaining is split between the various news,
foreign and regional channels. The various channels are
trying their best to woo viewers by first luring the
all-important cable operators. SET Max, a Sony TV
subsidiary, took cable operators in batches to Colombo
during the ICC Champion's Cricket Trophy in October
2002. Earlier, TV channels including Ten Sports,
Discovery, ESPN and National Geographic were among the
broadcasters which took operators on fancy foreign
trips.
The freebies for the operators included
free air tickets to foreign destinations, free stays in
five-star hotels as well as complete holiday packages.
In return, the broadcasters expected higher subscription
numbers. Ten Sports, which had the exclusive telecast
rights to the FIFA football World Cup 2002 in India,
flew around 50 independent cable operators to the United
Arab Emirates for the Sharjah Cup cricket final. This
was a way to popularize the channel, just before the
FIFA World Cup last year, jointly hosted by Japan and
South Korea.
When it first made its appearance,
Zee did not have to resort to any such gimmicks and was
able to cash in on its first-mover advantage. It enjoyed
a clear run for nearly a decade. In 1999, a dozen of its
programs figured in the Hindi Top 20.
But this
happy state of affairs didn't last for long. According
to industry watchers, Zee's share of Gross Rating Points
(GRP) has slipped from 28 to 12 percent over the past
two years. During the same period, archrival Star TV's
has shot up from 26 to 52 percent. Even Sony TV, which
has been co-promoted by the Japanese entertainment giant
and a clutch of Indian investors, including cinema star
Jackie Shroff, has a GRP of 31.
Last year, while
Star TV raked in Rs 9 billion (US$187 million) worth of
advertising revenues, Zee could manage only Rs 5
billion. The Zee share, which touched Rs 176 on April
26, 2002, slipped to Rs 112 on August 2, 2002 and is now
trading at around the Rs 100 mark.
What went
wrong with Zee? Exactly what often goes wrong with many
a business leader: complacency. "Zee could not handle
its own success," says media analyst Pamela Babo. "It
stopped focusing on the main task on hand. Viewers were
ignored. Zee neglected staying at the top of the
reckoning in terms of programs, content and scheduling
strategy."
Zee's competitors have always been
quick to come up with innovative programming. Take the
case of Star TV's game show Kaun Banega Carodpati (KBC),
the successful Indian adaptation of the popular British
hit Who'll Become a Mllionaire. It was hosted by India's
greatest cinema star, Amitabh Bachchan, and the show's
runaway success opened up a new career for him in
television.
Sawal Dus Carod Ka (SDCK), Zee's
answer, was a poor copy of KBC. The game show's format
was messy and its production values tacky. Its hosts,
character actor Anupam Kher and Hindi cinema actress
Manisha Koirala, granddaughter of a former prime
minister of Nepal, were no match for the charisma of
Bachchan. The show had to be pulled after a few weeks.
A reality show, Prisoner of War, didn't go
beyond the usual press conference and print
advertisement stages. The show was not aired because Zee
had miscalculated potential returns and costs. The
channel's marketing department could not assure
sufficient returns for a program whose each episode was
being estimated to soak up a whopping Rs 5 million.
Embarrassed over the failure of SDCK, Zee could not risk
another flop so soon and decided to pull the plug.
Instead of coming up with original ideas in the
popular serials category - aimed largely at the Indian
housewife - Zee has only been churning out me-too
programming. So, while Star TV telecasts big hits like
Kyunki Saas Bhi Kabhi Bahi Thi and Kahanai Ghar Ghar KI,
Zee reacts by showing pale replicas.
Zee also
made the mistake of annoying software suppliers by
delaying their payment period from 30 to 180 days. The
result? "Software suppliers like the prolific Balaji
Telefilms today keep their best offerings for Star and
Sony," reveals Ashutosh Kapri, an independent New
Delhi-based software supplier. Zee also angered viewers
by extending the lengths of some of its programs from 30
to 45 minutes. But perhaps Chandra's biggest shortcoming
was in the way he was running his ship at the helm.
Several talented professionals were just not
given the opportunity - and freedom - to blossom and
take the channel on a growth curve. Even before they had
settled down and fortified some of their plans to
re-position the channel in the face of growing
competition, they were shown the door in quick
succession. These included Meenakshi Madhvani, in charge
of sales and marketing; CEOs Digvijay Singh, Vijay
Jindal and R K Singh; Sandeep Goyal, group broadcasting
CEO; ad sales head Kanta Advani; Karuna Samtani,
programming head and Vinta Nanda, a senior creative
person.
But while Zee was going through its
internal turmoil, a slugfest was on - its competitors
were encroaching on its territory by making just the
right moves. Sony, for example, launched a new channel,
AXN India, which as its name suggests, is devoted to
action. Some of the programs on AXN, like the Australian
Who Dares Wins (which is now running a series of India
specials), have become immensely popular with Indian
viewers.
Another Sony spin-off, SET Max, which
has positioned itself as a Hindi movie and cricket
channel, has paid over $250 million for exclusive
satellite TV rights to the ICC Champions Trophy, World
Cup 2003 and 2007. Cricket being the most popular sport
in the Indian subcontinent, Sony expects to make a
killing with this move. Now Sony TV has latched onto a
new genre - comedy - as the next big television formula.
Sony launched two new comedy shows in November 2002.
According to Sony TV's assistant general manager
(consumer marketing division) Naoki Matsumoto, his
company is eyeing a 25 percent growth in turnover to
touch Rs 7.5 billion by the end of next year.
Star TV, meanwhile, continues to consolidate its
leadership position in the general entertainment
category. Going by viewership figures for the month of
October 2002, the channel occupied 38 of the top 50
slots. Sony dominated nine while Zee had just three.
Star has also appointed advertising agency Ogilvy &
Mather (O&M) to handle its communications. The
agency has been entrusted with the task of devising a
new identity for the channel. In addition, O&M will
provide need-based audience research services.
Chandra is reacting to all this in the style of
a true fighter - by leading the battle from the front.
He has taken on himself the day-to-day responsibilities
of the channel. Other key positions are now occupied by
his brothers and nephews. Knowing the Indian's penchant
for movies, the entrepreneur has already delivered his
first masterstroke. He bought the rights to 26 new Hindi
films and is showing them on the Thursday, 8pm slot.
Advertisers are flocking and Zee is expected to make
about Rs 25 million from each film.
Securities
firm Motilal Oswal is bullish on Zee. A report prepared
by the Mumbai-based company lauds the Hindi film gambit.
The channel's decision to change the schedule of daily
soaps and serials with a focus on Sunday programming
should also pay rich dividends, says Motilal Oswal, who
adds, "Movie acquisition costs are at a three-year low,
making the cost of acquiring them and building up a
library very low. Given the low valuations and the
promise of a turnaround in the business, we assign a
'buy' rating."
But Chandra will have to do much
more if he is to keep competition at bay. For not only
are his adversaries on a growth path, they are also
becoming smarter. For example, HBO, which competes
directly with Chandra's Zee-MGM movie channel, has
launched a major marketing campaign in an effort to grow
closer to the Indian viewer. In addition, danger lurks
in the form of Turner International, an AOL-Time Warner
company, all set to launch a new Hollywood movie channel
in India.
Chandra could also end up losing
viewers - and advertising support - to a fast-growing
category: news channels, an area where Zee does not have
a formidable presence. Post-September 11, 2001, news
watching has become something of a national habit, with
viewership going up from 5 to 14 percent across
channels. An internal study by one of the biggest media
firms in the country showed that in November 2002, daily
average time spent watching the news was 40 minutes, up
from 14 minutes last year. Of the Rs 40 billion spent on
TV currently, close to Rs 6 billion goes to news
channels and that share is increasing.
It is no
surprise then that anybody who is a somebody in the
Indian media sector is making a beeline to start a news
channel or to beef up an existing one. With increased
competition among news channels, technological advances
and the fluid state of society and politics, news
channels hope to retain audience interest and deliver
the highest ratings among niche channels.
Videocon, one of the country's largest
manufacturers and importers of TV sets, is launching its
own Hindi news channel, called, hold your breath, BBC or
Bharat Business Channel (Bharat being the local name for
India). "The general entertainment channel space is
crowded and there is more scope for news channels,"
Videocon chairman Venugopal Dhoot said while announcing
plans for his Indian BBC. Bloomberg, the international
provider of financial news, is also looking at this
category with interest. So is Sahara, a financial and
construction company that already has a general interest
channel.
The one to watch out for is New Delhi
Television (NDTV), promoted and led by the suave former
journalist Pranoy Roy and whose troubled five-year-old
content supply arrangement with Star TV ends in March
2003. NDTV, which has made a name for itself via the
slick packaging of its programs, is promoting two news
channels, in English and Hindi. So threatened is Star TV
with this development that it has dragged its executive
vice president (advertising sales), L S Nayak, to court
for breach of employment contract. The talented Nayak
had recently joined NDTV after serving Murdoch for nine
years.
Chandra and his Zee can take solace in
the fact that the Indian television broadcasting sector
is estimated to grow to Rs 84 billion by 2005 and to Rs
289 billion by 2010. Among factors projected to induce
growth are a rise in the advertising expenditure as a
ratio to GDP, an increase in television's share of that
expense and the impact of both increase in TV households
and the steady rise in cable penetration into such
households.
There is no doubt that Zee has
always been a major player in the Indian TV channels
sweepstakes and continues to be one. But it will have to
work harder to retain its numero uno position - and also
work faster.
(©2003 Asia Times Online Co, Ltd.
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