A mechanical engineer and MBA from IIM Ahmedabad, Ashok Venkatramani started his career with Hindustan Unilever where he stayed for 19 years, working on the foods and personal care side of the business in sales, marketing and management roles. He was the vice president and business head ? skincare for Hindustan Unilever, before moving on to his current role as chief executive officer at Media Content & Communications Services (MCCS), an Ananda Bazar Patrika company which runs ABP News, ABP Ananda and ABP Majha. He is also the vice president and a director on the board of the News Broadcasters Association (NBA), an apex body for news broadcasters in India, and chairs its human resource and sales committees. He is also a former director of the Indian Broadcasting Foundation (IBF), the apex body for television broadcasters. In an interview with FE BrandWagon?s Anushree Chandran, Venkatramani talks about the challenges facing the news broadcast business and how an ad cap could sound the death knell for the genre. Edited excerpts:
Could you talk about your transition from Stars News to ABP News and some of the challenges you may have faced in the shift?
There were a great many challenges that we faced. Star is a big name in the television broadcast whereas the Anandabazar Group is not as well known in television. While incorporating the name change, we ran the risk of losing our best talent because, at the end of the day people like to work with big brands. We had very limited time to execute the change in brand name. For instance, we did not have time to go to the consumers and do some preliminary research on the logo or brand persona. The broadcast business model is dependent on ratings. The ratings pretty much determine what you get in the market. We ran the risk of losing our entire equity. If no one recognises us, there would be a sharp fall in ratings. News channels are not a very profitable business. Most of us are running into losses. It was important during the transition that we did not lose a single day?s revenue. We took on an alternate logo, but which would have cues that people can relate to. We didn?t touch the content on the channel. The single point brief to everyone was?do exactly what you were doing until yesterday. Do not do anything different. Hence the anchors were the same, the shows were the same and the style of news reporting remained the same. We developed an ad line also around it ?Nothing has changed, but the name?. In hindsight, that was a good decision. At the same time, we ramped up our distribution.
Two months after the brand shift, our ratings actually went up. We are the number one news broadcaster when it comes to political coverage. Another key challenge was to identify every single place where our logo appears and change the brand name. We don?t realise it, but on a daily basis, our logo appears in a number of places. For instance, a tie-up with YouTube, where our videos appear on the platform. We had to go back and retrospect and pull out all our old videos and incorporate changes.
Why did Star decide to exit the MCCS venture?
It was Star?s decision and I think that they in their own wisdom chose to get out of news. It had more to do with their long-term business plans in India. They probably wanted to focus on entertainment, sports and other areas. The parting itself was very amicable. They still distribute our channels internationally and in India.
What is the state of the news broadcast business?
The news broadcasting business hasn?t had a good year in 2013. The economy itself has been down and it has impacted the news genre substantially. News as a genre has been struggling to improve its yields for many years now. The benefits of digitisation?lower carriage fees and improvement in subscription revenues for pay channels?are yet to flow in. On carriage, the Telecom Regulatory Authority of India (Trai) has refused to step in. While carriage fees may have come down by 15-20% for some channels, what we expected was a significant drop and that has certainly not happened. Costs, therefore, continue to balloon. Many of the news channels are also free-to-air, which means that they don?t get the benefit of improved subscription money. Add to this, the slow pace of digitisation. Even for the pay channels, the money has not come in. The consumer forms have not been filled, the new packages have not been rolled out by the MSOs (multi system operators). This year, elections are supposed to be a big driver. But the response to the state elections in 2013 was lukewarm. Still, we are hoping that the general election revives the fortunes of news channels. The revival of the economy will depend on how stable the new government is and what it ends up doing in the second half of 2014.
What is happening on the ad cap issue? Do other countries have such caps on advertising?
The matter is still in the high court and there will be a hearing in March. There are caps on ad time in some countries, but it is not universal. In the US and the UK, it?s mostly self regulated and also 60-80% of broadcasters? revenues are from subscription. They are not dependent on advertising revenues for their day-to-day operations. In India, our dependence on advertising is almost 100%. Even the handful of channels that are pay channels are not seeing the subscription yields. The carriage fee amounts to a third of the total cost of running a channel. I would like to say here that no one is opposed to the idea of limited inventory, if it is in the interests of the consumer. But our issue is with the timing and the way it is being implemented. To be honest, the ad cap was being shoved down our throats without any reduction in carriage fees. The advertising market has also slowed down considerably. For news channels, this ad cap would mean our advertising time going down in half, which means our rates would have to be double the current rates. No advertiser is willing to give us increased rates at this point in time. This means that this cap is in effect the death knell for the news business. All of us would have to severely cut down our news gathering infrastructure. It is not good for the economy and not good for democracy.
Towards the tail end of last year, the TV18 Group had a huge restructuring drive and cut jobs. What is your view on corporate groups entering the news business and their relentless push for efficiencies?
Any investment coming in will only improve the business and quality of news. We need to invest in growing the business and making it better, whether it is in terms of training people or investing in news gathering infrastructure and equipment. If any industry needs a kick on the backside for efficiencies, that would be the news business. I think there is a lot of scope for fresh thinking from bigger corporate groups. The only word of caution is that we should not forget that we have a social responsibility. Being one of the four pillars of democracy, we have a critical role to play in its smooth functioning. So we should have editorial freedom. That freedom shouldn?t be infringed upon because of the advent of corporate groups or other entities.
What is the reach of MCCS? What are your plans for growth?
Between the three channels?ABP News, ABP Ananda and ABP Majha – on a weekly basis, we touch 55-60 million households. We have got three strong products and they are all growing healthily. News will continue to be essential part of every household. Our endeavour is to make sure we stay relevant and penetrate deep. We are obviously strong in Hindi markets, apart from West Bengal and Maharashtra. There is scope to build ourselves in Punjab and in Himachal Pradesh and Jammu area and we are about to launch a Punjabi news channel soon. This channel is still awaiting regulatory approvals. We are distributed in over 22 countries. We see opportunity in the Punjabi genre because this geography is growing in terms of contribution to the economy and revenues. There is also a large and booming Punjabi diaspora outside this country that we are looking to tap into.
