Tall men standing

Written by Pritha Mitra Dasgupta | Updated: May 31 2011, 05:33am hrs
ROUND four years back, the Hindi general entertainment television space, which till then had been dominated by Star Plus, the flagship channel of Rupert Murdoch-led News Corp's subsidiary Star India, media baron Subhash Chandra's Zee TV and Multi Screen Media's Sony Entertainment Television, saw a sudden spurt of action with several new channels jumping into the fray. Peter Mukerjea, the former CEO of Star India, who played a crucial role in making it the numero uno broadcaster in the country, quit in February 2007 to float his own media company, INX Network, along with his wife Indrani Mukerjea. The network launched a Hindi general entertainment channel (GEC) called 9X in November 2007. A few months later, in January 2008 came NDTV Imagine, the GEC channel from Prannoy Roy's NDTV Group under the stewardship of former Star India CEO Sameer Nair. That was followed in July 2008 by Colors, the GEC channel launched by Viacom 18, the 50:50 joint venture of US-based media company Viacom and Network 18. The broadcaster got the erstwhile CEO of television content production house Endemol India, Rajesh Kamat, to steer the channel. And the fourth big-ticket launch in this series happened in March 2009, when Turner International joined forces with production company Alva Brothers Entertainment to float a new company called Real Global Broadcasting that launched Hindi GEC Real, bringing the total number of GECs to 12.

Even as these new channels were trying to stand up and get noticed, entrenched players such as Star Plus and Zee TV had a second and a third line of defence ready. In 2004, Star India had launched Star One, which was positioned as a second Hindi GEC from the Star bouquet. It already had Star Utsav which aired re-runs of shows. That year, Zee Entertainment Enterprises Ltd (ZEEL) launched Zee Smile, India's first 24-hour comedy television channel. In 2000, Subrata Roy-led Sahara India Parivar had launched Hindi GEC Sahara TV, now Sahara One, but it failed to curve out a niche for itself despite several brand re-positionings and name changes. In March 2005, SAB TV was acquired by Sony Entertainment Television and later transformed into a comedy channel. And in December 2007, ZEEL launched Zee Next, a second Hindi GEC.

Today, among the debutantes, Colors is the only one going great guns. Real, which opened with much fanfare and at one time had 24 million viewers tuning in, has sunk without a trace. In September 2009, in an official communique, the promoters said, The Turner and Alva Brothers Entertainment partnership in the entertainment business goes back many years and remains strong, as it continues to explore opportunities within the entertainment industry in India. Though initially there were rumours that Real will be re-launched, the channel never surfaced again.

NDTV Imagine and 9X were unable to capitalise on their initial success, and both channels saw a change in management, the former in 2009 and the latter in 2010. But there the similarities ended. 9X has not been able to move up the GEC roster, despite a new leadership in place. NDTV Imagine, now called Imagine TV, has fared better, and is now making a strong bid to move up the rankings. For the week ended 21 May, Imagine TV was at number six position with 68 GRPs (gross rating points) while 9X had just 1 GRP, according to data from Mumbai-based television audience research firm TAM Media Research.

Zee Group's comedy channel Zee Smile also never took off. Although the channel is still on air it does not have any original programming and is currently at the bottom of the GEC roster with 3 GRPs (gross rating points). Zee Next was closed down in September 2008 due to high costs and lack of investors. So what went wrong

Says Ashish Bhasin, chairman India and CEO, South East Asia, of media communications conglomerate Aegis Group, says, There are two things that go hand-in-hand to make a channel successful. Quality of the management running the channel including creative and marketing teams. And sustainable content beyond the first 4-6 months. All the channels that failed suffered from either or both these two problems.

Agrees Manas Mishra, executive vice-president and head of Mudra Connext, the media arm of the Mudra group, Most channels did not either create news or conversations around their launch or could not sustain viewer engagement or both.

9X had started off with substantial market share and GRPs. From the very beginning, 9X had a bunch of high-voltage production houses as its content partners which included Balaji Telefilms, Synergy Adlabs, Creative Eye, Ugreya Entertainment, Endemol India, BAG Films and Media, Hats Off Productions, Miditech, Wizcraft International, Edit II Productions and Beyond Dreams Entertainment. A 360-degree communication plan that reached out to consumers at various touch points was launched to promote the channel. The media mix included television, print, outdoor and ambient advertising, radio, internet and mobile promotions and other innovative promotional activities. On the back of shows such as Chak De Bachche and Yeh Hai Jalwa, the channel captured the third slot on the GEC roster in May 2008. 9X held the number three slot jointly with NDTV Imagine with 8% channel share. That week, Star Plus remained at the top position with 31% channel share followed by Zee TV with 23%. Sony Entertainment Television toppled to the number 5 position with a channel share of just 7%. However, 9X was never able to move beyond this and remained a has-been. According to the latest TAM data, in the week ended May 21 , Star Plus still continued to rule the genre with 300 GRPs, followed by Colors (230), Zee TV (191), Sony (136), Sab (133) and Imagine (68). 9X had 1GRP.

Says Subhashish Mazumdar, senior vice-president, marketing and customer relations, IndusInd Media & Communications Ltd-Hinduja Group (InCable), The entire bandwidth in the analog television is choked. And unless a channel garners decent TRP even the DTH operators cannot bundle the channel in a good package. Therefore it is very important for a new channel to create shows that will create the channel identity. And also create proper buzz around the channel through various marketing initiatives.

A senior media player who did not want to be named said, The cost structure of the company was not sound and eventually it got into a financial mess. Peter Mukerjea, in a bid to get good talent, paid an obscene amount as salaries that led to skyrocketing overhead costs. So when this problem came to the fore, the channel could not recover from the financial mess and lost focus even on the content side which eventually led to the crash of the channel.

In March 2010, ZEEL said it had made a bid of Rs 65 crore for 9X, who owed Rs 130 crore to creditors. In April 2010, following a deal between ZEEL and INX Media, 9X vested into the ZEE Network. Zee has not revamped the channel though it is still on air. Both ZEEL and the members of the current executive committee of 9X Media declined to be interviewed for this story.

NDTV Imagine and 9X have been close competitors all along. Both the channels were launched close to each other and within May 2008, the two shared the third position on the GEC list. 9X initially had 4% channel share, while NDTV Imagine had only 3%. And by May 2008, both channels held 8%. However, NDTV Imagine's promoters who were facing a financial crunch could not continue investing in the channel. In December 2009 Turner Asia Pacific Ventures (TAPV), a wholly owned subsidiary of Turner Broadcasting System, acquired 92% in NDTV Imagine for $67 million. The channel was rechristened Imagine TV. The new promoters also restructured the management and streamlined its different businesses. It soon revamped its entire programming line-up and launched big-ticket shows such as Rakhi Ka Swayamvar, Rahul Dulhaniya Le Jayenge, Bandini, Zor Ka Jhatka with Bollywood superstar Shah Rukh Khan, Chandragupta Maurya, etc.

Ashesh Jani, partner, Deloitte Haskins & Sells, a consulting firm, explains the rationale behind the buyout of channels such as 9X and Imagine. Channels having similar content are increasingly looking out to rationalise their business by either seeking out competitors for merger or consolidating themselves by business arrangements with competitors. Content, forever, remains the king. So, if a channel has established itself with premium and well-accepted content then it will have bargaining power in business arrangements. However, the trend is to dominate the scene and have arrangements go their way, which has proved to be an issue in long-term business arrangements or mergers.

Earlier this month Imagine TV's long-time CEO Nair quit even as Turner said in a statement that the operations of Imagine would be fully integrated into Turner Broadcasting System Asia Pacific (TBSAP) as it strives to turnaround the channel. "We are currently working to fully integrate the Imagine operations into TBSAP and Sunny Saha, senior vice-president and general manager for the entertainment networks of TBSAP, will now be working closely with a great India team to chart a long-term course for the channel. Imagine will be better positioned to benefit from the relationship with its sister Turner networks in India," said Steve Marcopoto, president, TBSAP.

The company says that it will continue to invest heavily in the channel. "We are just in the twelfth month of running Imagine, it is early innings right now and we are here for the long haul. We hardly have had enough time at the crease to be questioned. Yes, we need to improve the channel's overall performance but the general entertainment category is hyper-competitive and needs long term-investment and continuous efforts. In terms of content as well, the category seems akin to the theatrical space where a large volume of original content is created but only a percentage actually over-performs," adds Marcopoto.

With two big names backing Real, everyone expected the channel to be a strong contender for the top GEC rankings. Turner International has kids channels Cartoon Network, Pogo, English movie channels HBO and WB, and news channel CNN in India. On the other hand,Alva Brothers entertainment that owns production company Miditech produces documentaries for National Geographic channel and has created shows such as Indian Idol (for Sony), Galli Galli Sim Sim (for Turner's kids channels), Roadies (MTV), Jeena Isi Ka NamHain (Doordarshan), Living on the Edge (Doordarshan/ Star) and SaaraAakash (Star) and many others.

The channel had roped in Swastik and Panama Productions, apart from its in-house production unit, Miditech, to generate content and had shows such as Sarkaar Ki Duniya and Vicky Ki Taxi produced by Miditech, Namak Haraam by Panama Productions, Hindi Hai Hum, a show on young India and Poker Face, an international game show. But it simply failed to take off. It opened with 9 GRPs in the tenth week of 2009 as per a TAM report and by the 34th week, it had garnered 11 GRPs. But soon after after the channel started losing GRPs and slid to the bottom of the GEC roster with a 1% share.

Industry watchers believe that the content on the channel was extremely innovative and ahead of its time. The channel, however, made two mistakes. Despite being a Hindi GEC, it wasn't positioned as a mass channel. It was targeted at the urban, upper middle-class Indian audience in the age group of 15-34 years. It started with three hours of original programming every week, with movies, music and kids' programming forming a large chunk of the content. Real spent miserly on marketing and distribution. Moreover, it went pay from day one which hindered its distribution pattern to a great extent, says Mazumdar.

We ventured into Real with great partners, Miditech, who had proven expertise on the production side. And together we thought we had an opportunity to offer targeted, differentiated content within the GEC category. There are always different takeaways in hindsight. For us, it seems that the GEC category is still very traditional and broader targets remain the name of the game, says Marcopoto. Despite the unsuccessful experiment with Real, Marcopoto believes that the Indian broadcast market offers great opportunities. "Hindi GEC is an exciting core category of the Indian media and entertainment industry and Imagine TV is an established, well-recognized brand, with a history of distinctive original programming that was a great, targeted addition to our worldwide family of entertainment properties.

But with increased competition in the genre, shakeouts had to happen. The Hindi GEC genre is a fairly established space with entrenched players. Therefore it's difficult for a new player to enter and reach the top slot, says KPMG India media and entertainment practice executive director Jehil Thakkar.

According to the Ficci KPMG media report 2011, between 2006 and 2008 the Hindi GEC genre captured the second highest market share in terms of viewership. In 2006, Hindi GECs captured 23%, in 2007 it marginally decreased to 22.6%, and then again rose to 23.2% in 2008. And in 2009, following all the big-ticket launches, the genre witnessed a steep rise in viewership and captured 26.9% of the market share. It increased further between January to December 2010 to 29.6%.

Colors has been the only one with an enviable run, shooting to the number one position within nine months of its launch. Their biggest strength is intelligent distribution coupled with fantastic programming line-up. The element of wide distribution was missing in case of others, points out Thakkar.

The other two GECs that have managed to curve out a niche for themselves are Star One and Sab TV. Star One has managed to survive because of big brother Star Plus, say industry watchers. And MSM's Sab TV, Thakkar says, converted the challenges in this genre into opportunities. It understood the appetite for light-hearted shows and recreated the comedy segment in the country. A fantastic strategy that has helped the channel grow.

Experts also say that in the midst of rising content acquisition costs with more blockbuster movies, reality shows and events on air, tier two GECs such as Sab TV and Star One have managed to hold their own on the strength of innovative fiction show formats, which are much cheaper to produce. Channels do well riding on their content and viewership and the Star and SAB group are no exception. Knowing when to pitch and when to exit the scene is what all need to learn in this volatile business, says Deloitte's Jani.

Most channels that have failed to make a mark put the blame on high carriage fees. But Mazumdar disagrees. The carriage fees is 10% of the advertising revenues. And to reach 40-50 million homes channels will have to spend more money. Today the cost of floating a new channel is 30-40% higher but the return on investment has also gone up by at least 50%.

The increase in the number of players in the Hindi GEC sector has also divided it into two groups the top GECs and the second-level GECs. While Star Plus, Colors, Zee TV and Sony Entertainment Television clearly belong to tier one, channels such as Imagine, Sab TV, Star One, Star Utsav, Sahara One, DD1 and Zee Smile belong to tier two.

However, experts are bullish about the future of the Hindi GEC space. The Telecom Regulatory Authority of India's order to networks to switch from analog to digital transmission from March 2012 is expected to give a fillip to this genre. Says Mazumdar, By 2015 the entire country should go digital. The digitalisation will make it easier for smaller GECs to survive. Smaller GECs can restrict their geographical limits which will reduce their cost and increase viewership. Also, it will be easier for them to track and earn from subscription money. Although it might bring lower advertising revenue that will not hinder the growth of GECs. He also said that currently it takes 3-5 years for a GEC to break even. However, with digitalisation channels may break even in 6 months.

Both Bhasin and Mishra believe that even if the number of channels increase, the genre will be dominated by 2-3 players. Stakes in GEC are high, viewer habits are more long term/ sustained, investments are huge and typically it requires a large super structure (channel presence across a few genres to flank the GEC, presence across all major cities, brand name recognition) hence fewer dominant players, says Mishra. Bhasin adds, I think going forward, be it the Hindi GEC genre or any other genre, there will be just 2-3 players who will emerge as clear leaders.

But Thakkar of KPMG adds a sombre note when he says that within the next decade Hindi GEC as a genre leader in the entire broadcast space will lose its numero uno status. As India moves to multi-screen market and not a multi-TV market, there will be erosion in the market share of Hindi GECs.