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Working Up A Lather

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After Kaun Banega Crorepati (KBC) pulled Star Plus out of the wilderness and made it No. 1 in July 2000, dethroned Zee TV reacted with a show few remember now — Sawaal Dus Crore Ka. The game show, anchored by actors Anupam Kher and Manisha Koirala, offered 10 times the winnings of KBC, but was a resounding flop. And, the dead heat for channel supremacy took its toll. The anchors were replaced by Ashutosh Rana. Zee CEO R.K. Singh, who had dismissed KBC as a passing phase, quit soon after.

Entertainment television had become serious business by the turn of the century. Hindi general entertainment channels (GEC) such as Zee TV, Star Plus and Sony had redefined entertainment and shifted mass audiences from single-screen cinemas to the comfort of living rooms. They brought in nearly 50 per cent of advertising revenue that the industry earned, but their influence was far greater. Star Plus rode this wave with KBC, and two soaps — Kyunki Saas Bhi Kabhi Bahu Thi and Kahaani Ghar Ghar Kii — to be the unassailable No. 1. But not for long. In July 2008 came Colors. Balika Vadhu and Akshay Kumar’s Khatron Ke Khiladi helped it dethrone Star Plus. By March 2009, Colors was No. 1.

By now, the TV universe had become a neck-and-neck race between Zee TV, Colors and Star Plus. Even Sony had bounced back on the strength of the Indian Premier League (IPL) cricket gala and a ­rejuvenated Amitabh Bachchan hosting KBC.

Broadcasting networks also began launching new channels. Zee, for example, has 32 channels on air today. And, advertising revenues have become more broad-based. GECs now account for a smaller slice of the pie — 25-30 per cent. Does that mean that they’ve lost their sheen? Probably not. Their primacy in the world of entertainment remains undisputed. And the consumer continues to be spoilt for choice.

The Digital Battle
At its peak, Star Plus’s weekly gross rating points (GRP) — the television viewer ratings (TVR) garnered over a week, reflecting the size of viewership — had touched 600 points; the No. 2 and No. 3 channels were way behind with 150 or less. But during 2007-09, Star TV faced an internal crisis. Its two joint CEOs (Peter ­Mukerjea and Samir Nair) quit. The confusion gave Colors a chance to move ahead. But Star Plus quickly recovered with the success of soaps such as Saath Nibhaana ­Saathiya and Yeh Rishta Kya Kehlata Hai during 2009-10. Briefly, in September 2012, Zee hit No. 1, while data for October-December — when digitisation of cable television kicked in — shows Colors at the No. 1 spot. “From now on, there won’t be a definitive leader,” says Colors’ Raj Nayak.

Echoes Star India’s COO Sanjay Gupta: “It is going to be a three-horse race between Star Plus, Zee TV and Colors.” According to Nachiket Pantvaidya, head and general manager at Star Plus, “We are seeing the end of the saas-bahu era.” Illustrating the changing storylines, Pantvaidya says in Star Plus’s chart-topper Diya Aur Baati Hum, the protagonist Sandhya wanted to be an IPS officer, while another serial, Veera, celebrates a woman becoming a sarpanch. “Meanwhile, the line between reality shows and soaps has blurred. For instance, we are running MasterChef as a five-days-a-week show, like a serial,” points out Pantvaidya.

What has also significantly changed the Hindi GEC turf is rapid digitisation. “Over 40 million homes in the country have gone digital — or one-third of total TV homes. About 14 million have been added last year and 60 per cent of Punjab is digital now,” says Gupta. “This means the number of channels available is up from 30 to 300.” The earlier anonymity of the consumer, known only to the local cable-wallah, is being replaced by an addressable digital system that makes the consumer accessible; and billing and gathering subscription data has got easier. “Among digital homes, 20 per cent are from small towns. These are being measured for the first time,” adds Gupta.

That said, digitisation has also moved viewers away from GEC channels to niche ones that were not available earlier, says Pradeep Guha, former CEO of the Zee network and currently an investor in a music channel. “This has meant harder competition.”

But digitisation and better distribution have also brought in a spike in revenues for GECs, he notes. Subscription revenue accounts for about Rs 2,000 crore, of which GECs account for a lion’s share. “This money is being ploughed back to develop better content. For instance, these channels are experimenting for the first time with putting Bollywood stars in soaps. This will be a game changer; but very expensive too,” says Guha.

Survival Strategies
At stake in this Big Fight is around Rs 6,000 crore, waiting to be earned from corporate advertising and consumer subscription. Of the Rs 12,000 crore of advertising that gets funnelled into television, a third goes to Hindi entertainment. It was a much higher figure in earlier years, recalls Punit Goenka, MD and CEO of Zee Entertainment Enterprises (ZEEL). Flagship channel Zee TV used to earn as much as 75 per cent of the revenues for the broadcast group. “The share has come down to about 25 per cent,” he says.

Though the contest between the Top Four has stabilised with Star Plus marginally ahead, keeping that equation going involves serious strategy. For instance, most of the big networks have launched second Hindi entertainment channels, known in the industry as the GEC-2 club. The old Star One was restaged as the Life OK channel in 2011, while SAB TV, a property purchased by Sony’s Multi Screen Media (MSM) a decade ago, has risen as a successful second channel. Zee, too, is in the midst of lining up a second challenger with Zee Smile, which it pitted against SAB TV.

The second GEC channel also serves to provide differentiated programming for the more sophisticated urban audience. The strategy seems to be working for SAB TV, which has scored with the show Taarak Mehta Ka Ooltah Chashmah, at No. 3 in March. The channel’s average GRP of 143 for March is just 29 points behind flagship Sony. Star is exploring a different kind of differentiator. “For us, the philosophy is to celebrate the power of women. But we felt our core values — compassion, courage, honesty — were getting left behind. A series like Mahadev on Life OK captures those values,” explains Star’s Gupta.

While Colors’ chief Raj Nayak concedes the need for a second GEC channel to broaden the offering and keep eyeballs within the network, he says the prohibitive costs of programming have led the channel to concentrate on consolidation rather than launching another. In the case of Star TV, it has a third entertainment channel. Star Utsav, a free-to-air channel targeting villages and small towns, beams repeats of old programmes and garners an average 50 GRPs a week with no programming cost. The three channels form a formidable force.

In this contest of equals, advertisers will have to dig deeper to ascertain which programmes reach their target groups better, based on factors such as demography, gender and earning capacity. Says Mukerjea: “The only way to measure audience numbers and viewership is to carve up the audience into smaller clusters of men, women and kids and then further sub-divide them into demographic groupings and then see which programme (and channel) is the leader in each demographic. Simply going by gross ratings is meaningless.”

Meenakshi Menon, CEO of media monitoring agency Spatial Access, agrees: “Advertisers always seek out Big Impact programmes on prime time. Shows such as Bigg Boss and KBC rule the roost as they have a much wider reach across demographics compared to the others,” she says. The obvious strategy of a successful entertainment channel is to have one or more Big Impact shows.

Cost Conundrum
Running a Hindi GEC is not cheap. Most GECs offer a minimum of 4-6 hours of fresh programming a day or around 35-40 hours of new content a week. The cost of producing this content is high — fiction and soaps average Rs 20-30 lakh for half-hour shows, while reality shows cost as much as Rs 60 lakh to Rs 1 crore an episode. This translates into a daily burn of around Rs 2 crore. “With channels targeting better production quality and using Bollywood actors in soaps, this figure is likely to double,” says Guha.

Then, the channels need to have a spike in viewership over the weekend. So, they buy satellite rights for popular Bollywood movies. The cost: Rs 2 crore to Rs 20 crore. For the big channels, programming costs range anywhere between Rs 1,000 crore and Rs 1,200 crore a year. Together with staff, marketing, satellite and distribution costs, the annual bill is close to Rs 1,500 crore.

How do they recover costs? While programming and marketing costs have soared, advertising rates have remained flat. Prime time slots for fiction and soaps sell for between Rs 75,000 and Rs 1 lakh per 10 seconds, while those for non-fiction and reality shows are sold for Rs 1.75 lakh to Rs 2 lakh. Subscription revenue is on the rise, but it is still dependent on many variables.

Under these circumstances, some GECs are looking at paring costs. Colors has cut back on buying expensive rights to movies. When KBC brought in Bachchan, it set a trend of using expensive Bollywood stars to anchor popular shows. Akshay Kumar as MasterChef host on Star Plus or as the protagonist of Khatron Ke Khiladi on Colors charged Rs 2.5 crore an episode. Producing Satyamev Jayate with Aamir Khan cost Star Plus close to Rs 4 crore an episode. It has been a matter of debate whether the extra eyeballs these stars bring in are worth the cost.

But some GECs have chosen to buck the trend. For instance, Zee insists good programming does not need stars. “We produce our reality shows in-house at about Rs 60 lakh an episode,” says Goenka. “If I can produce programmes at one-third the cost, I don’t mind being No. 2 with 10 GRPs less.”

Competition and high costs have taken their toll on this segment. Three strong players have shut down in recent years and there could be more casualties. Both attempts of Time Warner’s Turner Broadcasting to muscle into Hindi television have proved to be non-starters. It launched Real TV in March 2009, but the channel shut down after a year following poor response. Turner also picked up the ailing channel NDTV Imagine in December 2009 for $67 million.

Imagine did a little better, but failed to get traction. On 12 April 2012, Turner announced it was shutting it down. Its managing director Siddharth Jain was surprisingly candid: “We could not maintain innovation and were not consistent with our success.” But Nayak of Colors feels Turner shut shop too early for a channel that had produced popular shows such as Rakhi Ka Swayamvar. “Imagine could have done well in the long run. Turner should have had the stomach to ride it out longer.”

9X was another channel that had a promising start. It was launched in November 2007 by Mukerjea, backed by funding from Temasek Singapore and a clutch of PE funds, including Srei Capital. It stopped broadcasting on 10 August 2009 and was picked up by Zee Entertainment Enterprises as a flanking move to eliminate competition. Zee has not refloated the channel.

Says Mukerjea: “We simply did not have the funds to carry on and had not anticipated the launch of Imagine, Real and Colors in the same year. I think we did the right thing by cutting our losses and bailing out.” Zee’s Goenka is critical of the way that multinationals went about their GEC business. “The Indian market is tough and changing. GEC channels cannot be run by a board. You have to take spot decisions,” he says.

The Success Formula
Besides quick decisions, innovation is key, admits Turner’s Jain. “Since creativity is no one’s monopoly, we are not afraid to experiment. If we don’t reinvent ourselves, we die,” says Colors’ Nayak. Star Plus’s Gupta too has his strategy for the future. The channel is experimenting with filmmaker Sanjay Leela Bhansali, who launched Saraswatichandra in February — a story about a modern but conservative man who grew up in Dubai. Simultaneously, recognising the opportunity in food programming, Gupta has MasterChef as a daily cooking competition show minus Akshay Kumar.

In many ways, the Hindi GECs are now displaying the verve that Hindi cinema did over the past year by delving into subjects that would have been taboo five years ago. Star Plus did a Vicky Donor by airing Satyamev Jayate — a series spanning across 13 social issues, from honour killings to corruption among medical practitioners, otherwise subjects for news television. The show was not among the top 10 but got reasonably good ratings. “It resonated with the intellectual audiences, and created a buzz,” says Gupta.

Zee TV is similarly experimenting successfully with a series called Qubool Hai, which Goenka says “cuts through the clutter about Muslim stereotypes and allows a peep into a normal Muslim business family that has great cultural etiquette”.

On the other hand, Colors is betting big on the international crime reality show 24. Produced by the Anil Kapoor Film Company, the show will hit screens this summer and is based on a crime investigation that runs its course and ends with the case being solved over 24 hours. It’s a reality show the likes of which have never been seen in India.

In sum, as the Bollywood adage goes — there is no formula for success. But what is refreshing is that television biggies are raising the bar and experimenting with bold themes to wow their audiences. 

gurbir(dot)singh(at)abp(dot)in; gurbir1(at)gmail(dot)com

(This story was published in BW | Businessworld Issue Dated 03-06-2013)