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10+2 ad cap will wipe out Rs 300 cr from TV business: Sunil Lulla

29-August-2013
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10+2 ad cap will wipe out Rs 300 cr from TV business: Sunil Lulla

In a free-wheeling chat with exchange4media, Sunil Lulla, MD and CEO, Times Television Network shares his views on the challenges faced by the TV industry. He talks about the new system of rating, saying, “TVT is an evolution of the rating system and it is not going to stop here. It has to change further and it will next year.”

He throws light on the impact of 10+2 ad cap and the timing of digitisation. “Asking for 10+2 at a stage when economy is low and carriage fees is killing most channels, is ridiculous. This is a death knell for the industry,” said Lulla.

Lulla also talks about the English entertainment genre and the launch of TTN’s new offering Romedy Now.

Excerpts:

By launching a new English genre entertainment channel, will you be competing with Star World and other similar channels?
No. Star World is a very series-oriented channel and so are others in the English GEC space. Romedy Now is unique because the character of love and laughter has not been captured well before. It is a great blend of carrying the two emotions together.

It is a combination of movies and series. I think there is a unique positioning in this. Probably we will get audiences from both, the movies and general entertainment genre.

But when media planners would fragment genres, Romedy Now will be put in the English entertainment genre. How would you counter that?
I don’t worry how media planners rank us because we have built number one brands. I worry whether consumers have a proposition that they can stay with. I believe that the four channels we have today are a witness to that. I think what we are offering is unique and media planners are smart enough to differentiate that. There are people who want to watch this category and this will define their need.

What is your view on the new system of ratings in terms of TVT?
I won’t use ambiguity for statistical references. I think TVT is an evolution of the rating system and it is not going to stop here. It has to change further and it will next year. This is because TVT is a measure of a thousand audience reach, while TVR is the number of people watching in the entire universe. In both the cases, we are decimating the numbers and therefore moving away from the actual numbers. Globally, the ratings tell you the exact numbers like Olympics was watched by 1.2 billion people globally. TVR is usually used by media planners in their community to decide the efficacy of the money spent. Ratings have always been a content currency and not an advertising currency. One cannot mix the two. They might be relevant to each other, but content comes first. Unless one does not understand the power of one’s content, one will not be in a position to monetise it. So TVT is a step in right direction.

Additionally, the current measurement system is based on 60 million TV homes and that is a redundant figure. We need to figure out what is the real penetration of television and therefore, what should we pay for? I feel both, as a member of the industry and as an industry on a whole, we have failed to cost correct much earlier, as that would have taken the economics of the TV industry to a very different zone. Marketers have been buying TV quite cheap.

What is your view on 10+2 ad cap?
I think it is intervention in content. The respected members of the news business and us in otherwise object to it. As I said earlier, content precedes advertising. So in a channel one has got content, and then one pepper it with breaks, in order to monetize it.  If one tells how much and when to go ahead with ads, in other way one is telling me when to start and end my content. That is fundamentally violating rights of a citizen. Industry has worked best when the intervention has been least. One cannot fundamentally change a business model overnight.

Has digitisation started yielding results for TTN?
The advent of digitisation was not about subscription revenues but about capacity choke at the MSO level. It is about great picture quality, better bandwidth, revenues for the Government in form of service and income tax, and revenues for the channels. It is a process of over eight years but we are rushing over the deadline, and I complement the Government for doing it.
But asking for 10+2 at a stage when economy is low, carriage fees is killing most of the channels, and not everybody is a pay service, is ridiculous. This is a death knell for the industry. My estimate is Rs 300 crore will get wiped out in a flash. Let us start seeing digitisation effects and let free to air channel garner alter subscription revenues. This really works when there is a high subscription-driven model. We are just importing an international concept and implementing it in India without understanding its nuances.

Do you think present distribution aggregator model, which has been recently lashed by TRAI on the basis of complaints by several MSOs, is correct?
I support the aggregator model because one can’t look at this industry on a stand still basis. One has to evolve. Aggregators will be in a very good position to serve if the price ceilings that were there in 2003 and 2006 are lifted, as they are archaic.

But TRAI has been vocal about the monopoly of these aggregators?
TRAI doesn’t need to intervene in these issues. We have kept TV in the social service business. An average Indian spends 50 paisa/hour. And you want to regulate that? We need to lift the price tag.

Should TRAI stop micromanaging the industry?
Yes. The industry today comes together and finds its way out. The regulatory bodies are there to create fair system; to ensure there is no abuse by monopoly. It is not there to micromanage.

Has there been reduction in carriage fees post DAS?
In first phase of digitization, the industry saw a decline of average 20 per cent, which is not substantial. In the second phase, we don’t see a substantial reduction. The monopolistic practice of cable system does exist and for broadcasters, we need to get to the home. The money gets lost in the cable system and that is the real challenge.

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