For over a decade now, members of the media and entertainment fraternity have gathered at FICCI Frames to exchange notes on the changes in the industry and what the way forward should be to ensure growth for the sector in India. James Murdoch, Chairman and CEO (Europe and Asia) at News Corp, set the tone when he urged the ‘sleeping tiger (India media industry) to be awakened’ and industry leaders added to that, by not just tracing the journey of the sector, but pointing out hurdles that are holding the industry back.
Among the key issues brought to the forefront, digitisation led the discussions, along with issues such as the need for uniformity in policy on FDI for the media industry, need for self regulation, price regulation and inter-connected vertical integration and the freedom to exercise content exclusivity as growth path for the DTH sector. Closer to the problem, broadcasters agreed that there was an urgent need to restructure and alter methods and practices in order to effectively elevate the cable and television industry from its current undervalued state and tap the economic potential of the medium.
The Mess in Broadcasting
Drawing a map of the journey of the industry, Aroon Purie, Chairman & Editor-in-Chief, India Today Group, traced how the talking points have moved from emerging trends and opportunities in 2004 to the peak of the economic boom and global euphoria in 2008, to later that year in September when the global financial meltdown hit.
At present, speaking on what the future holds, he termed it as the “Mess in Broadcasting”, reasoning that the grim viewpoint was due to the fundamental problems not changing, but the industry since then has continued to grow. In terms of pure numbers, he stated that in the two years, the number of C&S households had increased from 90 million to 116 million, while the number of channels had increased from 461 to around 550 in two years, which was “good news and bad news”. Speaking on the need to address profitability, he said, “The days of spreadsheet capitalism are over. There is no doubt that we are an undervalued industry and on top of that, you put a perverse business model, and profitability becomes a huge challenge.”
In order to “unlock profitability”, Purie listed four key issues pointing at the choked distribution scenario with a skewed demand-supply equation that benefited MSOs. The second key is the current distorted business model, where broadcasters are cheated as they fail to avail of their subscription fees as a portion is lost in the form of ever increasing carriage expenditure. The third lock is the Government, which should have been a facilitator but has acted as the biggest stumbling block in the growth of the broadcast industry. Offering digitisation as a solution, he said, “Digitisation will not only help increase bandwidth and eliminate carriage costs, but also bring addressable platforms, which means transparency and accountability for subscriptions. A fair share of what the consumer pays will flow to the broadcaster as subscription. It will be viable for new channels to be launched. Content will be king again, not distribution. I believe, the government should not listen to all the lobbies which descend on it and do what is right for the industry. And this, to my mind, is a no brainer.”
The last lock on profitability, as Purie observed, was the industry itself as broadcasters had not presented a unified front to the Government. “A progressive unified industry would have set up a digitisation fund and encouraged the cable operators to digitise,” he noted.
Talent Dearth, Regressive Regulation & Lack of Answers…
Uday Shankar, CEO, STAR India, spoke about the rampant dearth of talent apparent in the quality content generation today. Taking a critic’s approach to the industry, he spoke of the state of news broadcasting and the criticisms it faced, and said, “In most cases, people make fun of the content, dubbing it to be another mad race for TRPs, which is not true. In most cases, it can just be the lack of competent talent.”
He explained that the root cause was the lack of media companies’ ability to invest in quality talent and training. He cited that due to the current structure and perverse business models that were operational, only few companies had a small chunk of profits available to invest in nurturing talent, over and above basic sustenance and survival in a competitive environment. Shankar went on to say that the impact of this lack of talent was evident in a lot of content seen today. He said, “There is repetition of the same kind of content. One example of that is ‘KBC’. STAR brought the format to audiences in India in 2000, and even today is being hawked by other players. And audiences are watching it, not as a choice, but due to the lack of it.”
Shankar spoke on the piracy of television content by players in small markets and the absolute lack of a system that could address and correct such problems. He said, “We are probably the only example, where our content is pirated and we pay for it to be carried!”
Turner General Entertainment Network’s CEO, Sameer Nair, echoed Shankar’s views on not just the visible lack of talent attracted by the broadcast industry, but also the fact that ground realities such as carriage fees made it difficult for broadcasters to invest in content. Nair explained, “What started as under-declaration from cable operators, coupled with a price cap at the retail level, led to a situation where broadcasters had to pay carriage fee to MSOs. The carriage fee has been growing over the years, but there are no other substantial revenue forms that came in play for broadcasters.”
Broadcasters’ dependence on advertising revenues was discussed substantially once again at the forum. TV Today Group’s CEO G Krishnan said, “In any media market, there are advertising revenues and subscription revenues, but in India, we have not been able to get anything from the latter, and there is lack of vision from the regulator on the subject. In fact, the presence of a regulator has only worsened the problem between the broadcaster, MSO and cable operator.”
The discussions through the day on the subjects related to broadcasting industry hurdles reiterated that the India market needs a very strong and drastic measure from bodies such as the Ministry of Information and Broadcasting and even the TRAI to take the correct and progressive steps that can awaken the “sleeping tiger”.