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The Meltdown: Is the Hindi GEC bubble bursting? Part 1

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The Meltdown: Is the Hindi GEC bubble bursting? Part 1

Hindi general entertainment channels are seeing one of the toughest times in the history of the genre. The meltdown has impacted the segment. At an industry level, the broadcasters’ blackout of fresh programming is one aspect that got magnified due to the slowdown. Uniting on the distribution front, too, is among the many steps that channel heads are taking to contain the situation before its goes out of control. Top execs have already met on rationalising carriage fees. This meeting included names like UTV’s Ronnie Screwvala, NDTV Imagine’s Sameer Nair, ZEEL’s Puneet Goenka and Joy Chakraborthy; Multiscreen Media’s Kunal Dasgupta, and INX Media’s Arun Mohan.

While that is on the industry level, there is much happening at individual levels too. From shooting out pep mails to the teams on the need to cut costs; putting tight leashes on aspects such as international or national travel, entertainment expenses and so on to even dispensing off mid-year increments, almost all channels have lined up a list of precautions to be prepared for the times ahead. The meltdown has created insecurities of all kinds, too, and something gets added to the everyday grapevine; not many have been spared from that.

exchange4media takes a closer look at some of the industry realities and the measures that the various chiefs are taking to be future ready. Three channels under the scanner in the first part of the report are STAR India, NDTV Imagine and INX Media.

Owners don’t quit: Sameer Nair
Even before the INX speculations deafened everyone, much was being said on Sameer Nair, CEO, NDTV Imagine, calling it a day at the organisation. Ironically though, not many asked Nair about this. When questioned on what his first reaction was to this speculation, he said, “Owners don’t quit, and I am an owner and a shareholder at NDTV Imagine, as is every single employee here, so such speculation really makes no sense at all. We are a close knit team; most people have worked with me for years and know me very well. This kind of cheap rumour mongering has never bothered me, or the people I work with, because we really don’t have the time for that kind of thing.”

But has the international affiliation with NBC Universal created stress in the organisation, especially in light of the global meltdown. To this, Nair said, “In crisis, lies opportunity. At a time like this, anyone would want to work with promoters and partners that are not just focussed on the next quarter but also on the next three quarters and next three fiscals. At least in our case, NDTV is a blue chip media company, and NBCU is a global media major. Everyone here has a good appreciation of how the market and media business works, and what the downturn actually implies – both in the form of threat and opportunity. The idea is to have your eye on both the short term threat and on the long term opportunity, and work accordingly. Different countries and companies have different dynamics and the one-size-fits-all approach doesn’t apply.”

For Nair, the meltdown is about correction. He said, “Over the last two years, not just for the GECs, but you could argue that across all industry, the availability of easy capital led to the boom. In media, there was mushrooming of all kinds of channels and that led to a situation of insane talent prices, carriage costs, acquisition fees and so on. There was a disproportionate premium on money power as compared to brainpower. My personal view is that the meltdown is good for the industry. The premium on brainpower is back, and there would be some level of sanity now.”

Eco impact important, but not when the clones are already rejected by viewers: Uday Shankar
Industry leaders like Uday Shankar, CEO, STAR India, emphasise that while economic slowdown is a reality and it has had an impact, some of the new entrants didn’t offer a different enough proposition to be accepted by the viewers in the first place. He said, “I have always said that the most amount of cloning happens in the Hindi GEC business. You would think that the economic impact becomes important, but only if the new channel would be accepted. Some of the new channels failed on that first test with the viewer itself.”

For Shankar, it is the survival of the fittest or at least of the smartest. He said, “There is deterioration in the current economic environment, and everyone is affected. But the ability of strong seasoned broadcasters with proven track records and robust P&Ls is going to be much better to withstand the environment. Those who focussed on getting market share regardless of the cost, would find it tough to monetise it now.” He stated that the number of TV players was disproportionate to the size of the market, and that there were even fewer broadcasters with a distinct offering of their own.

To top this, the market at present has various kinds of business models, and Shankar reiterated the point that the valuation dream had gone bust. He further observed, “Even the ones who survive the economic environment, it is tough times ahead. We are all in a business, and this space too has to make business sense. Lack of realism has crept into the entire value chain, and that needs to be revisited. Do we want to survive going bankrupt, or by competing in a sensible business manner?”

Much like all the other players, STAR India, too, is looking at all of their expenses very closely. Shankar said, “Our hiring is very need based anyway. We would hire if there is a need. But we are examining cash outflow very rigorously. We are visiting everything including investment in programming, cost per episode – even if the show is a great show, if it commercially unviable, it would be scrutinised closely. Even aspects like travel, if it can be avoided, including my own, it would be. Every business manager, and every unit, has to take responsibility of this exercise. My approach has been to involve the entire team in this.”

We will ask people to cut to the bones and work: Indrani Mukerjea
INX Media is another company that has already initiated various meetings with its Head of Departments on how costs could be cut across all functions. Indrani Mukejea, Co-Founder and CEO, INX Media, divulged to exchange4media, “Currently, we are at a much lower cost model. We haven’t identified the areas where we would look at cutting cost, but content and carriage are the obvious ones – half the battle would be won if those are addressed.”

The industry has been abuzz with rumours that INX Media is laying off its workforce. Clarifying on that, Mukerjea said, “We do not plan to ask anyone to leave. There is going to be softness in the job market. We had begun noticing that in our HR firms even before the meltdown happened. When you do cost cutting, the smarter way is definitely not to ask people to leave but to accommodate, which is to say that adjust with no bonuses, or work with no frills. We would bring down our travel and entertainment cost hugely. Wherever required they have to cut to the bone and work.”

Is the GEC bubble bursting?
Uday Shankar said, “I won’t call it a bubble. It is very real. But obviously, people who had come in the last year or so without any distinct identity would find it tough to grow. That said, I don’t think their failure or success has anything to do with the economic slowdown.”

Sameer Nair replied, “There is no such thing as a bubble here. New players would always enter a promising growth market. We have seen a sudden spurt of activity that challenged the otherwise hegemony that STAR and Zee enjoyed in this space, and that may tend to give the sense of a bubble. The industry is not new to such a situation though.”

Indrani Mukerjea observed, “The only channels that would survive are the ones that adopt the absolute low-cost model. Even if you spend a lot of money, there is softness in the marketing spends and this would worsen in the next 18 months. The market would see huge cost rationalisation across all sectors and mediums.”

What has the Zee Chief Puneet Goenka instructed to his team? How do Multiscreen Media Chief Kunal Dasgupta and his team view the slowdown? Is the slowdown disturbing Colors’ CEO Rajesh Kamat too?

The Chiefs reply to all these queries in the second part of ‘Is the Hindi GEC bubble bursting?’ in exchange4media’s Meltdown analyses.

Also read:

The Meltdown: Competitive tactics help; slowdown fails to dampen DTH spirit

The Meltdown: Sale or no sale – INX Media & INX News caught in a speculations storm

The Meltdown: Peak season fails to cheer outdoor industry as ad spends dip 40 pc

The Meltdown: ‘The flamboyancy of 360-degree initiatives will be diluted’

The Meltdown: Radio players safe for now, but keep a cautious eye on market


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