Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player


The Meltdown: Is the Hindi GEC bubble bursting? Part 2

The Meltdown: Is the Hindi GEC bubble bursting? Part 2

Author | Noor Fathima Warsia | Thursday, Nov 13,2008 6:09 AM

The Meltdown: Is the Hindi GEC bubble bursting? Part 2

Perhaps the sentiment is greater than the memos, but the Hindi general entertainment channels space has gone shaky enough to discourage many players that were looking at entering the genre to significantly delay their plans. Industry leaders have stated in conversations with exchange4media that the situation that the genre is currently in may give the sense of a bubble, but it is not one. Most leaders had said that there are players in the genre who would still be there once the present times of turmoil pass.

A few on-ground realities though include media companies like Big Broadcasting delaying their GEC launch plans by almost two years. Real Global Broadcasting has been very quiet but doesn’t appear to be able to meet its promised 2008 launch deadline. Officials from Balaji Telefilms has been heard saying that they want to launch a Hindi GEC soon but are still grappling with ways on how they could proceed with this plan given the current situation. Many media observers have said that even after the slowdown is controlled, players in GEC genre would think some more before showing recklessness in their decisions. The GEC bubble, in that sense, has burst.

Players like Zee TV, Sony Entertainment Television and Colors have said that there is still time before the economic slowdown hits Hindi GECs in its entirety. All three sound optimistic on the conditions being brought under control in a few months’ time. Players like Colors, which is a JV between Viacom and Network18, both of whom are seeing their share of problems, and Sony Entertainment Channel, the Hindi GEC from Multiscreen Media, which again is a US-based company, have stated that the plans were on track, but there was no stress of any kind, just yet.

We are cutting down, but not on people, programming or marketing: Puneet Goenka
Perhaps one of the first memos that had gone out on the efforts to keep costs under control was from the Essel Group. Addressed by none other than the company’s Chairman Subhash Chandra, the memo said, “There is always an opportunity in such times and prudence lies in working at leveraging all opportunity. We need to come out as winner in such times and getting back to the times of ‘Champagne and Caviar’. We need to look at improving productivity and rationalising costs. Let’s all focus at work to stretch ourselves to the hilt. The organisation and employees at such times are responsible to work with less and deliver more. This is the time to see how we can get best out of ourselves with given resources.”

The memo also said, “Let us look at all our cost centers. This is an opportunity to sit with a fine tooth comb and cut undue expenditures. I have formed committees and given them a mandate to look into the above and start addressing the issues immediately.”

Puneet Goenka, CEO, Zee Entertainment Enterprises Ltd (ZEEL), said in a conversation with exchange4media, “These are troubled times at a general level, but it is not that we are seeing extreme results already. The Hindi GEC genre consumes significant energy and investments, and the broadcasters are dependent on advertising monies to a very large extent to make for the bulk of their revenues. There are certain caps on subscription revenues, and there is only so much that you can do in that area. The situation of meltdown has only aggravated the overall condition, and it is very important to be more cautious than usual.”

“As a company, we have always been careful. For this situation, we have put together committees that would be looking at the overall situation and the specifics. But we are very clear that we are not going to cut down on people, programming or even marketing budgets. We are instead looking at areas like administration and overhead charges,” added Goenka.

It is going to be tough, but media wouldn’t be affected very badly: Kunal Dasgupta
Whether it is the impact of the Indian Premier League (IPL) or just the typical Sony survival instinct, but Sony Entertainment Television, the Hindi GEC from Multiscreen Media, is one of the companies that has neither come in the line of fire for not being able to withstand the current pressures, nor has it as undertaken any severe measures so far. Kunal Dasgupta, CEO, Multiscreen Media, told exchange4media that even though the times ahead were tough, he did not think the media industry would see much of an affect.

He added, “This is still a very growing industry, and a newly growing industry. It is not as if we have reached any kind of saturation level in this industry, and so it is still poised to see growth. Even for various international companies operating here, India is a priority. At the same time, it is important to be able to look at what you can do to stay in control for whatever happens.”

We are not going to make any ad hoc cuts on anything: Rajesh Kamat
The going has been good for Colors, however, the meltdown hasn’t spared this promising newcomer either. One school of thought is that Colors has invested significantly in putting together the channel, but would it be able to monetise the investments. Another set of discussions is that both Network18 and Viacom are seeing their own share of problems due to the stringent market funds. Would this impact Colors?

Rajesh Kamat, CEO, Colors, said, “It has been a good opening for us and the environment in the next year or so would be challenging for everyone. Our situation is different from the established players since we are not at the point of saturation. It is a zero-base game and the business is ahead of the curve. Since we have started with a zero base, we do not even have all the advertisers on board yet. By virtue of the growth path that we are in, we are still matching the revenue expectations we had. So, we are not facing that kind of impact. Sure, we may be able to monetise to the level that we could have in a booming economy, but we are trying to bridge the gap between the revenue share and viewership share. We are still getting into quite a few media plans, and that adds to our P&L.”

Kamat is very clear that the channel would not put a control on costs just yet. He said, “The brand is at the stage where we have just about gathered critical mass, and we could slow the momentum if we were to take any knee-jerk steps. The spends would be judicious, but we are not doing any ad-hoc cuts. You would not see us pull back on plans in any way.”

But with both the parents facing the kinds of problems that they are, is there any pressure on Colors? Kamat replied, “Not really. This is a flourishing business and if there was any kind of prioritisation that would be happening, we are clearly on the top of the priority. These are long term strategic investors and from that perspective, flourishing brands would be supported.”

SaharaOne Media’s Seemanto Roy was not available for comments at the time of filing the report. It is learnt that SaharaOne officials, too, are conducting a series of meetings to address programming costs and carriage fees issues.

The Hindi GECs are witnessing a lot of action – internal factors and external factors – simultaneously. If the GEC bubble was one of the outcomes of this action, another one has been the unity of the top bosses, and in turn their teams, to get together to make the basic economic structure of this genre more viable. As Sameer Nair had said to exchange4media in the first part of this series, the meltdown is more about correction. The question is by when would we see the corrected picture in place?

Also read:

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

Tags: e4m

Write A Comment