Govt must allow indigenous manufacturing of set top boxes: Kartikeya Sharma

95% of set top boxes are imported in India & for one of the largest digitization processes in the world to happen, the country needs to manufacture its own set top boxes, says Kartikeya Sharma, Group Chairman, ITV Network

e4m by Simran Sabherwal and Henna Achhpal
Updated: Jul 10, 2014 8:00 AM
Govt must allow indigenous manufacturing of set top boxes: Kartikeya Sharma

Setting up the ITV Network was a leap of faith for Kartikeya Sharma. Taking every challenge in his stride, the network’s Group Chairman talks about right decisions made at the right time, power of ‘differentiated content’ and what makes ITV grow at a time when the news genre bleeds. He is also upbeat about ITV’s soon-to-be-launched integrated social media platform, which he expects to be a key differentiator.

The journey of ITV started in 2007. Sharma’s initial goal was to launch a national channel. However, the economic downturn forced him to re-strategize. His new game plan was the regional news channel, India News. Today, ITV operates five regional channels under the brand name India News across Haryana, Rajasthan, Madhya Pradesh and Chattisgarh, Uttar Pradesh and Uttarakhand, and Bihar and Jharkhand. Subsequently, in 2012, ITV acquired NewsX (the channel’s third owner since its inception in 2008), an English news channel which had a market-share of less than 1% at the time. A business move that raised eyebrows of many, Sharma says even here the company saw the challenge as an opportunity to turn around a crisis. Since then, NewsX has managed to create a space in the market and build a viewership base for itself in the crowded English News genre.

From building hotels to launching channels from scratch, the entrepreneur in Kartikeya Sharma seeks to contribute to society. Speaking to Simran Sabherwal and Henna Achhpal, he talks about differentiated content on Television, expectations from the new I&B Minister and why a free-to-air channel is not actually free-to-air.

In terms of content and programming, all news channels look similar. Why don’t we see innovative or clutter-breaking programming?
I am a true believer of the market, the force is in the viewership and the power and ability they have to humble the biggest of brands and the biggest of the products that are used, be it from Print or Television. As the Television genre has evolved, we’ve seen a plethora of channels come in – including high quality, high definition international channels from different genres. The level of expectation is definitely increasing and evolving. People expect the same quality in India as well and that’s something the Indian media industry will have to understand. Our viewer is exposed to all these channels and content and they compare our content with international channels.

We’ve tried to create a distinctive feature for NewsX and tried to be different from the rest, creating our own stylesheet of how we lay out our content on the screen. It’s not something that happens overnight, but we are intent on doing it – it’s not very comforting for your existing loyal viewership; you have to ease into it. So over the next two months, we will be doing that. NewsX and India News will be able to create some sort of history with the kind of differentiated content we will put out there specifically keeping our advertisers in mind, keeping social media and interactive television in mind. We are looking at something very major and revolutionary to be launched very shortly. It will change some fundamental aspects of how we see television.

There has been a proliferation of news channels, but this genre is still not profitable. For this reason, news channels have been strong opponents of the 10+2 ad cap advised by TRAI. Where do you think things went wrong and what should be done to make the genre profitable?
We have to leave the industry alone and not interfere in issues. The 10+2 ad cap should not be implemented as the industry is still not very well structured. For instance, a lot of players don’t get subscription revenues and advertising still remains the principal source of income. To put a limit on the level of inventory a channel can run limits the possibility of generating revenue beyond a point. Frankly, it is absurd because in any free market economy, the demand and supply should determine a product and its aspects and attributes. If people don’t want to watch advertisements for more than 12 minutes, they will definitely switch and the channel would suffer. So, it’s a trade-off between viewership and monies needed to sustain a business. That is an extremely important decision which must be left to the people who are running the business and not some regulatory mechanism and to dictate what percentage of content can be run would be detrimental to their existence.

Now, with a new measurement system due from October, what are your expectations from BARC? Do you believe it will deliver?
There’s no reason to doubt the ability of any other mechanism; but the more, the merrier and if there are two mechanisms instead of one to gauge the ratings, then why not? I’ve always advocated TAM because there wasn’t an alternative. Sometimes we just like to shoot things down without building an alternative which is not necessarily the best way or the better way to approach the market. To run the market without any number, vis-a-vis some number that is available, is something no one should even suggest or recommend. For lack of a better option, yes, TAM. Even if BARC comes on board, it will be a welcome thing for the industry by and large.

You have been sceptical of the MIB’s rating guidelines. Why so?
It’s an interventionist approach and MIB shouldn’t be setting up the rating guidelines, the market should set up the guidelines because the market has a better and a wholesome perspective. But, MIB should be an equivalent stakeholder in it because it is one of the largest consumers of TAM or any other agency including Prasar Bharti or AIR. They must have a say because they’re a stakeholder in it, but the Ministry should not be regulating the guidelines. I hope these decisions are left to the industry - from advertisers to broadcasters to industry specialists.

With the new government in place, do you think the FDI limit in news media will soon be raised?
The FDI limit has to increase but it has to be a gradual process and we’ll have to see what this government thinks on the issue of FDI, because one thing is very clear that FDI will never cross 49 per cent in the news space. It’s highly unlikely that this government or any other government would do that. In that scenario, we have to wait and watch. Sooner or later, the FDI limit is definitely going to be increased. It’s important as far as the news channels are concerned. The cross-holding issue is more of a problem than FDI. A lot of companies which have an interest in news channels and other entities can’t hold beyond a certain percentage, and that also becomes an impediment. That is an issue which needs to be resolved. When a large company is in the distribution business, they can’t acquire more than a certain share of a news channel and vice versa. But I think we have an open-minded I&B Minister from whatever we have heard of him. Hopefully there will be a welcome change.

What are your expectations from the new government?
The new government should do what is absolutely critically required for this industry as soon as possible. In terms of digitization, the I&B Minister recently spoke about set top boxes (STBs) being indigenously manufactured. That’s a welcome thought and I can’t understand why no I&B Minister till date has initiated that – for one of the largest digitization processes in the world to happen, you need to have set top box manufacturing in the country as 95 per cent of boxes are imported. The rise in dollar value led to a 25 per cent increase in costs which made the business unviable for cable operators. To add insult to injury, the last government increased the import duty on set top boxes. While you are trying to digitize on the ground and trying to tax it more, this doesn’t help the industry and doesn’t facilitate the process. You are almost penalizing the people importing STBs and it wasn’t a prudent policy by the government. I hope such fundamental policy decisions happen in favour of the industry and happen quickly.

If you were to offer advice to the new I&B Minister, what would you say?
The I&B Ministry has to play a bigger facilitating role between broadcasters, distributors, cable operators and DTH providers. It has had a very limited role – it needs to take a pro-active role. For instance, why should a free-to-air (FTA) channel which pays carriage fees need to have a viewer pay for it? It defies the concept of a FTA channel as the channel is never really free-to-air. A number of fundamental and basic issues in the industry which haven’t been resolved because of its haphazard approach and evolution and some incorrect policies by the previous governments need to be corrected and addressed.

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