Pushing ahead on a growth path: Haresh Chawla & the Viacom story

Viacom18: From Rs 110 crore to Rs 1,100 crore. What’s next? CEO Haresh Chawla admits that the space continues to be competitive, but avers that the brand is stable and his challenge is to keep it going on the trajectory it is on, and further strengthen it...

e4m by Noor Fathima Warsia
Updated: May 4, 2011 10:36 AM
Pushing ahead on a growth path: Haresh Chawla & the Viacom story

The Indian media industry has had many success stories to boast of in the last few years. The Viacom18 story specifically, which began as a challenger brand’s journey, has become a favourite for many. When two media entities – Viacom and Network18 – joined hands in 2007 to create this Group, the industry preferred staying in the ‘wait and watch’ mode. One year later, all conversations were about whether Hindi GEC Colors would be able to survive the competition in the space. The year 2009 turned out to be about the unbelievable rise and rise of Colors. But that story changed in 2010, when the channel lost its top spot and the long-held label of an expensive proposition almost came back to haunt Colors.

But that is not how Viacom18 is viewing it. For Haresh Chawla, CEO, Viacom18, the company has achieved its targets for Phase One. He pointed out, “Not many people understand what we have done here. In 2007, we had MTV, Vh1 and Nick and total turnover of Rs 110 crore. Cut to 2010 end: we got Colors in the mix, the films business in Viacom18 Motion Pictures, Sun18, Digital business and Consumer Products (CP) – and this is around Rs 1,100-1,200 crore.”

While each brand of the group had a certain strategic direction, at a broad level, Viacom18 took a two-pronged approach to meet with competition – work with a challenger’s mindset and create a sizeable business in the shortest time possible. The challenger approach was a need of the moment. The company had come in significantly late into the game – players like Zee Entertainment and STAR India have had stints long enough to be credited with building the television domain in India.

The Internal Focus
And hence, came the “internal focus”. The industry takes various yardsticks to measure how well Viacom18 was performing – in some occasions it is ratings and some others it is ad rates and revenues. But for Viacom18, the measurement was the Group’s ability to create challenger brands and the timeframe in which it managed it.

In addition to the television “services” (as Chawla puts it), Viacom18 has kept itself busy with the digital business, the motion pictures business, consumer products and also its distribution set-up, Sun18. These together form Viacom18 at the end of Phase One. Irrespective of how much ever Viacom18 houses, the key talking point of the company is, and for some time would continue to be, Colors.

Colors: The War is Not Over...
Whether Viacom18 admits it or not, Colors left the “challenger” status nearly two years earlier, when it became the genre leader. And because at the end of the day, the industry plays the perception game, the drop to number two was not an easy one for Viacom18, especially given the view that Colors outlay was more expensive than any of its competitors – a point that Viacom18 has never agreed to. Speaking on how much of a worry was the change in this leadership position for Viacom18, Chawla said, “We are in a tough market, and we have worthy competitors. But you have to realise we are a young brand and Colors more so. I say it with all humility, but resilience was something we needed to learn, and we have. But it is not as if the war is over or the battle is won. We were different when we launched, whether it was the number of programming hours or the cost structure and we have to stay that course.”

That course includes the channel’s approach towards programming, scheduling and the attempt to bring disruption and innovation in time bands that are yet under-tapped. For many, the channel had a setback of sorts when Rajesh Kamat, who had earned a new-found prominence in the industry for the launch and growth of Colors, exited the company in April 2011. This was soon followed by conversations on how Haresh Chawla would now run the show. But even before one could register all this, Viacom18 announced the appointment of industry veteran Raj Nayak as the CEO of the channel, and Chawla made it very clear that his role remains to give strategic direction to the channel – not interfere in the everyday operations.

And Another Interesting Game Begins
Those who know this business know that the return of Nayak to mainline broadcasting will only make the game more interesting, and hence up go the industry expectation from Colors once again. Drawing the roadmap ahead, Chawla informed that the first thing on Colors’ agenda was to increase programming hours. For starters, Colors is adding content hours to its evening time band. The channel has already launched a show in the 7.30 pm slot and according to Chawla, more such announcements are on the way.

Afternoon and weekends have been a sore point for most channels and Colors is not in a hurry to challenge that space yet. “People have tried weekend fiction, but that has really not given them results. Afternoon is also not giving returns if you do a cost-benefit analysis. After we expand evening primetime, we would think of innovations that can challenge the afternoon and weekend paradigm,” Chawla added.

Big Revenues, Big Spends
Industry figures showed that for the last three reported quarters (April 2010 to December 2010), Viacom18 made a revenue figure of Rs 833 crore. This included all channels – the film business or the subscription business has not contributed to this in any real sense, yet. Nearly 90 per cent of this revenue number has come from Colors. Impressive as the number is, since it brings the channel in league with Zee TV, and close to Star Plus, for many, Viacom18 was hoping for more. But the only comment Chawla had to give on that was, “We had set very aggressive targets internally and we are performing very close to them.”

The Next Big Push
The road ahead would continue to see Viacom18 grow its franchise. The company will add to each of its verticals of mass entertainment, specialised channels, consumer products, films business, digital offering and distribution network.
Immediately on the cards is the Hindi movies channel launch.

Regional is on the company’s agenda both in terms of channels and films, though for films, the target window is by 2014. In addition, the films business that has finally settled as Viacom18 Motion Pictures is another big area for the Group. The films business was integrated in Viacom18 in the last four months.

Digital has been high on Viacom18’s agenda. Through its brands like MTV, the company has built communities and online properties, “silently and organically grown such as In.com or our social media following” as Chawla puts it. In the next wave, this would again be an area of focus for the company.

Does Network18’s investment in AETN18 limit the kind of specialist channels Viacom18 can launch? Chawla replied, “No, Viacom18’s focus is entertainment. History or any other of AETN18 channels is a specialised niche channel and Viacom would be specialised entertainment channels - there is no overlap of any form.” The big push for the group, however, will come from subscription revenue. Right now, around 12 per cent of Viacom18 revenues are coming from subscription and it has very little international subscriptions to speak of. “We currently lag behind our peers because we are late entrants. Time, as I said, is our first challenge. We entered as a bouquet much later and therefore the challenge ahead is catch up and how soon we do it. Catch up we definitely will, but how soon we do it, is the question. It is like Colors – people have been able to hit this kind of revenue in nine to 10 years but we managed it in two and half years. On subscription revenues too, our focus is to catch up as soon as we can and the whole digitisation of the market is helping us. We are hoping to close the gap b y 2014. We have to find a way as quickly as possible.”

By 2014, in fact, Viacom18 is hoping to add channels or partner channels in each of its verticals. “But we won’t add anything for the heck of it, we would do it only when we are sure that it fits our DNA of creating leading brands,” stated Chawla.

(For complete report and a special interview with Haresh Chawla, please read the latest issue of IMPACT.)


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