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#Focus09: Back To FY08 Levels; Industry Reacted Too Cautiously To Recession

Last week, senior executives from the Media business met in Delhi to discuss industry issues at ASSOCHAMs Focus 2009 conference. Excerpts of comments made at the conference, where discussions spanned the state of the market, often repeated issues of not enough advertising, among others:

Back To 2007-08 Levels: Rajesh Sawhney, President, Reliance Entertainment, when asked about the next big thing, in terms of percentage growth, said that normal service has resumed: “2009-10 revenues have been rerated to 2007-08 revenues. If you take the impact (of the boom) out, we’ve come back to the normal growth patterns. Excessive money drove valuations and revenues. The bubble has been left behind” As an example, he pointed out that if a movie was selling TV rights for Rs. 10 crores in 2007-08, it went to Rs. 20 crores in 2008-09, and has now come back down to Rs. 10 crores.

Herd Mentality, Investors Cautious: Sawhney added that he’s not sure if investors are positive, though. “They’ve taken a step back and are trying to understand that is working and what isn’t. We’ve seen the herd mentality in broadcasting, multiplex, media, and not everyone’s got a story. Most people rush in like Gurgaon developers trying to get a landbank, and get into excessive price wars. But what’s working? To me, the one trend is that entertainment is becoming big. In Hollywood, the movies that are working, they are all big spectacles. Studios have decreased the number of movies, but increased the budget per movie.”

On Broadband: Sawhney said that India has lagged behind in Internet adoption: “The government in China had encouraged Internet adoption. I pray that WiMax and 3G auctions act as catalysts. They need to light up the pipes. In India, we’ve had a supply side failure.”

chintamani-raoOn Advertising vs Subscriptions: “The industry reacted too cautiously to recession and cut down on expenditure,” KVL Narayan Rao, NDTV Group CEO said, adding that adspend in India is just too low at 0.5% of GDP. He lamented the lack of adequate subscription revenue, saying that no industry can subscribe on advertising alone.

Times Global Broadcasting Vice Chairman Chintamani Rao also pointed out that as long as competition is undercutting each other, and this way no one will make money. “We are an advertising dependent business – the fact is that subscription is not going to increase tomorrow. As of today, I don’t think more than 30% of channels in the country are paid. Rest are free to air. For a rate of Rs 1000/10 seconds, you’d make Rs. 42 crores a year. Only the large GECs make big bucks. Not a lot of channels charge more than Rs.1000/10 seconds.  I’ve wondered why more broadcasters dont shut shop. What keeps them going? Somewhere it will have to break.”


On Copyright & Fair Use: “Copyright is integral to my life, to my business. That being said, for certain activities, news being one, there is the concept of fair use, how fair is the dealing that you do for a particular copy that you use in your news broadcast. “This could be for sporting fixtures. If Tendulkar creates a world record, are you, as a news channel, required to carry that or not; or do you say sorry I don’t have the copyright for that. The concept of fair use that is enshrined in the copyright act, which allows news channels to carry such news. There is a debate going on on fair use. If tomorrow a great film star passes away and I show 5 seconds from each movie he made, that is fair use, but if I show a movie of his every day for the next six weeks, then that is not fair use. It’s all very nuanced.” – KVL Narayan Rao, NDTV Group CEO.

On paid news in India: Barun Das, CEO, Zee News Ltd, pointed out that in India media, people have forgotten the costs of doing content. “The performance of people is being measured in TRPs:  there are 60-70 24×7 news channels in the country, some serious players, and some with other motives. The news industry cannot underestimate the intellectuals of this country, and the recent (Lok Sabha) elections proved that we’re a mature country. i’m a firm believer of a regulator called market. Everything would fall into place.” Responding to a question on the recent expose on paid news (read it here), Das said that “Whether we indulge in paid content or not… I come back to the point that I cannot underestimate my consumer.”

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