Nov 27, 2008

Entertainment - India;Channel rollouts on hold

Anushree Chandran

Mumbai: Reliance-Anil Dhirubhai Ambani Group (R-Adag) has delayed the launch of 20 television channels, which were widely expected to start airing the firm’s Big TV brand by January. Senior media buyers say the roll-out, which included national and regional channels, could be delayed by as much as one year.
Asked about any delays, Rajesh Sawhney, president of Reliance Entertainment Pvt. Ltd, maintains R-Adag had never publicly announced any plans for that business.

It isn’t just new entrants. As an abrupt downturn takes a severe toll on advertising revenues and with stock markets plunging and liquidity drying up, a slew of Indian broadcasters are putting launches and expansion plans on indefinite hold, and starting to also trim existing offerings and staff.
A Viacom 18 Media Pvt. Ltd senior executive, who didn’t want to be named, said plans to launch a sports channel, which they had begun pitching to clients, are now on hold. However, Raghav Bahl, managing director of Viacom 18, maintains the group didn’t have such a plan and was only involved with sports marketing.
Relatively newcomers such as UTV Global Broadcasting Ltd and INX Media Pvt. Ltd have frozen hiring and are making significant cost cutting, note industry observers. UTV has also closed its Delhi office and reduced investments. INX has also looked to cut costs, terminating an account with public relations firm Hanmer and Partners Communications Pvt. Ltd and handling the activity in-house. Asked about cost cutting efforts, Indrani Mukerjea, founder and chief executive of INX Media, said: ““We do not comment on gossip and baseless rumours.”
UTV didn’t respond to specific Mint questions but provided an internal memo sent recently by chairman Ronnie Screwvala to employees where he said costs, investments and business models of all four channels—Bindass, Bindass Movies, World Movies and UTV Movies—were reviewed
“We have looked very sharply at all our other costs, including capital expenditure, proposed start of new channels, carriage fees and other operational costs and have also actioned a substantial reduction,” Screwvala wrote. “Programming and anything which could affect the popularity and the running of channels has not been touched and will not be affected. In financial terms, the original plan had earmarked an investment of Rs660-700 crore in broadcasting over the next two-three years and our present actions above would result in an overall investment saving of between Rs200 crore and Rs240 crore.”
Indian television channels had Rs6,766 crore in ad revenue in 2007, according to the Lintas Media Guide 2008. General entertainment channels accounted for about 35% of this, says on ad buyer, adding that the share could soon fall to 20% cent due to fragmentation and reduced spending.
Sam Balsara, chairman and managing director, Madison Communications Pvt. Ltd, says he is not sure there is space in the general entertainment space (GEC) for new players. “In one sense, it is good for industry if no more new channels are being launched. Fragmentation is not good for anyone; neither for clients, nor for broadcasters.”
In effect, the GEC space has plateaued and most broadcast firms would relook at new launches, predicts R. Gowthaman, managing director of Mindshare, GroupM India Pvt. Ltd. “Colors was successful because it came in before the liquidity crises had begun. It’s difficult to get incremental revenues now.”
Prasanth Kumar, managing partner at GroupM, said broadcasters are facing challenges in maintaining quality of content, holding on to existing clients, etc. In his opinion, everyone’s looking at controlling costs and certain broadcasters may compromise on the product itself which will not benefit them in the long run. Still, there may be others who will innovate during these tough times to keep the attention of the audiences, he adds.
Broadcasters such as Punit Goenka, CEO, Zee Entertainment Enterprises Ltd, however, say entertainment as a business will always be in demand.
“While there may be some slowing in the sector by way of erosion in stock prices, margins or revenues, these will be transitory and are unavoidable,” says Goenka. “In the ultimate analysis, the current situation will, in fact, turn out to be a blessing to broadcasters and viewers alike—while channels will be compelled to become customer-focused, the viewers can hope to receive more entertainment value for money.”

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