Feb 6, 2009

Entertainment - MSM president (network sales, licensing & telephony) Rohit Gupta

2 009 is expected to be a rough year for all in media. Television is no exception. With the stockmarket collapsing and balance sheets getting battered, advertisers have become cautious and the current quarter is expected to be extremely choppy. Multi Screen Media president (network sales, licensing & telephony) Rohit Gupta concedes that clients are consistently assessing the environment and signing quarterly deals as against the annual ones earlier. He, however, is confident that Sony Entertainment will ride through the stormy times on account of the strength of its network.
Indiantelevision.com's Ashwin Pinto caught up with Gupta to find out about what lies ahead, the mood in the market, the importance of tentpole properties etc.

How was 2008 for Sony in terms of revenues? What growth was managed over 2007?It was a successful year for us. All our channels grew their revenue. Some by 25 per cent, others grew in the range of 10-15 per cent. The other success story was the IPL. We created benchmark rates for Indian cricket before the event had even started.
This year is expected to be challenging with the recession. What impact will this have on Sony and the television industry?As we move forward this year will present challenges. The key one is the meltdown. A client would cut marketing spends but television as a genre will still grow. We believe that television is the cheapest form of advertising in terms of the reach it delivers. TV gives you the best RoI and this is what clients focus on during a slowdown.
Print and outdoor will take a larger hit but television will still grow. A recent report projected a 10 per cent growth which is fair. TV has been growing at 18 per cent over the last few years. While that will not happen this year, there will still be growth.
For the IPL what is the upside being looked at this time around?We have established rates that are in line with what we had decided upon earlier. IPL will be a bigger property this year.
Everybody including the franchisees have more time to prepare. Last time we just had 45 days to prepare. This year the hype will start after the auction ends. We will hold a meeting with the franchisees after 6 February to decide on the course of action to take. Also at the point of time there is no other major property on television.
So you are confident on the financial performance of Sony for the IPL despite the slowdown?Yes! What happens during a slowdown is that the clients' ability to take risks decreases. IPL is a proven property. There is no risk in being associated with it. People will put money on 'sure' properties. The IPL is one of them. Last time the IPL had an 80 per cent reach on Max.
Have deals been closed?Yes! However I cannot divulge any details. Some deals are for both the IPL and the New Zealand series that comes before it. We do not have category exclusivity this time around for spot buys.
This allows us to access more brands. Last time the IPL was not tested. Exclusivity was an incentive that we had to concede. By not giving exclusivity we will ensure that multiple brands can co-exist.

'We will offer more flexible IPL packages'

But won't it be a challenge to get many brands on-board in a difficult climate?You have to understand that cricket's cost rating per rating point (CPRPs) are still holding up. The reach of the channel is key. Max does not have this issue. So we are confident of getting the desired rates.
I don't think that the rates are a problem. The challenge will lie in the outlay that a client puts on IPL. So this time around we will have smaller packages. The number of clients taking spot buys will go up. One does not have to buy all 59 games. A company can buy for ten games at a stretch. There is flexibility.
Has the revenue split within the group changed over the last couple of years?I cannot give any numbers. However our dependence on the large channels is not that high. AXN and Pix are growing substantially. Max is now a very big channel in our network.

What is the clients mood like in general?They are more cautious. They are adopting a quarter by quarter approach. They are not signing large deals for a year which used to be the case. For this quarter ending March, clients are being extra cautious. Companies want to show better results with this being the last quarter. So it will be tough.
The key is to have tentpole properties that can be sold. You need to have a distinctive niche in the market. Clients want more accountability. As a broadcaster you need to be responsive and understand clients' needs. You have to make sure that the client gets value back. Everything is not necessarily about a rate. The question lies in the effectiveness of the media buy.
Apart from IPL what are the other tentpole properties coming up for the group?In March we are launching Operation Dikhla Jaye on Sony. This will be a directors cut where four of Bollywood's top directors will produce shows for us. It will be a 13 week initiative and will be the first time that anybody has tried it in India. These are one hour shows. We have roped in directors like Madhur Bhandarkar, Mahesh Manjrekar, Vikram Bhatt. Then the IPL starts. Post that we will have re-launches of our big shows.
In the GEC space are the new arrivals having any impact? Is the ad pie growing or merely getting sliced further?There has been growth overall. But this year since growth will be restricted there will be some slicing of the pie. The GEC space will see turmoil this year. New players will come in and others will go away. GEC costs are huge and it is a question of who will survive. The like of Star, Sony, Zee will always be around come what may.
New channels will come. They may be on top for a while but the fact is that nobody is on top all the time. Clients also look at networks as opposed to channels per se. They want networks which are strong enough to withstand pressure. They want networks that have the sustaining power to ride over the tough times. Besides that you need big properties which ensure that clients look at you differently.
Each of our channels is in the top four in their respective genre. Sab is number one in the second level GEC tier. Sony has managed to hold on to its share more or less. Other channels have experienced a bigger fall in the GEC space. We may not have many channels but what we have done is to focus on building them.
How has Sony built up its client relationship management efforts over the years?Our focus has always been on giving value back to the client. We were the first to start a client servicing team four years ago. Then other channels started doing this. We work closely with brands to integrate them into our properties. This is how we add value that goes beyond just 10 second spots. Therefore even though there are days when ratings have not been what they should be the clients have supported us. The relationship with clients makes a big difference in terms of your ability to raise rates.
Which categories will be affected in terms of TV advertising due to the slowdown?If you look at it the categories most affected by the meltdown which are real estate and retail these are not big on television. Finance was not as big on television compared with other mediums. Auto companies are shifting budgets from print to television.

Coming back to the cricket front the New Zealand tour is the first time that Sony will air bilateral cricket. How is this event being positioned for viewers and clients?This is a full blown tour. India has not visited New Zealand since 2002. We lost very badly then and so this is a big challenge. There will be anticipation. In fact this is the Indian team's biggest challenge after playing Australia twice recently.
Coming back to the cricket front the New Zealand tour is the first time that Sony will air bilateral cricket. How is this event being positioned for viewers and clients?This is a full blown tour. India has not visited New Zealand since 2002. We lost very badly then and so this is a big challenge. There will be anticipation. In fact this is the Indian team's biggest challenge after playing Australia twice recently.
But isn't the timing an issue as the telecast of the matches is very early in the morning?The timings are good for the T20 Games which start at 11 in the morning. The ODIs start at around 6:30 in the morning. Test matches start earlier but they are not a big revenue contributor compared with the other two formats.
How many sponsors are being looked at?We have clients who are interested in both the New Zealand series and IPL. That would give them visibility from Feb till June. So we are doing special deals for them. Generally we look at six to eight sponsors.

Are you also looking at doing long term deals with clients for IPL?No! We believe that the IPL which is a big opportunity is better served through yearly deals. You have the option to re-look at things.
IPL broadened the viewer base. Has the client base also grown for cricket as a result? Yes! Godrej an FMCG company came on board. They do not associate themselves with cricket. Max New York Life came on board. It worked well for them. It was not the traditional clients that came on board. This year also you can expect to see some surprise companies coming on board. IPL after all changed the way TV viewership happens. It is not just the male TG that tunes in.
Will the IPL be simulcast?No! It will only be on Max. We did that with the Cricket World Cup in 2007 where some matches also aired on Sab. However viewership got disrupted and the channel loses share. Then it is difficult to get viewers back.
When HBO left there was a gap created. Is Pix now starting to fill this gap?Pix has made a lot of progress over the last couple of years. Pix started when there were already established players. Now it is competing. In some weeks it beats HBO. Advertisers have followed this. Pix is making investments in terms of acquisitions. The aim over the next couple of years is that in terms of ad revenues it can reach the level of HBO and Star Movies.
It is pitched as a premium movie channel. It delivers in the 25+ SEC A, B category which is what a lot of marketers target. All the large brands are on it.
How come Pix decided to air soccer with the FA Cup?The audience for it is similar. It is SEC A,B. We decided to offer viewers something new and extra. Matches air on the weekends and so the movie schedule is not disrupted.
The other two major distribution bouquets have two English movie channels - a mass one and a niche one. Isn't Sony at a disadvantage here with just one channel that does not have the latest offerings?It does not affect the advertising side. Channels like MGM (which is in the Star Den bouquet) do not carry ads anyway and it is dependent more on a subscription kind of revenue stream.
What is the roadmap forward for AXN?AXN is doing well and has been growing at 25 per cent CAGR. You will continue to see local content. You will shortly see the AXN Action Awards. Each year you will have three shows produced in India.
Does cost control become important in this environment though?This is an area we always look at. It is something that we are always conscious of and it is not as if this area has suddenly assumed importance. For us it is business as usual. One has to see the returns more carefully though.
On the licensing front how has business grown over the past year?This was small four years back. However we participate more actively in trade fairs like Mipcom and we showcase more content in the form of formats there. Our shows are sold in European markets, the US. We took all our formats to Mipcom. along with other shows like Filmfare, Stardust Awards. The other aspect is the Hindi movie licensing business. We syndicate them wherever we have rights.
Could you shed light on Sony's plans in the new media arena?The telephony side has been slow apart from voting on shows like Indian Idol. However once 3G comes in and bandwith goes up things will change. We already have mobile channels for AXN and Animax in other Asian countries. There is also a lot of potential in doing things for Sony and Max in terms of clips, show recaps etc. So we are ready with content. The technology has to be there.
Finally we are seeing channels advertise on rivals. What is Sony's policy?We do not advertise on competitors nor do we accept ads from them. We accept ads from kids channels, news channels as we do not operate in that space. But you will never see us air ads from a movie channel belonging to a rival network. We are not desperate for revenue.