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INSIGHT... Prepare for the Indian Media Invasion
by Chris Forrester

The United States is a powerful media player. With a domestic market of 300 million people, a strong cable and satellite infrastructure, a long legacy of movie and program making, and helped by the English language, the US has become the world’s major supplier of entertainment. But consider this… what if another country appeared, with a long legacy of film and program making, a huge domestic audience, and also with English as the main middle-class business and entertainment language?

Step forward—India. Moreover, not only does India tick all the right boxes, its entertainment bosses are planning for a future well outside India’s geographic boundaries. Recognising this, the giant National Association of Broadcasters (NAB) Las Vegas exhibition and conference in April will open with a special day devoted to all things Indian, with keynotes from some of the region’s most important names.

The discussions might well concentrate on the growing importance of all things Indian, not just the importance of Bollywood to local audiences, but also the growing power of Indian media-related business as they seek to flex their muscles internationally. For example, there’s already a dedicated ‘health and wellness’ channel, Veria, financed entirely by the Zee organization. And Zee has committed $200 million to this US-based channel that’s already on Echostar and tapping in to the estimated 80 million Americans who have an interest in maintaining fitness and vitality.

Subhash Chandra is the Chairman of India’s huge ZEE media company. He is backing the launch of Veria with a chain of retail shops to capitalize on the station’s output and publicity and already has more than 15 million homes subscribing to the channel. This is an indication of how India’s latest thinking is to invest aggressively in overseas ventures. Chandra admits that if this channel is a success in the United States, it will roll out elsewhere around the planet.

In fact, not only does India tick the boxes, it can justifiably claim to be dramatically moving forward in terms of broadcasting and entertainment much more rapidly than the US. Here are some examples. India is the world’s 3rd largest TV market (after the US and China) and, while much of this year’s international TV focus will be on Beijing and the Olympics, the bottom line is that India’s homes with TV sets are growing at a spectacular 7.5 percent per year. This year there will be 125 million TV homes, of which some 77 million are cable or satellite, and they are switching to digital at a predicted 8.8 percent annual rate. TV is the medium that’s fastest growing when compared to newspapers, radio and magazines.

There’s another huge difference between India and the rest of the world. Other than China’s anticipated growth (and, to a lesser extent, growth in Brazil) the ‘Western’ world’s expansion prospects in terms of TV are limited, to at best about 1 to 2 percent per annum. India is expected to grow its TV and entertainment business by a massive 18 percent over the next 4 years—and some experts predict a significantly steeper climb. TV ad-revenues will grow by at least 15 percent. Subscription earnings from pay-TV will grow 25 percent over the next 4 years—and, again, some predict even more robust growth.

You might reasonably argue that these growth rates are easy, given that India’s costs are ultra-low. After all, the typical monthly price paid in India for access to 300 channels of satellite TV is barely 250 Rupees (about £3). It is even less for the vast bulk of the nation’s 67 million cable homes.

There’s also another major factor that will drive pay-TV growth: a flurry of rival DTH operators. The market leader is currently Zee TV’s Dish TV system. Zee is the world’s largest producer and aggregator of Hindi-language programming and its channels are seen around the world—mostly by expatriates—representing about 500 million viewers in 120 countries. Zee TV and Zee Cinema are the nation’s No. 2 and No. 3 channels and is a powerful name in sports, movies and news. Zee TV, as a single channel, is just behind Star Plus in the ratings, and well ahead of Sony Entertainment. Indeed, Zee is recognised as India’s pioneer in terms of multichannel TV, but today, Zee is not alone.

Rupert Murdoch is more active than ever. Murdoch started transmitting his Star TV channels back in 1990 and, while the initial focus was very much China (and hence its Hong Kong HQ), the past years have seen Star drive hard for the Indian market, with some notable success helped by the localized ‘Who wants to be a Millionaire?’ show. Star has linked with the giant Tata empire (based on steel to trucks and low-cost cars) with Tata-Sky (Tata 80 percent, Star 20 percent). The service launched its DTH package in August 2006. But Tata-Sky is not alone, either!

There are three other DTH players now active in the Indian market: Reliance, Bharti, and Sun. We can mostly discount Sun as it is focusing only on Southern India. But combined, these three new players are expected to blitzkrieg consumers with the all the joys and attractions of DTH transmission, complete with improved images, stereo sound, interactivity and easy-to-use EPGs. Moreover, Reliance and Bharti are transmitting in MPEG-4, not ‘old-fashioned’ MPEG-2.

This transmission model is something of a necessity, given that satellite space over India is tight and MPEG-4 allows more channels per transponder. It also allows both platforms to move easily into HDTV. But they also have to convince viewers to invest in new MPEG-4 receivers. Both Reliance (Big TV) and Bharti are major cellular telephone players in India and they have deep pockets. One is reported to be planning (March 2008) to offer a ‘free’ LCD set with a new subscription, which is bound to be appealing.

The bottom line is that with fierce competition there’s going to be great creativity, and probably a few years from now some industry consolidation. Zee is promising to introduce HDTV channels within a year—and has no shortage of satellite space. Zee’s next step is to invest actively in non-Indian companies and to fast-track its digital presence outside India. It is definitely a broadcaster to watch.

There are strong hints that Zee wants to mount an Al-Jazeera news challenge, and launch a global news channel in English, probably with a major US partner, giving the world’s news from an Indian perspective. Zee already has a leading Hindi news channel (plus a business news channel), so is more or less ready in terms of local newsgathering.

Chandra explains, “24/7 news is very high on my wish list, but whether we can achieve that is a difficult question, but again we hope to give this our best shot. Today’s pattern is for news from India to be seen by the rest of the world through the eyes of Reuters or Associated Press or perhaps CNN. Rarely is it seen from an Indian point of view. What comes into India from the rest of the world comes to us from a Western perspective. There is absolutely nothing wrong with this and I want no favors for us or for Africa or China or anywhere else. My hope is that we can show to the rest of the world what we in India are thinking, and to put our thinking and perspective on that news.”

That’s not all. Chandra adds: “There’s an immense focus on what’s happening here, commercially, politically, and in regards to entertainment. I think we have an excellent window of opportunity, but the window will not last forever.” Chandra says he is keen on the acquisition of related businesses operating outside India as a speedy route to grow revenues.

India is also a country with immense creative expertise. It is wholly focussed on the profit motive—although Chandra recognizes that a news project would likely be a loss leader—and wants to play its growing role in the world—that means TV.

Punit Goenka heads up Zee’s core TV channel, as well as the company’s cinema and sports divisions. He says Zee is actively looking for quality ‘foreign’ assets, in programming, in format developments—“and even in transmission”.

Challenged as to why Zee needed a larger international presence, Goenka smiled as he answered, “Greed! More seriously, for us to be a real media business, we have to be much larger than a domestic player. International players are already coming into this market and we can only strengthen our position by vigorously entering their markets.

“I believe any media business to sustain itself in the long term has to grow internationally. We can do this via small-scale organic investment, or by making a major acquisition statement, or via a merger or acquisition route. From our perspective over the next 24-36 months we will have to be fairly aggressive in entering these [international] markets.”

Zee TV already has two 24-hour news channels (in Hindi, and one looking after business news) and performing a very slick-operation out of Delhi and with correspondents and stringers around the world.

In other words, unlike Al Jazeera, it isn’t going to have to start from scratch. “We are a large country with a huge population and there’s a lot of news happening here. I prioritize the list of interests as politics, local, regional, national and international as sharing similar priorities, then religion, then business, then entertainment, and if you take all those sectors together, there’s an enormous amount going on,” stresses Zee News’ CEO Barun Das. “Moreover, the news channels have grown up, they have become more sophisticated. The best of them will provide a magazine format which analyze the news on a regular basis, talk about politics or business, and the viewer enjoys these elements.”

Questioning whether the world needs another international 24/7-news broadcaster, and whether such a service could ever be profitable, Das responds in a flash, “Zee News is a listed company and we are one of the most profitable news channels in the country. We are wholly profitable, which is not a claim that can be made by most of our rivals. The English-speaking marketplace for news is very, very crowded. First mover advantage was taken more than 25 years ago by CNN but our view is that if you get your product right, you can leapfrog many if not all of the channels that are out there. Again, and it is our intention to achieve one of these top two position or at least a very good third place. Our view is that if you get your product right, you can leapfrog many, if not all, of the channels that are out there. It is our intention to achieve one of these top two positions or at least a very good third place. Our primary intention is to expand out from our Hindi and regional news channels and get into the English domain.”

This may not happen as a solitary exercise. Subhash Chandra, speaking of his friends at CNN, admitted that any such project would be expensive. He recognizes the cost implications. “This is a fact of life. The news sector is tough, very tough, and I know some say it is difficult to make a return out of news but I believe if we execute well and do things properly, then we can make it work. I think we have an excellent window of opportunity, but the window will not last forever.”

Author Biography
London-based Chris Forrester is a well-known entertainment and broadcasting journalist. He reports on all aspects of the TV industry with special emphasis on content, the business of film, television and emerging technologies. This includes interactive multi-media and the growing importance of web-streamed and digitized content over all delivery platforms including cable, satellite and digital terrestrial TV as well as cellular and 3G mobile.