Hindi GEC suffering because of FTA pricing: Ashish Sehgal, COO, Zee Unimedia

TV advertising has been under stress for the last two years, partially because of the government's two big disruptive moves, 'Demonetisation and GST',which made advertiserstighten their purse strings. As the industry gets back on track, it isn't only the urban market that the leading TV players plan to monetise but rural as well. In an interview with BestMediaInfo.com, Ashish Sehgal, COO, Zee Unimedia, unveiled the network's growth plans and highlightedthe industry’s issues.

"The Hindi GECs are under pressure and that is primarily because of the FTA pricing and growth. We've been correcting the prices of FTA. We could do that even more in 2018 as the government has focused more on the rural budget," Sehgal said.

Sehgalsaid that digital would take years to be ahead of TV in terms of reach. “An FTA channel delivers content to the last-mile customer and that too free of cost. Digital cannot do that,” he said.

Sehgal feels that in the election year, there would be a correction in DAVP’s ad pricing and the government would choose TV as the preferred media vehicle.

Zee Unimedia for the last two years has been consolidating all Zee assets under one umbrella to offer the right bouquet to advertisers. Talking about the network's expansion plan, Sehgal said that a new global channel Zee5 would be launched soon and Zee Studios will be replaced with an '&' brand channel.

Sehgalsaid the network would make good investments in &TV so that it shows in the BARC ratings.

Excerpts:

Zee Unimedia was conceptualised with a purpose. How far have we reached there and what’s the plan ahead?

Our focus over the past two years has been to synergise and consolidate all media assets of Zee. This has helped us provide integrated (platform agnostic) and customised solutions to our advertisers with the approach of value-based selling as opposed to inventory selling as the case across TV as a medium. Teamwork has helped us not only in monetisation, but in market intelligence and knowledge sharing across various companies. Our plan ahead is to further optimise our value-based selling approach, being a win-win for both the advertiser and us.

How is your digital play panning out?

We will be very shortly announcing our OTT platform, which would be a differentiator in the marketplace. The other existing platforms – zeenews.com and about 10-12 websites for news and on video website – too would be further enhanced. Through our television presence, our protagonists, actors, producers are our greatest influencers. We have realised that their footprint on social media as our TV characters is phenomenal (about 1.2-1.3 billion digital transactions). This understanding came in when we started collating all our assets together and this will soon be an offering to our advertisers.

We have a complete 360 degree portfolio, except sports.

Any plans to tap that white space in your bouquet? Does it have enough RoI value?

India has two cultures, cinema and sports, and our objective is to dominate the cinema space.

I think sports is also relegated to a certain percentage of viewership. It is a common factor that binds the country. People are investing a lot of money in sports but at what expense from an advertising point of view? If we can give the advertiser a much more efficient and effective option to reach a much wider audience set of similar mindset and within the framework of higher reach and frequency with characters closer to the viewers, the marketers will definitely appreciate the potential and advantage.

Yes, sports does create brands and the category will always have that advantage. But the same impact can also be achieved with smart initiatives on our 45 channels. In fact, we are creating packages that would be impactful.

As to whether we will enter sports and when, I think that’s for the promoters to decide. But I believe that the RoIvis-a-vis investment is low, still it is the highest given any other genre on a pure topline basis. But cost is important. Subscription and other parallel revenue streams are very crucial.

Why Zee5? You already had well established brands and products in OZee and Ditto TV?

Zee5 is a different offering. From the technology point of view, it has a much better UI and UX. Ditto and OZee will also come together. Zee5 is a global brand for us and hence, we wanted to start afresh. We have a huge marketing plan for the new brand. It will take some time to establish the new brand, but with all our might, we will create it. The popularity of Ditto and OZee is restricted to the Indian market.

Zee5 will also have content from all across the globe and original content. It will have both SVOD and EVOD model.

Now you have radio too to offer, after Big FM’s acquisition. Has that been included in the Zee Unimedia circuit?

We are awaiting the final merger to take place, until such time I can’t comment.

However, we have already merged the TV channels of RBNL bouquet and it has grown tremendously.

The businesses are under lot of pressure. Broadcasters are increasingly finding it difficult to hike ad rates. What are your plans to maintain profitability?

It is not entirely true. Yes business has been partially under pressure due to demonetisation and GST and this has impacted not only the broadcasters but advertisers as well, wherein their sales has got impacted. These policies coupled with rural expansion with FTA channels had put some stress on the pricing of the largest pie – mainline Hindi GEC, which is also being corrected as I speak. But I think when we discuss the ad rates, we should look at the complete picture and consider all genres. Ad rates are witnessing a healthy increase in the Hindi cinema genre. Also, while there is de-growth in the niche space, the pricing has gone up. Regional channels are the flavour and they have seen about 70-80% hike in the ad rates.

As I said earlier, Hindi GEC is under pressure primarily due to FTA pricing and FTA growth. We at Zee realised this sometime back and started the process of garnering the right value for our rural audience on the FTA platform. Despite doubling the price point, it continues to be much cheaper than the mainline GECs.

Further rate correction in the FTA will continue. This is purely because the Govt, in this Union Budget, has turned its focus towards tier II and III towns across various parameters. This will improve income levels across strata leading to consumption in these markets. This will lead to advertisers wanting to capture the potential of these markets.

The free to air offerings like Star Bharat is about providing content to the last-mile customer at almost zero or no cost from his pocket, and TV remains the most effective medium with so much more reach.

It will take ages for digital to reach where TV is. FTA will always have an edge on growth for TV vis-a-vis digital. Digital has entry cost of data and subscription to the content platforms.

Is FTA the only thing that is putting pressure on the business?

FTA is not putting pressure. It was miscalculated by most of us, broadcasters, in terms of the offering to the advertiser. Had we been sensitive about pricing from day one when BARC India started reporting rural data, or had there been a CPT calculation, then it would have been very easy for us to price it thoughtfully. If both mainline Hindi GEC and FTA has to grow, both pricing needs correction. This, I believe, will happen this year (2018) with the surge in demand. In the last one year, demonetisation and GST did hit the spends and sentiments of advertisers. But with that settling in now, the demand is coming back in almost all the sectors. With that, advertising and inflation in advertising will go up, at least in the genres that are important.

But considering that most FTA numbers are coming from rural, if I ask an advertiser to give me Zee TV rates for Zee Anmol, he won’t buy it. Ultimately, the monetisable market is urban.

The government has not been able to decide on the DAVP rates. The broadcasters had recently demanded an increase in the rates, which were stagnant for many years. Where is the industry on that?

The rates were increased five to six years back, basis TAM ratings for urban market only. Their formula was such that it used a same CPRP for all genres, all channels. Because of this, English suffers a lot. Since then, we are operating on the same rates. We have sent many requests to the I&B Ministry, highlighting the problems of broadcasters, right from news, English or other genres, explaining how some are not very well represented in the sample and that these genres should have a different criteria. In last 18 months, we have presented our case before the ministry and the DAVP for about 10 times. We had given our perspective. They had offered a new CPRP for urban+rural market together about six to eight months back, but that was not even the closest price point for any of the channels. In fact, after five years, the new rates were lesser than the previous ones.

With an all-India universe being considered, CPT would be a currency under discussion to bring parity on all media platforms. Across almost all genres, viewership in actual terms has grown but because the rating is percentile, CPRP is not serving the purpose of growth. Even if one considers 7-8% inflation per year, all news channels would have almost doubled their rates by now. But DAVP has offered the same rate to news channels.

In the last two meetings, they had been suggesting that a revision will take place, but we are still awaiting further communication. In the last meeting in December 2017, they met individual broadcasters.

How much does DAVP advertising amount to on television?

Including Doordarshan, it should be over Rs 1,000 crore. For the private broadcasters, it should be a total of Rs 600-700 crore. It’s not only about money, it is also about the government’s initiatives/ policies that need to reach the normal consumers. Today, one of the reasons for so much confusion in the GST application was the lack of communication to the common man. This is predominantly due to their non-presence on television as a medium, which is the most widely reached media vehicle in the country. Audio visual communication as we all agree has a very strong impact, coupled with the reach of TV. Now, in the run-up to the elections, I guess TV would be widely used to reach fastest to the consumer and hence a correction would be in pipeline.

Do you think a rate revision will mean that they will increase their budgets or will they plan their media strategically?

My estimation is that the budget will improve, but even if they have to operate in the same budget, they need to rework their plans. They have not spent much money on TV in the last six to eight months. That savings too can be spent back on the medium.

You are representing the broadcasters in this case. Do you think things will be sorted well in time so that the broadcasters can benefit from the election campaigns?

I think a resolution is likely in the next 30-45 days because as I mentioned earlier, TV is a critical audio-visual medium to reach the mass audience across the country.

English money is shifting to digital and regional? Is it a theoretical analysis or is it true on the ground?

As the market matures, multiple media vehicles will gain prominence and the advertising pie will grow disproportionately. Even today, we are just about 0.3-0.35% of our GDP unlike other countries. With literacy improving and English language gaining, it will be TV, mass media, which will be the preferred medium and will continue to grow. Having said that, currently, as the measurement system does not represent English rightly, there is some amount of ambiguity in the advertisers’ mind. This leads to other research being used to showcase their need. Hence, according to me, it is theoretical that English monies are shifting to digital. Digital is a different media and is capitalising its strength basis the growing population.

Since the influencers, or the super-premium audiences you may call them, are tuned in to multiple options and consuming media as per their space and time, be it through online or offline, it is assumed that everyone is consuming in a similar fashion. Look at the people in the smaller towns and villages; you will see that TV consumption has increased. The aspirations are growing and hence English is not suffering because of regional either.

On digital, most English content is behind the paywall. So, to pay for data and subscription is another problem.

Are any new TV channels on the cards?

We are launching another English channel under the brand “&”. &Prive has been a huge success for us and has fantastic critically-acclaimed movies. The new channel will be a more mass product with popular movie titles. We have acquired Sony First library and the popular titles that we acquired during &Prive deals will also be utilised in this channel.

We will have 52 premieres on the new channel in next one year. This channel will replace Zee Studios. We are also evaluating further enhancing our regional space.

The network is investing handsomely on &TV’s content and marketing. Why is the channel not picking up? Any reasons you have identified?

Unlike other Hindi GEC channels,&TV has made a mark in the metro space. Bhabhiji, even to date, is the biggest success for us. Our offerings are differentiated and good but this is not reflected in the numbers. To be sure of our content line-up as it is not reflecting in numbers, we have conducted multiple on-ground research. There is huge buzz around these shows and they are being watched in major markets like UP, Delhi, Mumbai and others. Because of so much of fragmentation from FTA and other things, BARC is not representing the right potential of the channel. Or that’s what we feel.

We will now focus on bringing newer better shows on &TV to push ratings. Better production quality, better marketing and to create awareness. Because it is a late entrant, there might be some hitches in the rural connectivity, and that’s how it is not seen in the rural charts. But it performs well in urban.

Also, &TV was launched with very differential modern storylines. But in order to get ratings, the content became too mass-focused sometime back. We want to now go back to the identity with which the channel was launched. The shows we will now launch will be more progressive.

But &TV was launched with a potential to become a strong second GEC from the network?

We don’t see it as a second-rung GEC. From the content point of view, we are putting as much impetus as we would do on a mainline GEC.

ZEEL has a lot of channels that never came out of the red. Zee Smile and Zing are few examples. Why are you still carrying on with these?

Zee Smile was replaced by Zee Anmol. Zing is an encrypted channel, not an FTA. The channel has grown tremendously, though on a smaller base. It has started to grow now.

Do you think &TV is getting into this zone? There are rumours that you might look at shutting down &TV.

No, &TV is doing good, though it can do better and we are working towards it. From the rating point perspective,&TV is an attractive offering for advertisers. & brand is now picking up and growing stronger. We are launching more channels in that sub-brand. How can we think of shutting down the flagship channel of & brand?

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