In the last one year, Network18 channels have gradually strengthened their positions across categories. The network spent a lot of effort to build in synergy and fine tune programming to ensure it stays ahead in coverage of the recently concluded mega events such as the Cricket World Cup and general elections.
The network claims to be number one in terms of reach with a total share of more than 10% despite being a pay network. From an EBITDA loss last year, Q1FY20 has seen a major leap in profitability to Rs 20 crore, a growth of 29%, and touching 54 crore viewers in Q1 as against 67 crore in the last fiscal.
"The growth didn't come overnight. It's the result of the effort that started with the rebranding of our channels. That's why despite challenges such as NTO, we bounced back in a few weeks," said Avinash Kaul, CEO, Broadcast, Network18.
In Q1, ad revenue from Hindi news nearly doubled because of improved performance of the channel and a 48% YoY improvement in subscription revenue, led by implementation of the new tariff order.
He said the future for Network18 lies in synergy with digital and offering a single-window solution to advertisers.
He lashed out at BARC for being inconsistent when it comes to measuring landing page.
"This whole ‘issue’ of landing is two years old when it first came in news, earlier it wasn’t heard of. This was heard, earlier, when a new channel was launched in the Hindi space and I am not naming those. So why was it okay then and why isn’t it okay now? If anybody has made the ‘fastest-growing news network’, it is only on the back of those landings, we never make those claims. We always played clean because that is what we believe in," Kaul said.
Talking about ad revenue, he said though June and July were tough for the industry, the festive season could bring some cheer.
The last quarter was good for the network. What factors contributed to the growth?
We almost have had a 3X viewership jump ever since we converted CNN-News18 to News18, News18 India from IBN7 and rebranded all regional channels. We used to be number four and five in the pecking order of news as aggregate. For the last six to eight quarters, we are the number one news network in the country, which happened on the back of fine-tuning work to make sure every channel grows in its ratings. So you see good results when a lot of preparation meets good opportunity.
If we weren't prepared for the elections, then we wouldn't have benefited as much. Because we were prepared and there was an environmental factor that came in, it led to good benefits for us.
Similarly, when NTO was implemented, it caused a lot of disruption. Since we are a pay network, our channel’s reach was affected. We used to have 10.1% viewers share. We went down to 9.3%. So we saw those challenges. But the good part is we were able to crawl back far quicker since those were anticipated.
Just in a matter of four weeks, we bounced back in most of the things. Even our flagship channel News18 India suffered for at least four to six weeks. But then it bounced back and now it is the number one channel in Hindi news category. Disruption took place due to NTO but there was also a path to recovery. We were the quickest to get on to the recovery path. It didn’t impact many of our competitors because they were FTA. We had an extra challenge but with good preparation, we were able to bounce back very quickly. We saw a significant jump in subscription, which reached 48%.
Most of the news segment, because they are free-to-air, might not even know that. We captivated our business model and substantial income is coming from subscription. Now, there was an obvious cost that we had to bear through the NTO period but that is behind us and I think that was a strategic move for us and that is what we have done.
We are looking at cost very closely for a long period, especially since the last couple of years when we synergised our national and regional news network. So when the culture sets in, benefit start playing out in this movement. But when the environment becomes stagnant, you need to make sure you are fighting fit and that is what comes in handy. For this quarter, all three things came together, the controlling cost, subscription and advertising growing on the back of the ratings. When three things converge, you get a great quarter.
With niche channels such as CNBC, it was a choice you make because the main flagship of our distribution was the Colors Value Pack. Now the pack typically caters to the mainstream channels such as News18 and History FY18. But the CNBC kind of channels are meant for those who were affluent, and so the channels were on the higher value packs because the audience that watches them is meant to have higher disposable income. So was there an impact on the genre? Yes, there was. But the impact happened on all premium genres such as English movie, English GEC and it is no secret and the industry takes time to settle down. When there is disruption it is not going to go back to its original. The industry changes and evolves and advertisers look at it very differently and things settle down.
Several broadcasters feel the top position of Network18 channels is on the back of landing page.
I wish that was the case but unfortunately it is not.
If you see, CNN-News18 for the last two years continues to be at the number three position. If that was the case, we would have been number one. Our stance on this is fairly simple. All we are asking for is a level playing field.
Two years back, when a new channel was introduced, it launched with landings.
Hence any algorithms based on math and standard division won't work because from Day 1, your base is on the artificial mean and based on that you know if you are going higher or lower.
So, you are trying to beat the system.
What we are trying to say is remove this for everybody. We would be the happiest but don’t be selective. Don't do manual interventions.
The problem today is that there is a manual intervention happening and there is no documented procedure to record that.
From what I gather, there is no discussion happening, not even with the technical committee, on what this document outlier document is, who has sanctioned it, which statistician has got involved, what is its science, etc.
What I gather from news sources is that now there are two observers. Now why is there a need for an observer? The need arose obviously because a system override is happening, which doesn't work well for the industry. If you remember, the basic premise of BARC was on the principle that the left hand won’t know what the right hand is doing. Everything will be outsourced. I remember several presentations highlighted that 29 vendors were working together to make it and the processing of data was not supposed to be in the hands of BARC. The processing was meant to be with some other company.
The kitchen in many ways has now moved inside and what we don’t know is what is cooking in it and that is what makes us uncomfortable. It should be transparent and open for all. Sometimes we hear things like, ‘we can measure certain things while there are some we can’t’. Sometimes there is a policy and at other times, there isn’t. So all this is not in the open. In various forums, various conversations are happening, which makes us very uncomfortable because it is not just the question of the channel but of the 400-500 people employed in it. It is all about those things; it is the fair play that we are asking for.
We are fully supportive of those who want to remove landing. Remove for everybody, all we are asking for is a level playing field. We don't want anybody to play God because that is not right. Here is a huge industry with a lot of people behind it; their salary, their income everything depend on the fortunes of the channel. If anybody is allowed to play God, it means you are either in favour of somebody or discriminating against somebody, which is not acceptable. Let's all talk about the content and fight on the basis of content. If your content is good, you get the ratings. This whole ‘issue’ of landing is two years old when it first came in news, earlier it wasn’t heard of. This was heard, earlier, when a new channel was launched in the Hindi space and I am not naming it. So why was it okay then and why isn’t it okay now? If anybody has made the claims of being the ‘fastest-growing news network’, those claims are on the back of those landings. We never make those claims. We always played clean because that is what we believe in.
You have good content and you are getting good ratings for it. But how will you make marketers believe landing has no hand in it?
See, there is no magic formula that landing offers to a particular brand.
All that the landing page does is to give marketing exposure to explore a particular channel and the change from this channel is one second away. You push one button and you are out of it. We are doing a disservice to viewers’ intelligence by saying channels become number one because of landing. All it requires is one second for a consumer to change and it doesn't even cost him a single thing. Do you think one can force a consumer to sit and watch? Can anyone do that? No they can’t.
It is just a lack of understanding for many people that contributes to this confusion and even then we are saying that it does give a little bit of edge. And the edge it gives is that there is only one channel that can take this opportunity on a particular platform. Hence, it is not neutral in that sense but that doesn’t give any additional advantages. The only thing is it is not available for others as it is just one person at a time. So yes, one can say that if we are there, others can’t come in, and that is why we are saying, remove it for everybody.
And the number one position we have for our channel network didn’t happen now, it happened two years ago. We didn’t do anything when a new channel was launched in the English space; we took our position at number three. Did it affect our business? Of course it did. Did we create such a furore about it? We didn’t.
With NTO, we have a clear demarcation between premium and regular channels. BARC has also started revealing pay and FTA channels’ data separately. How has it been for you?
BARC has opened two layers. What it can do is open three to four layers.
Free versus paid subscriber is the first layer. The second layer is in paid and how much. Below or above Rs 200 or below or above Rs 300.
Now, CNBC’s place is in the higher segment what I call is the ultra-premium. I wish there was a mechanism for BARC to convince that CNBC is ultra-premium. For that to happen, they will have to code it that way. It will have to become a primary control variable in the recruitment of the panel; they will have free, premium and ultra-premium.
Unfortunately, that is not the case today. I wish it was. Ever since I was in the technical committee of BARC, it has always been my view that there should be a primary control way because then you have a clear-cut three segments of audiences advertisers have been looking for.
Not just the pay and FTA channels but even counting of landing page channels is a challenge BARC is facing. Since you were on the technical team of BARC, do you think there's a process through which the issues can be sorted out?
I think it is a question of just adopting the primary control variable based on which the selection of homes happens. There are parameters like the size of the screen, which are there in the secondary parameter. Now it is a debatable question if it is of any relevance or not. An ad may be playing on a small or big screen but for an advertiser, it is okay as long as it plays and a person is watching it. But as a practitioner in the business, it makes more sense to have a value-based system as there is dynamism in the industry. Packs weren’t introduced in the industry at that point of time; only DTH had a pack. So today there is an opportunity for BARC to introduce a value-based primary control variable, depending on users’ monthly spend on television irrespective of whether it is on DTH or cable.
If a user is paying less than or more than Rs 300, whatever cuts they want gives a better example of a person’s affluence. All I am saying is when you have a parameter, use that rather than relying on other parameters to judge that person. It just helps the industry and the advertisers because it enables them to figure out various things. There is a proxy for everything, it is just a question of whether you want to put it upfront and make it simple for people. I am glad they did pay versus free. Advertisers got a choice to take whatever they want. But, they shouldn’t be able to make a choice because of a lack of data.
It is been almost six months since the implementation of NTO. Has the distribution ecosystem settled?
It is not fully settled and I think it will take another five to six months.
The fluctuation has moderated but it will take its own logical time till entire transparency comes in and the invoicing and billing is done and for MSOs and DPOs, everything is crystal clear.
So it will take a certain time to reach where it will become a thumb rule. It will take a little bit of time for a new normal to settle down.
The previous quarter had some big events such as general elections, Cricket World Cup and IPL. So going forward, how are you planning to keep the momentum going for the network?
We are looking forward to the festive season. June and July haven’t been that great. There's a general slowdown in the economy and we are observing that in the advertising industry. What we are looking for is an optimistic festive season.
The good part of our business model is the rising of subscription income and it won’t just come for one quarter and then go away. So we kind of built in another raft to make sure that there is stability in the business we run, so that should hold us in a good state.
Our cost-control is continuing that should also hold us in a good state. Now, if any dynamism and fluctuation happens in the advertising market, we are hoping for the best and preparing for the worst as well. We hope that by August and September, the market should revive.
Because there was an excess in ad spends due to IPL, election and World Cup, it was logical for a slump to come in. But I am sure the industry will bounce back and we will have a good festive season.
The future of News18 does include a huge amount of digital. The synergies will continue between TV and digital. The synergies will vary from social media to digital from the offering that we give to advertisers. Even if I am a TV consumer, I also consume content on digital. So today there are two or three doors and we are making sure that there is a combined view because at the end, there is just one person. We can do that because we have various offerings, it is just a question retuning our workflows to make sure. Even from a talent point of view, we have several movements happening like training people in the newer mechanism of working, training salespeople to offer digital solutions. So there is a lot of enrichment on all levels. There is a certain amount of dynamism and optimism that comes in with this kind of things.