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Media

<strong><font color="#ff0000">Special: </font></strong>What media companies learnt from the economic slowdown (Part I)

The economic downturn has forced media companies and agencies to relook the way they work and reconsider the future

It’s only eight months since the fact of a slowdown hitting India became commonly accepted. And yet, it seems like a lifetime. That’s probably because it has affected our lives so sharply, and because the media covers it so extensively.

To most, the slowdown resembles a shallow pool of misery. Nobody will drown in it but neither will it allow people to feel cheerful about the future. Not everyone will agree with this metaphor. Many managers think that the downturn may be one of the best things to have happened in a long time.

In any case, there is another piece of good news: the worst may be over and we may be more than halfway through the slowdown. We may be climbing our way out of it though the ascent is slow and gradual. That is why afaqs! thought it would be the right time to ask leaders in the business about their experience.

We shortlisted a total of 10 companies which cover most major aspects of the media and marketing communications business. Among the media companies, their business included mainline TV, regional TV, dailies, radio and out-of-home. Among agencies, we focussed on a creative agency, media agency, below-the-line agency, interactive agency and a public relations firm.

We asked them about their experience: the steps they took, their toughest moments, lessons learnt, whether the rules of their business have changed, when demand will revive, and whether growth, when it picks pace, will be similar to or fundamentally different from what we have had until the economy slowed down.

While the compulsions in each business have been different, the takeaway from the slowdown for most of the interviewees has been similar. Read on to find out what media companies had to say:

PUNIT GOENKA, CEO, Zee Entertainment Enterprises
<strong><font color="#ff0000">Special: </font></strong>What media companies learnt from the economic slowdown (Part I)
Major steps taken:
We have been looking at rationalising all the costs, which include operations, overheads, administration and selling expenses. We have also been pursuing ways of enhancing productivity and stretching the potential of all our assets, including human resources. Unlike others, we have not resorted to wanton downsizing and lay-offs.

Toughest moments: There haven’t been any. We have been going about our business as usual. Our recently-launched shows are doing well. The channels in our bouquet continue to maintain their leadership position. We are revamping the programming strategy of Zee TV and are confident of regaining the leadership or a strong No 2 position shortly.

What you will remember: One take-home for everyone would be to never go overboard with your spending. Zee has often been spoken about for working on an airtight budget for its shows. Because our people are used to working with a limited budget they have managed fairly well during the slowdown. Apart from limiting a few overhead costs we did not resort to any big cuts. Through this practice we have set a benchmark in the industry and other players have taken note of our way of work.

Lessons learnt: Trust your people. If you are with them during tough times then it is a sign that you have been successful.

Whether the rules of business have changed: As I mentioned, we have never gone overboard with our spends. The slowdown has only taught us to be extra careful in other aspects of the business as well.

Revival of demand: Anything that goes up has to come down and vice versa. The demand is bound to go up in a couple of months. It may take time and the process may be slow but things will be normal again.

When growth returns: It will take time for growth to get back to its pre-slowdown pace. There will be a gradual increase and we will have to remain patient for things to return to normal.

APURVA PUROHIT, CEO, Radio City 91.1 FM
<strong><font color="#ff0000">Special: </font></strong>What media companies learnt from the economic slowdown (Part I)
Major steps taken:
More efficient cost management has become an imperative till we figure out where the industry is headed. Control on variable costs has been initiated. Radio being a fixed cost business there is just so much one can do.

What you will remember: Concentrate on the essentials of the business and get back to the fundamentals. Consistency and perseverance are the only ways to ride the slowdown.

Lessons learnt: Cost management is the need of the hour, but we must guard against taking short-term measures which harm the product quality or allow consumer interaction with the brand to suffer.

Whether the rules of business have changed: Not really. Radio has always had an uphill task - earlier with respect to unviable regulatory and licensing policies, an ongoing issue with music royalties and now the slowdown. The industry has developed ways to grow.

Revival of demand: No guesses on this one!

GIRISH AGARWAL, Director, Bhaskar Group
<strong><font color="#ff0000">Special: </font></strong>What media companies learnt from the economic slowdown (Part I)
Major steps taken:
Our organisation mainly looked at creating a smooth fit amongst its various initiatives and decided to concentrate on its core areas and strengths.

Toughest moments: While restructuring, when we had to let go of a few people.

What you will remember: There is a need to stay lean and fit even at the best of times so that such situations are best addressed without much problem.

Lessons learnt: Stay focussed.

Whether the rules of business have changed: Yes they have. There are new learnings and innovative ways of evaluating or approaching an opportunity or a problem. Many of these learnings will become part of a regular operating process.

Revival of demand: Soon.

Categories that will fuel demand: Government, education and real estate will lead the rally.

When growth returns: We believe it will be slow but sturdy. There’s a degree of cautiousness built in now. Growth will be more stable in nature.

INDRAJIT SEN, President - Projects, Laqshya Media
<strong><font color="#ff0000">Special: </font></strong>What media companies learnt from the economic slowdown (Part I)
Major steps taken:
Thanks to our presence in different countries, we had better information on what was coming. We had decided on a three-pronged response. One, add higher values to our delivery to clients. Two, optimise all resources and, three, continue to build assets that would be ready for the post-slowdown phase. At the same time, we have downsized those businesses that were non-core (for our key and loyal clients) and high-risk as well as too futuristic. We have also rationalised costs to ensure that these are commensurate with the new price points emerging in a lower demand market environment. At the same time we are focussing on skill upgradation. We are now a far more efficient business than we were eight months ago.

Toughest moments: Downsizing businesses that had been started with lots of hope and emotional involvement. A gratifying moment has been that we have decided not to make any cuts for our existing staff for 2009-10.

What you will remember: That this gave us and our clients the best opportunity to get ready for a tough decade ahead – it will probably be even more chaotic in terms of the opportunities it throws up than the last five years.

Lessons learnt: Process purity and compliance must be ensured at all times - bad or good. Constraints and criteria must not be relaxed during periods that give perception of strong growth without checking for sustainability.

Whether the rules of business have changed: For OOH media, it has brought about a new awareness of the vulnerabilities of an unorganised industry. We do not have credit protection, recognition as an ‘industry’ nor a widely accepted industry body that allows us to negotiate better terms with regulatory bodies. We have no way to prevent a panic reaction from the smaller businesses which serve only to disrupt the entire industry’s working pattern. Now, we hope that at least the major businesses will overcome individual insecurities to come together and develop pan-industry working methods that give the industry the resilience to withstand shocks much better.

Revival of demand: By the fourth quarter of this financial year paid capacity utilisation should start moving up and reaching optimum levels. However, rates will still be lower than April to September last year (2008-09). Pressure of cash losses are also likely to continue with most of the small and medium businesses that have single-city or regional presence. It will be well into 2010-11 before we see business stabilising completely.

Categories that will fuel demand: For OOH, we see telecom companies, white and brown goods and automobiles leading the charge. Banks will also be in the fray. FMCG, media and entertainment will also have larger shares.

When growth returns: We don’t expect to see the kind of prices and rates that prevailed pre-2009. Growth will be more rational. People are more wary now. So, as far as OOH media in India is concerned, definitely a period of growth but slower, rational and stable growth – not the mad pull we saw in the last three to four years.

SURESH IYER, CEO, Raj TV
<strong><font color="#ff0000">Special: </font></strong>What media companies learnt from the economic slowdown (Part I)
Major steps taken:
We have always been a compact operation. However, we too have cut cost in acquisition of programmes, etc. We haven’t resorted to job cuts, though.

Lessons learnt: This experience has taught us to operate smartly in a highly fragmented and competitive market. The valuable lesson we have learnt is to always have tight control over wasteful expenditure, no matter what the market condition. The most important thing we have learned is how to keep advertisers’ interest alive even in a slow market.

Whether the rules of business have changed: There are no set rules in the broadcasting business as it is a fast-evolving medium. But yes, it has definitely changed the way we approach a crisis.

Revival of demand: In about a year’s time.

When growth returns: It definitely won’t be like the pre-slowdown period since all the key players - the advertisers, broadcasters and delivery platforms – will be more cautious.

With inputs from Sangeeta Tanwar, Sapna Nair, Sumantha Rathore, Surina Sayal.

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