The topic of the second session at The Future of News 2011, a seminar organised by afaqs! in New Delhi on August 4, focussed on push overcoming pull in the television news business.
The session started with Saha citing the example of a popular Hindi news channel, which has an annual spend of Rs 80 crore, of which it spends about Rs 50 crore on distribution, Rs 2 crore on marketing, another Rs 2 crore on resource and technology, and spending only about Rs 26 crore on content. It sources most of its content either from news agencies or channels. He added that in case of most of the channels, there is little or no differentiation when it comes to content, which further leads to focus on distribution and increasing the cost, ensuring a high reach.
He opened the discussion by asking the panellists whether the kind of investment being made on content was enough.
& #VIDEO1 & #Sanan said, "Like any other business in the world, I am in the business of monitising my television rating -- TVRs -- as given by the God called 'TAM'. This business has two legs -- the first being reach, and the second being time spent. To me, these are two independent variables. Reach is a function of distribution, placement and brand spend -- the context of a news channel; while time spent is a function of content.
"While distribution is a function of money that one is willing to spend in the market, content is a function of ideas. In a way, these two are not related -- so it would be wrong to say that one is spending more on distribution and compromising with the content," said Sanan.
He further explained that one cannot negate the fact that companies are spending on distribution and the reason behind this is two-fold. In case of news, as we go forward, the differentiation in content is a struggle. However, the main reason behind the cost of distribution going up is that there are more than 500 channels chasing about 80 spaces on analog and 200 spaces on digital. Thus, the entire game is about gaining accessibility as there is an imbalance between capacity and demand.
"But, content still rules the roost," he said, citing the example of the popular show, Saas Bahu aur Saazish, on STAR News.
Krishna, however, countered Sanan's perspective and said, "News channels, especially Hindi, in order to grab eyeballs, stoop down as low as possible by providing absurd news such as Barack Obama being an ISI agent. The other part of the story is that the battle is due to people for whom news channels are cost centres for other businesses. The game is getting more complicated because of two factors -- firstly, with more and more channels being launched, grabbing eyeballs is the main fight, and secondly, people watch television for entertainment and that is where the focus is increasing now."
Seth was of the opinion that the entire business is about what people want to watch. He said, "One cannot force the viewer to watch something, and so once again it comes to 'pull' as the factor. Also, in case of a new player, it is a known fact that in order to ensure a high reach matching the level of competition, one has to spend on distribution. However, that does not mean that there will be a drop in quality in case of content. So, push is equal to pull."
Saha then asked Natrajan of Lintas Media Group whether media agencies are ready to pay a premium for the perception of news channels, or was it just on the basis of numbers?
Natrajan replied, "Typically, all channels work on a ratio of 80:20 per cent, wherein 80 per cent of cost is spent on distribution and the rest on content. What is more, about 23-24 per cent advertising revenue goes to news channels, while general entertainment channels all over India generate 36 per cent of advertising revenue. Therefore, in case of news, it's disproportionally high as we are still paying for content."
According to Natrajan, amidst all this, there is good news as gradually, the system is changing from analog to distribution. With 60 per cent of analog homes decreasing to 57 per cent of the total 112 million cable and satellite households, even subscription will play a role in revenue. However, she added that all the stakeholders should understand clearly that there is a need to restrict this spectrum game.
Sanan of MCCS further opined that going forward, news channels will have to re-invent from time to time in terms of content and ensure that each brand stands out from the competition. However, at the same time, news channels have to ensure that the content manufactured by the channels should find a connect with the viewers. Failing to do so would result in ratings suffering heavily.
"News as a genre is under pressure from the GECs. Every year, the news genre witnesses some big news stories which help in generating spikes. If you compare the spike every year, there is a 50 per cent growth both in terms of reach and time spent, which means the context of news has not gone out of a person's life. The challenge lies in making the content attractive to the viewers, and at the same time, news channels have to be careful with what they want to show," explained Sanan.
Countering Sanan's point of view, Natrajan said, "Carriage fee had been present in every market, including mature markets. Earlier, you had the cable operator twisting your arm, and now you have big corporates asking for big moolah in the name of carriage. So, in keeping with the reality of the game, if we invest in the right kind of content, it will automatically ensure pull. While it is important to re-invent the content, news channels have to, at the same time, play the role of curator, and have to be responsive towards the content. The spectrum game is the worst game one can get into."
In conclusion, Seth emphasised, "In a hypothetical situation, wherein news channels would want to air content for which they can take the responsibility, the measurement system needs to be re-looked upon."
When Saha asked Sanan, whether content still enjoys the same pull as before, Sanan took a statistical tour. According to him, the time spent by an individual in watching television has been 200 minutes in the past five years. In the last two years, the number of channels in the GEC category has increased because of intense competition, the money spent, and aspirations. "A pull has been created by GECs as a genre. The time spent has grown, and the roping in of cinestars by GECs is working wonders for the channels in the category," explained Sanan.
However, on the other hand, news that reaches out to people creates much lower noise as compared to the GECs. For news channels, it is the news items that increase the consumption of a channel. And, every year, it increases by 15-20 per cent. The challenge for news channels is to re-invent themselves in order to compete with the GECs.
Finally, in reply to Saha's question regarding the interests of new players entering the news genre going beyond finances, Seth said that it's difficult to generalise people who come from non-pedigreed backgrounds. "Yes, sometimes, their interests go beyond providing great content," he said. On the other hand, Sanan, who believes in the concept of core competence, thinks it's difficult to speculate.
The event was sponsored by STAR News and IBN Live.