Going international: A new route for broadcasters?

For the estimated Rs 136-billion television industry in this country, advertising revenues, no doubt, contribute significantly more than subscription/pay TV revenues. There is no denying though that subscription revenues have gained importance in a broadcaster's scheme of things with players increasingly looking at the latter to support bottomline growth.

According to some estimates, the universe of C&S households, which stands at 44 million currently, should touch 64 million in four years' time, with overall TV penetration in India hitting 111 million. While this may point towards a substantial - if not proportional - increase in subscription/pay TV revenues, the scenario becomes complicated when one considers ground realities like under-declaration by cable operators and price sensitivity of the India market. Also, with CAS looking like a non-starter, the scope of increases in subscription/pay TV revenues, remains doubtful.

Against this backdrop, tapping foreign markets seems to be the logical next step on the broadcaster's agenda. Indeed, some players, such as ZEE, Sony, STAR, SUN and Asianet, have taken the lead in venturing abroad with a handful of them launching international operations a few years ago.

ZEE Telefilms, considered the forerunner in this area, has international operations contributing almost 35 per cent of its overall revenues with the balance accruing from the domestic market. On its part, Sony's international operations contribute almost 10 per cent to its coffers, while pubcaster Doordarshan is in talks with the James Murdoch-headed BSkyB in the UK and Globecast in North America to distribute its bouquet of regional channels including DD India, Punjabi, Gujarati, Tamil, Telugu and Bengali.

Not to be left behind, players such as NDTV, Sahara and Eenadu are also toying with the idea of tapping the NRI audiences. Satish Menon, president, Sahara TV, says, "We are in serious talks with distributors and something should materialise in the next few months. The markets we have short-listed include the Middle East, the US, the UK and Australia."

Ajay Kumar, general manager, marketing and sales, ETV Network, also speaks in the affirmative on the subject. "We are talking to distributors," he says. "We come from Andhra Pradesh and there are a lot of Telugu-speaking guys abroad, who could be tapped," he adds.

For Eenadu, going overseas has been on the cards for quite some time considering that the network has its own teleport at Ramoji City, Hyderabad, facilitating uplinking and downlinking of signals. "We had always planned it," says Kumar. "We were one of the first in the country to invest in a teleport," he claims.

Rival SUN Network also has its own teleport, implying that the broadcaster can cap needless technology costs, making it that much more easier for it to have a viable business operation. "Targeting the global Indian is actually additional monetising of existing expenses," says Rohinton Maloo, managing director, Cutting Edge Media. "The technology exists to do that, which is not as expensive as it used to be, making it another revenue stream in terms of gross profits for the broadcaster," he adds.

If monetising content is what propels entertainment channels to go overseas - considering that players have to merely tweak their products before presenting it to their international audiences - the challenge for news channels is far greater. "Content cost for a news channel is much more than that for an entertainment channel, plus news does not get premium pay," says Maloo.

But veterans in the business would like to sound the warning bell. "It takes some time to be operationally viable," says Jawahar Goel, vice-chairman, ZEE Network, a thought echoed by Kunal Dasgupta, chief executive officer, Sony Entertainment Television Network. "The investment is very high," says Dasgupta. "Transponder costs, uplinking, downlinking, targeted marketing to woo subscribers… For the first six years, you are simply losing money before you manage to get a foothold in the market," he points out.

Kumar of ETV Network, however, has an interesting point to make. "Frankly, as geographical boundaries melt away with television, it is a good graduation for the industry. There are various models that exist in terms of distributing your channel and in the end, what really counts is the interplay of demand and supply." © 2004 agencyfaqs!