Shemaroo launches general entertainment channel, "We're missing out on advertiser money": Hiren Gada

Lately, all we have been reading is that companies are shutting down or laying off employees or cutting salaries. The media industry, like others, has been badly hit by the COVID-19 outbreak and the subsequent nationwide lockdown. Since all filming has come to a complete halt, the broadcasters are now running out of fresh content. At the same time, advertising has declined significantly with many brands pulling out of television campaigns. However, viewership has increased manifold and so has the time spent on watching television.

There’s a shortage of content that the entire family in a single TV household can watch together. Based on this insight, Shemaroo Entertainment has decided to launch a free-to-air (FTA) general entertainment channel (GEC), Shemaroo TV. With this, Shemaroo Entertainment, which is traditionally known as a content aggregator and distributor, intends to establish itself as a broadcaster. In FY19, the network's revenue from operation stood at Rs 548 crore, and net profit (after taxes) at Rs 86.11 crore. In the current fiscal (extended), Shemaroo also launched a free-to-air Marathi movie channel, MarathiBana.

FTA channels don’t get any subscription revenue and, thus, depend entirely on advertisers. Before the Telecom Regulatory Authority of India (TRAI) rolled out the new tariff order (NTO), all the major broadcasters had their own FTA channels - Zee Anmol, Star Utsav, Sony Pal, Colors Rishtey, etc. TRAI mandated that FTA channels can’t be clubbed with pay channels. Therefore, the broadcasters converted their FTA channels to pay channels, leaving a massive gap in the FTA space. Enterr10 Media's Dangal TV latched on to the opportunity and became the number one channel in the FTA space. In fact, for several weeks, it was the number one channel across genres (pay+free) on the back of content licensed from NDTV Imagine.

"We have been there for a very long period of time, but didn't have a direct relationship with the consumer. As a result, we realised that we are missing out on advertisers' money. That’s why we decided to get into the television space, which is a natural progression for us," says Hiren Gada, CEO of Shemaroo Entertainment.

Shemaroo TV, which goes live on May 1 (tomorrow), will compete with Dangal TV in the FTA ring. "Eighty per cent of the total video consumption happens on television, so there is a huge opportunity. The universe will expand further, and people from the bottom of the pyramid will make FTA channels more relevant, as it is likely that they would not directly jump into the pay paradigm," says Gada.

With two television channels, is the group shifting its focus to TV and, if so, what does that mean for the OTT platform ShemarooMe, which was launched last year? "Not at all," says Gada, adding, "With the kind of investment we have made, we can’t afford to shift our focus from digital. It offers you the opportunity of immense growth, while TV offers you scale, and both work in synergy. A lot of content will flow from digital to television and, at the same time, TV is a platform which will be used to promote the digital offering."

As per industry estimates, about Rs 1,500 crore to Rs 1,800 crore of advertising money (total adspend on TV - Rs 34,100 crore) is spent on the entire FTA space, and GEC commands a lion’s share of that. Gada feels it is a big enough playing field for one more player to enter and, in the long run, the overall pie will grow, too.

Shemaroo TV will have a programming lineup spread across 6.5 hours, and also depend on acquired content. On weekends, it intends to air movies and going forward, it will have a mix of original and licensed content. While GEC is a lucrative TV genre, it is highly competitive, too. Giants like Discovery failed to establish a presence, despite launching with hours of original content. "We have studied all the recent launches, both the successful ones and those that didn’t work. The key is to enter with a low-cost strategy so that the risks are lower," says Gada.

A media planner, who didn’t wish to be quoted, feels this is a great time to enter the FTA space. "Many people will lose their jobs, or a significant part of their salary, and the disposable income will fall massively. Entertainment is a luxury that you need and so it won't be a surprise if you see the average revenue per user (cable and satellite homes) decline. People will cut down on the number of pay channels they subscribe to, and stick to FTA channels, instead. At the same time, with pay channels mostly airing reruns, advertisers will shift spends to FTA channels to garner eyeballs."

The planner adds, "While the advertising spends on pay channels have declined by more than 50-60 per cent, the FTA channels with high ratings have either retained or grown in this period so the risk is far lower (in the FTA space)."

The risk is also lower because of the low content investment. FTA channels acquire the license to broadcast content that has already been aired on pay channels. The licenses, which can be exclusive or non-exclusive, are acquired for a particular period of time. In the case of exclusive ones, the IP owner can’t give the right to any other FTA channel during the licensed period. "Those rights range from Rs 5,000 to Rs 20,000 per episode, depending on the actual cost of production."

Joy Chakraborty, former CEO, Dangal TV, feels Shemaroo has deep resources necessary to succeed in the FTA space. However, he feels it will have to face challenges, too. "Distribution is key. Just being on DD Freedish is not enough. The channel needs to be available on platforms like Tata Sky, Den and others. Once the distribution is in place, they will need to get the FPC right. If they do so, they will succeed for sure," he says.

Like Gada, Chakraborty also believes that there is enough money available for one more channel to enter the space.

So, with Shemaroo TV entering the GEC space, the ‘Dangal’ in the FTA ring will certainly become more interesting.