Media check: How will TV do in 2012?

What will happen to the television industry in 2012?

In one word, ’lots'.

It’s all down to The Cable Television Network (Regulation) Amendment Act, which came into force a fortnight ago. Fundamentally, the Act will significantly correct (over a period of time) the revenue pie for broadcasters. Revenue from distribution will a) see a sharp upward trend and b) become predictable.

In essence, this decreases the reliance on advertising revenues, giving channels the ability to first hold - and then raise - their effective (selling) rate.

In a spin-off, the digitisation will result in a far better measurement of the niche/special interest channels, disadvantaged as they are in the TAM measurement system. To explain, the complexity of the country caused the lack of homogeneity, which coupled with the sheer number of channels has resulted in ‘a long tail’. A number of small channels together account for sizeable audiences, but do not show up accurately in TAM, thanks to the limitation of the number of people-meters installed. Such channels will see revenues from geographies that currently do not even show up in TAM.

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A big bonus is the likelihood that carriage fees will certainly start heading southward.

More exciting is the thought that digitisation will deliver near-perfect numbers on viewership - and will become, in effect, a parallel audience measurement system for those who choose to use it thus.

As with all media, 2012 will be a tough year- thanks to the overall sentiment. More time will be spent by advertisers and media planners on each plan than we have seen in the past. More time will be spent negotiating. In short, advertisers will need to be convinced that their plans deliver the best RoI the negotiations can get them. (Quality) Niche and special interest channels will receive more attention and revenue than they have done. Hindi general entertainment channels will continue to dominate with the trend of decreasing in the context of the total viewership mix.

Let’s take a look at the picture, genre by genre. Caveat: The impact of digital revenues has not been discussed here.

Hindi general entertainment channels

The Hindi GECs account for about 33 percent of all viewership. This is a number that has been shrinking as channels in new genres are launched. Around twenty years ago, for example, only Hindi and English were available on satellite, so the entire satellite viewership was divided between the two. What this meant was that brand managers could reach the entire country by advertising on only two channels, Zee and Star Plus.

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Things have changed dramatically over the years; today it is impossible to reach the entire country without campaigns on regional GECs and other genres.

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The shift to other genres certainly has meant pressure on yields on the Hindi GECs, and this pressure will continue. Having said that, the 33 percent audience commanded by the Hindi GECs is still a formidable chunk of the audiences brand managers seek. So it will be an uneasy negotiation where both buyer and seller cannot do without the other.

The cost of programming, spurred by the need to be the leader, has seen profligate spending chasing TRPs - and rights holders of Hindi feature films (HFFs) have been the largest beneficiaries. The second half of 2011 saw the battle between the GECs settle into a reasonable predictable pecking order, with STAR Plus as the leader, followed by Colors, Zee and Sony. In a way, the ‘definition’ of a pecking order eases the pressure on all to decrease spends on expensive, low RoI HFFs. And this year, I believe, will see the channels getting back to basics - searching for the elusive, winning program, rather than artificially bolster numbers by airing expensive HFFs.

Regional general entertainment channels

Many of the regional GECs have been around for a few years, and they will start reaping the benefits and consolidating their positions. STAR, Zee, and Network18 (after yesterday’s announcement) all have major investments in the regional market as well. One can expect pressure on the independent broadcasters. They could either crumble under the weight of the pressure or sell out to any of the big three - or to Sony, who must certainly be chomping at the bit to get into this space.

Overall, competition in this area will spur an improvement in the overall programming quality for the GECs. The big bonus will be the lost subscriber revenue which they will start recouping as the digitisation regime rolls out. A big plus for advertisers and media agencies is that they will be able to do deals for the Hindi GECs and the regional GECs in one meeting (as far as the regional channels controlled by the big three are concerned). This will, automatically, put pressure on the independent players, in much the same manner as BCCL’s Mastermind put pressure on all local newspapers.

English news channels

Overall, a good year. The news cycle offers great potential, beginning with the sessions of parliament. Each time parliament is in session, there’s an automatic opportunity to spin-off panel discussions, interviews and the like. There are a number of bills pending, and, thanks to the fragmented nature of politics, all will be discussed threadbare and fought aggressively. Great television. Parliament sessions this year, thanks to the Lokpal Bill, have been entertaining reality television - and the players, the politicians, are making the most of the new found opportunity for exposure. The Lokpal Bill will be back, look forward to debates on judicial reforms and FDI to name a few.

Then we have the assembly elections to the five states, most notably Uttar Pradesh, which will have star performers in Sonia Gandhi, Rahul Gandhi, Mayawati, Mulayam Singh Yadav and all the BJP top brass. The super bonus is Priyanka Gandhi. So we will see analysis, debates, exit polls, pre-polls, the results and the impact of the results. That’s a lot of news TV.

This gets followed immediately by the various budget presentations, followed by the analysis. Considering the rumours of a possible mid-term poll, the budget will be more closely watched than it has been in recent years.

Finally, we will see the cherry on the cake - the US elections.

It’ll be a great year for news TV. How each channel monetizes the opportunity will tell the larger tale. My bets are on CNN-IBN and Times Now.

We’ll also see the Katju effect coming into play every now and then, when news media will go over the top, inviting howls of protest. However, Manmohan Singh’s views on media regulation has already blunted the threat somewhat.

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Hindi news channels

The assembly polls will be a great fillip - even if it is in the form of paid news to many of the smaller players. The political uncertainty will boost viewership through the year, especially when it comes to speculation on a mid-term poll. Hindi news will milk this dry; as they will on the corruption issue when it is back on centre-stage - which it will.

Expect great viewership spikes beginning now till the end of February. After that, like the English news channels, live coverage of parliament will be leveraged to the hilt. Parliament sessions are terrific for news channels - they get a free feed!

English business channels

There’s nothing like uncertainty to push up the numbers on business channels, and the only certainty about business is the uncertainty. Will the GDP go up or down? Will the UPA have the courage to get back on the reforms track? Will the FIIs come back with love, dollars and euros? What will happen to the euro? What is the impact of the US election? Lots of questions, no answers, and the English news channels couldn’t ask for more.

Sports channels

The exit of Lalit Modi, the fiasco of the Kochi team and the overall lack of excitement surrounding the last edition of the IPL do not bode well for the coming year. One sees advertisers pushing for much lower rates - much lower, not just a little lower. The excitement - or lack of it - during the player auctions will be a dipstick.

India’s performance in the Australia series so far doesn’t help the cause of cricket, either.

But all is not lost; one sees European football growing, helped by the involvement of European teams in India in the form of coaching programs and exhibition matches. While Venky’s investment in Blackburn FC has not done much good for the investor, it’s done a lot of good for the EPL.

F1 in Noida will be bigger and better - and more lucrative for the broadcaster, ESPN STAR. And then we have the Olympics, which, though India will not do well at, should attract attention for the Opening and Closing ceremonies, the track and field events, football and the disciplines India is taking part in.

Overall, however, cricket will take a beating. And cricket being the cornerstone of all sports channels (India focused sports channels), when cricket takes a beating, so will all the channels.

Factual entertainment

There is no genre which will gain more from the Cable Television Network (Regulation) Amendment Act than this one. They hardly show up in the TAM numbers, and, when they do, they show up poorly. In addition to more real audience numbers which will see advertising revenues go up, the effect of digitisation on carriage fees is excellent news for them. Expect more such channels to launch as the barrier to entry reduces. In addition, expect more language versions of the existing channels as well. Will we see History channel in Malayalam and Punjabi and Discovery in Marathi? Yes, we might, we might.

Music/youth

The genre name that I’ve used reflects the confusion in the genre. We will see the channels such as MTV and Channel [V] define themselves more sharply, more as a youth channel than as a music channel. Considering their youth focus, we will see these channels go, literally, out of the box a lot more. More engagement of their core audience in events, in social media, on tablets, on the mobile phone and in brand extensions. Licensing and merchandising in this genre will be taken more seriously than it has been done, becoming an important revenue head.

Children’s channels, English movie channels, English entertainment channels-

I can’t see any significant change in these genres, except for the positive impact of the Cable Television Network (Regulation) Amendment Act - more subscriber revenues and lower carriage fees.

Overall

Interestingly, at a time when competition is greater than it has ever been, and when there will be great pressure on maintaining effective rates and yields, TV companies will enter 2012 feeling good, thanks to the Cable Television Network (Regulation) Amendment Act and all that it implies.