Meghna Vincent is soaking in all the adulation that she can. A trained classical dancer, Vincent has also appeared as a child artist in several Malayalam films but it is the small screen that has got her true fame. In Kerala, people know her more commonly as Amrutha, the character she plays on Chandanamazha, a soap opera that goes on air on local TV channel Asianet five times a week. Thanks to the TV show, in which she essays the role of an orphan, Vincent has become a household name in her home state.
Chandanamazha (loosely translated, sandalwood rain), a remake of popular Hindi language TV show Saath Nibhaana Saathiya that first went on air on Star Plus five years ago, is the most popular Malayalam serial on air at present and is steadily drawing television ratings in excess of 10 from among its target audience, which primarily comprises women. The serial has been on air since March last year, with over 425 episodes broadcast so far.
A key draw at 9.30 pm on Asianet, Chandanamazha has given no reason for the channel’s top bosses to complain. The channel’s managing director, K Madhavan, an understated personality, smiles when you ask him about the success of Asianet and other shows like this one, all of which are drawing crucial advertising revenue for him. His Asianet bouquet of channels is the leader by a very large margin in Kerala, with others such as Mazhavil Manorama and Surya struggling to keep pace.
“We have got a few things right in Kerala,” says the reticent Madhavan, when asked how he has managed to strike it rich in the state. Of course, much of that success comes from smart programming and making sure the network reaches out not just to the middle-aged demographic but also the impulsive youth. “The latter is critical,” he says. Asianet’s dominance in Kerala is aiding the process of Star India gaining a foothold in the south. This is a growing market and one where Star has to get things right.
Given that the south accounts for ₹4,650 crore of television advertising revenue (see: Southern delight), this is a story that is not just compelling but impossible to ignore. Besides, it is a market that continues to grow by at least 10-12% each year, with very high levels of cable and satellite penetration at 90% in Tamil Nadu and 70% in unified Andhra Pradesh.
The TV advertising pie in south is one of the biggest in the country
Over the last decade, Star has slowly consolidated its presence in south India (see: How Star is stacked up...), a region known to be extremely complex when it comes to programming and distribution, among other things. Today, the four languages — Tamil, Telugu, Malayalam and Kannada — account for approximately ₹1,100 crore of Star India’s total revenue of over ₹6,000 crore, translating into a market share of 18%. Subscription revenue is still a very small component, and for any player in the south, it does not exceed 15% of overall revenue. Therefore, there is a huge dependence on advertising.
Struggling to shine
To begin with, Star had its hands full in India after having been through a painful period of about eight years. Its programming had not worked and it was only with Kaun Banega Crorepati, the game show hosted by Amitabh Bachchan in mid-2000, that things changed. The success of the show brought in a large viewership and Star Plus, the network’s flagship channel, started on its way to becoming a Hindi GEC, even as English programming came a cropper.
Starting 2000 for about five years, the network grew impressively in the Hindi genre, which meant there was no time to look at a key market like the south. “It was still an unknown territory for us and we had our hands full with Hindi anyway. Besides, we were still not getting it right with Vijay TV,” says former Star India CEO Peter Mukerjea. Clearly, success in Tamil Nadu was mandatory before looking at the rest of south.
How Star is stacked up against other broadcasters in the south
Star’s growth in the region began through the acquisition route. Starting off with acquiring a majority stake in Tamil channel Vijay TV in 2001 and once the broadcaster established itself in Tamil Nadu, in 2008 it picked up a 51% stake in Asianet Communications, which had a presence in Kannada and Malayalam. This involved an outgo of $235 million and saw the creation of Star Jupiter, a joint venture between Star and the Rajeev Chandrasekhar-owned Jupiter Entertainment Ventures. In mid-2010, Star increased its holding to 75% and by the middle of last year, Asianet was 100% owned by Star.
This brought three Malayalam channels; Asianet, Asianet Plus and Asianet Movies, into its fold, along with Asianet Suvarna and Suvarna Plus, two GECs in Kannada. At that point, the only missing link in the chain was Telugu, which came later in the form of MAA TV. Today, the network has a presence across the four languages in the south, something that none of the other national broadcasters can boast of. Much of this progress has come through innovative programming, differentiated content and adapting to local viewership at every step.
The big picture
The network beams 10 channels in four southern languages
Once Star went in for acquisitions, the heterogeneity of each southern market was something that was easy to deal with. In mid-February this year, Star inked a deal to acquire the entire broadcast business of MAA Television Network for an estimated ₹2,500 crore. This gave Star four general entertainment channels (GECs) and a foothold in the ₹1,200-television advertising market in Telugu, of which MAA accounts for ₹275 crore, with Gemini and Zee Telugu clocking ₹300 crore and ₹120 crore, respectively. More importantly, it has given Star a presence in all four south Indian languages and five states. With this, Star is the clear market leader in Telugu and Malayalam, and a strong No.2 in Tamil Nadu and Karnataka.
However, the deal to acquire MAA, a network that launched its first channel in 2002, took several rounds of negotiations, and at one point was even called off. Three years ago, Sony Pictures Television, a subsidiary of Sony Entertainment Television, agreed to buy a 30% stake in MAA, which eventually did not fructify. According to Mukerjea, the interest in MAA goes back to 2005. “That’s when we first looked at buying MAA TV. The top management at Star was not very convinced and that’s where it ended,” he says.
In many ways, the reason behind this decision was how the Star-owned Vijay TV was doing in Tamil Nadu, the largest advertising market in the south. This GEC, which was acquired and renamed by Vijay Mallya in 1995, was not finding the going very easy in the state. Mallya eventually sold the business to Ronnie Screwvala, who was then running UTV. In August 2001, Star acquired 51% of Vijay TV and, three years later, acquired another 44%. The big challenge was not about what was aired on Vijay TV. It was more about the channel being visible.
The cable distribution business in Tamil Nadu was then controlled by Sumangali Cable Vision (SCV), an entity that was owned by Kalanithi Maran, who was also the promoter of the Sun network. Maran made sure Vijay TV did not get a prominent position on air and repeatedly pushed for the cause of Sun TV.
With him having almost 100% control over cable distribution in the state, there was no place for another channel. “Maran knew that if Rupert Murdoch (Star TV’s owner) got it right in Tamil Nadu, he would invest a lot more in south India. The fact is that they were very strong and Vijay TV suffered,” adds Mukerjea.
Kahaani filmy hai
The two key markets in the south — Tamil and Telugu — have historically been characterised by a huge film influence. Together, they saw over 400 releases in 2014 — 215 in Tamil and another 195 in Telugu — compared with 201 for the Hindi film industry. Sanjay Gupta, chief operating officer, Star India, goes as far as to say that it is difficult for anyone to have a broadcasting strategy without the two states. “They offer a mix of a large population, high GDP and per capita income along with a high penetration across many product categories,” he adds.
Concurring with Gupta is Neeraj Jain, senior director, Deloitte India. “Tamil Nadu, Andhra Pradesh and Telangana are large markets for films and have a strong local film industry. In that sense, the need for broadcasters to have a film library is a direct consequence. From a broadcaster’s point of view, airing films is a tool to increase the channel’s visibility.” For many years, Sun Network was on a Tamil and Telugu film acquisition spree, and that greatly aided in getting more eyeballs. Soon, the network, in addition to a normal GEC that aired soaps, had channels devoted to films and music. Over time, this was supplemented by channels in genres such as comedy and news as well. The bad news was for the competition, since there were few good films left to be bought, with Sun acquiring at least 80% of the films released each year.
“We were clear during the early phase (around 2004, when Star took over) that we did not want to mirror the existing programming scenario in the south, as that would only overlap with the available viewership,” says K Sriram, general manager and business head, Vijay TV. It was impossible to look beyond films, though there was a different way to approach the problem. In 2006, the channel went live with Super Singer, a reality singing competition in Tamil. Positioned as a show that was a search for the greatest voice in the state, it was a huge success. It continues to be on air and Sriram thinks it ensured high levels of viewer participation, which the channel continued to build on with genres like stand-up comedy.
This was a far cry from the soaps and films on Sun TV which, while getting in eyeballs, offered nothing by way of interaction with the audience. Besides, with shows like Super Singer, Vijay TV was slowly getting in the youth audience. This strategy of taking a non-film route is remarkably similar to how MAA TV went about the Telugu market, which was dominated by Maran’s Gemini TV.
A rival broadcaster in Tamil Nadu says Sun TV’s soaps strategy worked very well with the housewives but alienated a large chunk of the viewership. “If Sun was good on the weekdays, it was quite loose over the weekend. This was where Vijay got in game shows and music talent contests. Not only was its programming distinctive, but it also managed to aggregate the alienated viewers,” he says.
While Vijay started getting in the viewership numbers, a worried Sun TV decided to air soaps on Saturdays as well. At the end of March this year, Sun TV had 1,780 gross rating points (GRPs), a metric that is the total of all weekly rating points, in the city of Chennai, which was at 1,534 at the beginning of the year. Vijay TV has moved from 430.6 GRPs to a much higher level of 680. Meanwhile, in Telugu, MAA went off the ground in 2002 and — five years later — was acquired by Nimmagada Prasad, the founder of Matrix Laboratories. Apart from Prasad, the other shareholders included actors Chiranjeevi and Nagarjuna.
“MAA was never obsessed about films even back then and adopted a very selective approach. The focus was more on quality of content,” says Ratnakar Rao, former CEO, MAA TV. The market leader, Gemini was quick to dub its Tamil soaps in Telugu and managed to get viewership at a relatively low cost. At that point, MAA was a distinct No.3 behind Gemini and ETV.
In what was a multi-pronged strategy, MAA decided to air film events such as award nights, audio launches and cricket matches with stars. That did not mean the top management had taken its eyes off soaps. “We decided to dub Hindi serials like Balika Vadhu and Hara Hara Mahadev from Hindi into Telugu. That brought in a new audience that wanted to watch a different kind of soap,” says Rao. That worked, and MAA TV’s GRPs in the rest of Andhra Pradesh region at the end of March this year stood at 590.4, compared with 582.5 for Gemini.
For a while now, Gemini has been under serious pressure from Zee Telugu. “We will upgrade the quality of content on MAA, especially in the non-fiction segment. A lot of the focus will be on the youth,” says Madhavan. MAA has four television channels today; MAA TV, MAA Gold, MAA Cinema and MAA Music, catering to different viewer segments. Within a genre like music, it was again important to be distinct and different. Gemini Music was a channel that worked on a simple formula of airing film songs. Taking that route for MAA Music would have made it just another music channel.
According to Rao, the thinking was to make the channel more youth-focused. “We had music contests and live shows, which was a more interactive way of going about it. More importantly, it helped us create a distinct segment within music,” he says. Gemini, like Sun TV in Tamil, continued to stick to the old format of soaps (dubbed in the case of other south Indian languages) and was not quick to adapt. Each time viewership for soaps declined, the channel would air a blockbuster film. Which is why not everyone agrees with the strategy of acquiring a large number of films.
According to I Venkat, director, Eenadu Group, it takes about three to four years for a channel to recover the cost of buying a film. His group, which runs two channels — ETV AP, which focuses on news, and ETV Telangana, a GEC — took the decision of staying away from films, and not without reason. “There is no doubt that it gives a channel a lot of reach, but it is still debatable if it can generate enough money,” he maintains.
As MAA grew on the back of its content, coupled with shows like Meelo Evaru Koteeswarudu, a game show hosted by Nagarjuna based on Kaun Banega Crorepati, the Sun network was facing issues on its home turf in Tamil Nadu. A new political dispensation in Tamil Nadu in 2011 meant Maran’s grand uncle M Karunanidhi was no longer the chief minister. His distribution monopoly would soon be replaced by Arasu TV, a state-run network, which was now refusing to air Sun TV.
With the channel bringing in as much as ₹800 crore each year by way of advertising revenue, it was getting difficult for Maran to take his eyes off the state. In the process, other markets in the south, especially Telugu, that were getting hyper-competitive, saw MAA taking charge. “In many ways, the success of MAA TV coincided with the failure of Gemini. The equation had clearly changed,” says Rao.
By the time Star acquired MAA TV, it was positioned as an upmarket channel with a distinct viewership, quite like Vijay TV in Tamil Nadu. Sriram himself admits that his channel was drawing audiences from the upper social-economic class (SEC). “We are skewed more towards A and B than C, D and E,” he says. With shows such as the slickly-produced Super Singer and Neengalum Vellalam Oru Kodi, a game show hosted by actor Suriya along the lines of KBC, the masses, too, joined in.
With cable distribution now in the hands of the government, Vijay TV, now bringing in about ₹180 crore of advertising revenue each year, was looking very pretty; Sun, in comparison, rakes in ₹900 crore. Interestingly, at the end of the third season of KBC, Star decided to give up the option in Hindi, which was then picked up by Sony Entertainment Television. “We instead decided to pick up the show to be aired in other languages. It was a tough decision but we felt that the show had run its course in Hindi,” points out Gupta. This was followed by successful versions in the four south Indian languages.
In the case of Tamil, it was really a case of one channel taking on the might of Sun’s eight channels in Tamil Nadu and slowly making its mark. While Sun TV boasted of television ratings (TVRs or percentage of potential audience who are viewing at a certain time) in the range of 18-20 for many years, it is not something that the advertisers were necessarily comfortable with. According to P Suresh, managing director, Arun Excello, a real estate developer and the gift sponsor for Super Singer for four years, his target was the city-based middle class.
“That kind of a profile can never be captured by viewership numbers. Today, an advertiser has the option of more channels, since distribution has opened up in Tamil Nadu,” he says. Likewise, P Ramesh, general manager, KTV Health Food, an edible oils company, thinks TVRs are a highly debatable subject and one that is hard to trust.
“They can never tell the full story and do not offer the option of segmenting an audience or profiling them,” he says. While these are local advertisers in Tamil Nadu, it is estimated that retail in the state accounts for 40% of overall television advertising revenue. No other state in the region comes close to that number. There is no other state with that level of retail business in the south, either, and this is across product categories such as food, real estate, saris, dhotis and jewellery, to name a few. It is quite normal for a large retail advertiser in the state to have an advertising budget in excess of ₹50 crore.
Bridging the gap
A big challenge for Star is in markets such as Kerala and Karnataka, since they are all about a high level of dependence on advertising revenue. Karnataka and Kerala account for about #₹700 crore each in ad revenues, which is substantially lower than what Tamil Nadu and Andhra Pradesh (unified) bring in. If the Karnataka audience is more fragmented on the back of it being mixed and cosmopolitan, Kerala is not always a great one for films. According to Madhavan, ratings for films in the state are not impressive because of high levels of piracy and the DVD often being available legally before a release.
“Each state presents its own opportunities and this was evident when there were over 60,000 people at the stadium watching the Indian Super League (a football tournament) last year in Kochi. There were a lot of people watching it live on television as well,” he says. The other reason Karnataka and Kerala are slow-growing markets is the size of the film industry (270 releases between the two languages for 2014) compared with the other states in the south.
More importantly, retail advertisers here, while growing, are not as big as Tamil Nadu, barring categories like jewellery. Madhavan, while agreeing with this, is quick to add that sports content is still a limited play in a market like Kerala, though one that offers a big opportunity.
“So far, there has not been a great attempt to increase viewership. What we saw through football or cricket, (during the 2015 cricket World Cup, Star’s channels in the South had commentary in the respective language with local advertisers during the commercial breaks), is confirmation that there is a market outside of soaps,” he adds.
Yet, Asianet is the largest player in Kerala by some distance. It has an average of 1,000 GRPs for a week, with the closest player being Mazhavil Manorama at around 250 GRPs; Surya is at third position. Referring to Asianet’s dominant position in the state, Madhavan says having a niche in each segment is very critical in a market like Kerala. “While Asianet is a GEC, we realised that it was important to reach out to the youth. This is where we have Asianet Plus, which is a music channel targeted at a young audience,” he explains. Likewise, Asianet Movies is specifically targeted for another kind of audience.
“There is very little audience overlap between these channels, unlike in other languages. Each needs to be clearly positioned for a certain audience.” This is quite in contrast to Tamil Nadu, where Vijay TV is the only channel that Star runs. There has been buzz about the launch of another GEC, though Sriram thinks it is a little early to talk about it. To be called Vijay Plus, it will reportedly attempt to bring in the masses. “It will have repeat runs of shows on Vijay TV, films and some original programming,” he adds.
Gupta is forthright when he says that Star, in the past, has been a disruptor. This goes back to a time when Hindi programming at the turn of the century replaced English soaps or non-fiction shows dominated the Tamil network. Today, he smiles when he speaks of the market in Tamil and Telugu being ready for another disruption.
“In Andhra, it is a case of three equal players, where there is scope for improving the quality of fiction. Likewise, Tamil Nadu cannot remain a two-player market, especially when there is money to be made,” says Gupta. This market brings in 10% of the total national television advertising market. With a more favourable distribution scenario, it is only logical to expect players such as Zee Tamil to offer better content or someone like the Network 18-owned ETV to launch a channel. Though Zee is not present in Kerala, it is the third-largest in Tamil Nadu after Sun TV and Vijay. It is also the third-largest in Andhra Pradesh and No.4 in Karnataka.
There have been talks for the past six to seven years that Zee will enter Kerala, but nothing has taken place yet. Thanks to its acquisition, Network 18 has a presence in Telugu through ETV, which is the fourth-largest channel. It is among the top three in Karnataka, but does not have a presence in Tamil Nadu and Kerala. In Telugu, as the integration with MAA is underway, the task for Star India is to grow bigger. “The fact is that if you are a clear No.1 in this industry, you get a disproportionate share of advertising,” Gupta explains.
It is evident that Star will merely look at ways to consolidate its presence in the south. Its patience and perseverance over the past decade seems to have paid off in no small measure. Madhavan succinctly describes the broadcasting business by saying, “Eventually, the time band between 6.30 pm and 10 pm brings in 75% of the advertising revenue for any channel. If you get that right, you are in business.” That, for now, seems to be the strategy Star India has followed.