TV.NXT: What prevents Indian TV content firms from scaling up?

At Day 1 of TV.NXT 2011, a panel of eminent media personalities debated on why content firms can't seem to scale up in India. Some rather interesting viewpoints emerged.

Television is viewed as one of the most robust industries in India. It has around 25-30 large companies in the broadcasting and distribution space; however, the largest content production company in this country is perhaps Balaji Telefilms which is probably worth around Rs 150 crore, while there are dozens of smaller TV content companies valued at Rs 10-25 crore each. Why is there no scaling up happening in TV content companies? Discussing all this and more was an eminent panel comprising experts in the media field, on the first day of TV.NXT 2011.

Moderated by Vanita Kohli-Khandekar, contributing editor, Business Standard, the panel included speakers such as Anil Arjun, CEO (chief executive officer), Reliance MediaWorks, Sunaman Sood, director, Acendo Capital, Karan Ahluwalia, executive vice-president, media and entertainment, Yes Bank, B Srinivasan, managing director, Vikatan Tele Vistas, and Richard Fernandes, executive director, original production and development, Turner Broadcasting System Asia-Pacific.

Seeking an answer to the question on why is scale so elusive in the television content industry, given the fact that India has humungous TV viewership numbers, the moderator addressed Arjun of Reliance MediaWorks, asking if the company's acquisition of Synergy three years ago has resulted in scaling up. Arjun responded that Synergy has grown five times in terms of revenue since it was bought over. "I don't think scale is a problem in this creative industry," he said. "It is partly by default, and partly by design that content companies can't grow much in size. But, small isn't bad." Having said that, he added that the relationship between a broadcaster and a producer is very transactional and he wished it was more strategic in terms of understanding content and consumer trends.

Kohli-Khandekar then addressed Fernandes of Turner, asking him if it is more of a buyer's market in that case -- dominated by a broadcaster. "There may be hundreds of cars out there, but there are only a handful of good ones. Similarly, there are a lot of good ideas out there by content companies, but very few great ones. It's not that we operate in a buyer's market, therefore. And, if we get a great idea, we'd love to take it up, develop it and present it to viewers," said Fernandes.

Next up were experts in the finance field, whom the moderator addressed to enquire about what is the issue when it comes to investing in content companies.

Ahluwalia took it up, raising the question whether content companies really want scale or not, and what is the price they are willing to pay to get there. Further, he brought forth the issue of Intellectual Property (IP), and who controls it, which affects investment. Sood of Acendo Capital echoed that IP is a big issue, stating that if the IP is with the channel, then the reins are controlled by the channel itself. Content companies are unsure of the returns they get.

Srinivasan of Vikatan Tele Vistas raised another important point -- television in India is relatively much younger than it is in advanced countries, and hence, scale is becoming difficult to come by because of a lack of specialisation. "The 'factory' mentality steps in, and hence, creativity gets stifled. Scaling up can happen with more specialisation and greater clarity in the producer's mind -- he must learn from his failures," he said.

The moderator then asked if owning IP is a big incentive to invest further in the business, or should having in-house programming arms by channels themselves -- the way it is in the US -- be encouraged? Arjun stated that his company gets revenues on a commission basis. "IPRs are important particularly because of its ability to make content travel across different languages. But, IPRs are overrated. It's actually about what you can do with the IPR to monetise it that counts," he said.

Sood added a spin to that, saying that not only must one have specialists who have the resources to monetise IPRs, but also the benefit of that growth should come to the producer as well, the way it is in the motion pictures model. "The same has to happen for TV, and maybe an association should be formed for it, but it's a question of who will bell the cat?" he mused.

Addressing the in-house programming arm topic, Fernandes said he found the whole IPR discussion too much, and it is actually all about the best talent, even in the US. "I feel the creators of content have the power. If you have great content, I'll do whatever I can to put it out and make it a hit. If you want to scale up, get the talent. The better the idea, the more the power you have."

Kohli-Khandekar moved on to ask if the model differs for fiction and non-fiction shows. Arjun said fiction shows take six months-to-a year to materialise, and are more static and cheaper to produce. Non-fiction is expensive on the other hand, as these could be gala shows with celebrities, and also have a shorter shelf life. Srinivasan added that one can't really compare a Balaji to an Endemol as it would be unfair, but on a general plane, fiction companies seem to be doing far better and have a better scope to scale up. "Once talent comes in more aggressively, it will lead to critical mass, and hence, scaling up will follow," he opined.

On the financial aspect, Sood said that it is ultimately the ability to execute/deliver and the quality of an idea that tends to define investments, and this is fiction/non-fiction agnostic.

(TV.NXT is organised by afaqs!, in association with STAR News (main sponsor). The other sponsors include Zee 24 Ghante Chhattisgarh, Amagi, HeadHonchos, ApnaCircle.com, Fox History & Traveller, and Lukup. TV.NXT was being held at the J W Marriot, Mumbai, on September 29-30, 2011.)