TV.NXT 2012: A few profitable media companies do not reflect the health of the entire industry: Subhash Chandra

Chandra was also of the opinion that digitisation will legitimise the business and put an end to pay-offs.

When Subhash Chandra, the father of cable and satellite broadcasting in India, began his media journey, he soon realised he was getting into an illegal business. Delivering the keynote address at the afaqs! annual event, TV.NXT, presented by ABP News, Chandra, chairman, Zee Entertainment Enterprises Ltd, shared his experiences and also threw light on his perception of the future of the broadcasting industry.

Way back in 1993, Chandra had predicted that the movie and entertainment industry, which then was only a $300 million industry, would grow in size to be worth $4-5 billion by 2000. There weren't too many takers for his theory then. The fact remains though that this very industry today acknowledges this man as a visionary. After all, he has to his credit many firsts in the Indian broadcasting industry.

Chandra recalled how when he entered the broadcasting industry, there were mainly five big TV production houses in the country that demanded Rs 3 lakh for a 30-minute programme. Chandra, who is known to carve his own path, decided to bet on new directors and writers, which ensured that for the first 12 months, the average cost of programming was Rs 30,000 for an hour.

In fact, he started the empire called Zee with only Rs 24 crore, he remembered, which today could be the cost of a single show on television.

He said that one could argue about the various issues faced by the industry but the fact remains that the industry's evolution has only had a positive impact on itself. According to Chandra, television has the potential to change the way the country thinks. He referred to the growth level in rural India, which according to him can be attributed to the growing penetration of the television industry.

Chandra stated that the television industry has created 5 million direct jobs and the number of people indirectly associated with the industry will also be a significant figure. He advocated that the various stakeholders in the industry -- production houses, MSOs, LCOs, broadcasters, technology support, and all partners of the media industry -- need to come together on a unified platform for a better future.

Talking about the way things are moving forward, Chandra noted that the industry's structure is making it unviable. A few profitable media companies do not represent the state of affairs for the entire industry. Broadcasting companies' cumulative losses today exceed Rs 10,000 crore, which is a worrying fact.

Chandra said that there is a need to create right partnerships that will eventually lead to a win-win situation for all stakeholders. While the industry grew from 100 million viewers to 500 million viewers, advertising rates on television have not increased as much, which is a cause of concern, said Chandra.

He added that the industry is following a herd mentality with the same old programming concept for years.

The biggest issue that faces the industry today is lack of trust, beginning from the consumer and the last mile operator to MSOs and the broadcaster. According to Chandra, the undercutting starts at the consumer level. If a household has three television sets, it pays for only one. The collection agent further undercuts the number of households and the chain continues till the broadcaster.

Chandra said that digitisation will change the game to a huge extent. Now, if the cable operator pays Rs 30 to the MSO, the MSO spends another Rs 30, which it has to pay as bribes at different levels. The digitisation will legitimise the business and put an end to the pay-offs. According to Chandra, around Rs 20,000 crore is spent as pay-offs in a year, which is equivalent to the advertising revenue the television industry earns.

When a member of the audience asked him if the government is rushing digitisation, he completely refuted the claim. He said, "We have been talking about digitisation for the last eight years." Chandra said that digitisation has not taken off because of people who do not want it and the cable operator cannot be the only one blamed for the same.

According to him, there are a few MSOs as well as broadcasters at fault here.

He said, "People do think that I am against foreign investment but the truth is that there is enough money available within the market." While the cable operators do not need institutional money, the DTH players may, he added.

When asked about the challenges brought on by the online medium, Chandra said that content creation for online may be cheap but the quality is suffering as well. He believes that this is bound to change, with even global players like Google and YouTube launching linear channels now. He also referred to a Zee initiative wherein it has bought india.com and is creating content for this channel.

Regarding the content on television, Chandra said that launching a GEC is no longer a viable option today. Instead, there is an opportunity in creating utility kind of programming with content that is useful in everyday life.

This was the third edition of TV.NXT, an afaqs! event presented by ABP News.