Corporate Interview - We will acquire channels if the price is right

L.S. Nayak, popularly known as Raj, succeeded Rajesh Kamat, chief executive of Colors, three months ago. Kamat was credited with making Viacom 18 Media Pvt.
Ltd's Colors Hindi entertain- ment channel No. 1 within nine months of its launch, displacing Star Plus, the market leader for nine years. In his first interview to the media after joining Colors, Nayak talks about Aidem Ventures Pvt. Ltd, the advertising sales and marketing company he founded and exited recently, and his plans for Colors that slipped behind Star plus 15 months ago.

Edited excerpts: Why did you leave Aidem, the company you founded? Did you abandon a sinking ship?

No, I did not abandon a sinking ship. It was a conscious call.
Everybody was taken into confidence. Not one person in the company has been (left) unemployed. I held a majority stake but have exited the company by selling my shares to the current management that includes a strategic financial investor. The amount is confidential. M. Sukumar and Vikas Khanchandani are running the company, which has 120 people. The remaining 100 were placed with our business partners.

Why did you take this call?

Aidem was great, but the way it was structured, scaling would have been an issue. It was a very large ship and top-heavy.

Did losing the NDTV media business have something to do with your decision?

No. That was not the reason.

What has been your focus in the first three months at Colors?

The first priority was to continue holding the channel up there. The next obvious move was to strategize, to see how do we go from here to the next level and make the channel profit- able. Our non-movie grosses rating points (GRPs are the total of television rating points over a period of time. TRPs indicate the percentage of viewers watching a programme at a given time.) have been going up. Today, Colors is the No. 1 channel during prime time.

How?

The trend started even before I joined, thanks to the concerted effort of the programming team.
There is a phrase which channels use: Kill for prime time.

In the last 13 weeks, our prime time GRPs (all days as well as Monday to Friday between 7.30pm and 12 midnight) have been more than that of Star Plus.
For the last three weeks, Balika Vadhu has been top show in Hindi entertainment. Last week, it had a rating of 6.1. However, we are not the slot leaders between 9pm and 10pm. That is why we are looking at strengthening the time band with a new fiction show from Balaji Telefilms.

While we are No. 1 in prime time, there is a reasonable gap between us and the market leader (Star Plus). That is primarily because of the afternoon band, where they do better. They have original content in the after- noon. That's our next focus. We do about 22 hours of original programming and they do 36 hours. If we spend that kind of money, we can get the GRPs. But it is not about spending money. It is about spending it rightly.

How much are you spending on `Bigg Boss' this year?

Bigg Boss is really our flagship programme. We spend a lot of money on it. This time we intend to make it bigger with two stars, Salman Khan and Sanjay Dutt. Rohit Shetty of Singham fame has shot the promos with them although the shooting for the programme is yet to begin.

Do your reality shows make money?

You win some, you lose some. Reality shows get new audiences and advertisers. You can say they pay for themselves.

During the last season of `Bigg Boss', the information and broad casting ministry had asked Colors to move the show to a slot post 10pm as it was deemed unfit to be viewed by children. The channel got a stay from the court.

Will you observe the watershed hours?

We are a responsible broad- caster and there is nothing we will do that will violate the laws of the land. Bigg Boss is a significant revenue driver and is much sought-after by the marketers, given the sustained ratings and the innovative ways of integrating the brand with or in the show. This year, we're also evaluating other scheduling options for the show to add further to the channel's GRPs, and yet adhering to sensibilities of the environment that we operate in.

How will you make the channel profitable, by increasing revenue or cutting costs?

Profitability has to come from sensible planning and incremental revenue from other streams...international and domestic subscription, syndication of content and digital media.

There is only so much cost you can cut as input and people costs are going up. The truth is that production cost is up so is the cost of acquiring films. Television satellite rights of some films are going for `37 crore while the international rights cost `20 crore. At these rates, there is no way it can be a viable business.

It's not that we are not buying films but we are also looking at how to build ratings outside of movies.

What about advertising inventory?

The inventory is full. So now the value has to go up. We are taking our rates up by between 14% and 22%. For all renewals, we are looking at an increase.
The current yield is very low.

But advertisers may move to a cheaper medium.

At the end of the day, there are only a few channels that deliver the reach that we can give. It is a demand and supply market. Although channels lay claim to differentiated programming, nothing has really changed. Any comment?

Research shows that audiences are evolving. Three years ago, Colors programming came like a whiff of fresh air. Then Star took a leaf from its book and repositioned Star Plus. When your programmes are doing extremely well, there must be something...
It is not your view or my view... It is what the viewer wants.

I am a south Indian and I have people in my home town (in Manipal) who have never been to Rajasthan. Yet the dubbed version of Balika Vadhu is the highest rated programme in Telugu on Maa TV.

What's the biggest challenge in this business?

It is a very expensive business to be in. If you get it right, you earn a lot of money, but if you don't, you burn a lot of money.

You are dubbed a great networked.

Do you view it as a compliment?

I have never used relation- ships to get business. But yes, when my people go out to get business, all things being equal, they may get it. I am genuinely interested in people. My relationships don't ever sour.

What are your plans for Colors?

A movie channel is on the cards. We can also go regional or national with other channels if there is a viable proposition. We have an open mind to acquisitions.

If we find the price is right, we can acquire or we can start from scratch.

(Source-: mintlive.com)