UTV, incorporated in 1990, is a company of many parts. The firm makes television software, advertising films and motion pictures and also distributes movies. Such diverse revenue models may have flummoxed analysts, but the company has gone from strength to strength, earning as much as Rs 100 crore annually now.
UTV is now moving into broadcasting, and plans to start a channel for children.
UTV chairman Ronnie Screwvala spoke about the company and its competencies to Deputy Managing Editor Amberish K Diwanji.
UTV appears to be into many businesses simultaneously. How would you define your company?UTV's uniqueness is that it is an integrated media company.
The words integrated and media are not loosely used at all. The very fact that you are in media means you cannot be in any one aspect of media, you have to be in multiple aspects of media. If you are just in television production you are called a production company. If you are just in the movies, then you are called a movies company. The very fact that we are a media company means that we are a diversified company, and it is integrated.
We are diversified because there are multiple aspects of media. The reason it is integrated is because the mediums are all synergised. If you look at any media company in the West, and that is the best place to look at since media firms have matured there, you will find that those firms are definitely into television, movies, and broadcasting. So the perception that we are in too many areas misses the point that any media company has to be in all these areas.
It is not a case of having our fingers in too many pies. That is the definition of our business. If you are a single product company, then you are a contract company. But if you enter the retail market, then you have to be a multiple product company. The same analogy goes for media companies.
Still, what would be your core competency?
The core competency would be content. We are in the content space. We are doing television, and in that we are doing all kinds of programmes from animation to fiction to factual. In movies, we produce movies and we distribute them also. And all this is part of content.
And where do you see growth?
All three have got growth, and that too exponentially.
The reason we get into broadcasting is that just being in the content business we are not in complete command of the value chain. Every time you have an intermediary customer, it means you are a part of the best value chain. As content producer, we make the programmes, which are then broadcast to the customers. We want to move up the value chain to reach our customers -- the viewers -- directly and for this we now feel the need to go into broadcasting.
The same is with movies. One can produce and then [there is] the distributor [who buys from the producer and passes on to the exhibitor] and the exhibitor [the person who owns the theatres in which the movies are screened]. But if we have the whole model, then we can distribute them and then we know how to market them.
This is a very specialised business. A lot of good movies produced well can be distributed or marketed badly. Of course, a lot of bad movies marketed well can also fail badly. But we want to be in charge of the value chain. And for this we have to be in software production, distribution, and broadcasting.
But there are broadcasters and distributors.
What is there is still there. And they will still be there. But the way we define our business, we want to be in control of the entire value chain.
Any reason for that?
Otherwise we are not going to get growth!
But there are firms that have prospered doing more of what they do better, such as Balaji Telefilms.
Sure, sure. You have a gridlock example that at this point is very difficult to beat, of a television production company that has moved from Rs 20 crore to Rs 130 crore [approximately Rs 43.75 to a dollar at current exchange rates]. It has displayed a scaleable model.
The question is: what next for this company? You need to understand that 70 percent of their business comes from one customer. Now let me tell you that in the mid-1990s, when there were few channels, our business was in a similar situation and the bulk of our revenues came from one customer, Doordarshan. And one fine day Doordarshan became unviable and we had the challenge of keeping our growth pattern while moving away from Doordarshan. This is the kind of challenge that every software production company comes across every now and then.
It is like a bulk drug company that, say, manufactures drugs for prostrate cancer. It can only grow up to a limit and beyond that it has to manufacture different drugs for different diseases.
Balaji today gets the bulk of its revenue from one customer and across a narrow bandwidth of programmes [mostly soaps]. This is not to knock the model they have, but just to say that they too will one day have to move beyond.
And to have a scaleable model is one where, if in one year television doesn't do great then movies will do well, or vice-versa. That is how media companies grow even in bad years. In fact, that is the only mature model.
Let's talk about your broadcasting plans. Are you launching a kids channel?
We certainly are. It will be named Hungama [Fun] and we are looking at an August launch. Let me clarify that it will be a Hindi [channel with original programmes produced for it]. It will not be another animation channel in Hindi. Unfortunately, the perception in India is that a 'kids' channel is an animation channel. There will be about 10 percent of animation, but the rest will be locally produced action programmes.
Do you see a market for a kids' channel?
Yes. Till about three years back, the 4 to 14 age group was not even being tracked on a rating scale. There was nothing for them. I think what happened is that after being in this country for seven years, TNT [Turner Entertainment Television] decided to have a kids' channel with only one aspect of localisation: they dub the animation programmes in Hindi. Yet you can see what has happened [the channel, Cartoon Network, is a runaway hit in India].
But from the animation on this channel, there is nothing else for the youngsters. They go straight to the soaps. There is no graduation process. Thus, there is a huge gap.
The second part is that if you see the time zone, there is a huge gap in the four to eight time zone. The youngsters have nothing to watch. Hence, there is no competition.
And the third is that like most markets, there is no advertiser waiting out there to give us money. It is never that way. Content will get the eyeballs, which in turn will get the advertisers.
Are you looking at other channels?
No. I think the space with kids is how we want to grow horizontally and vertically. Vertically, there is a lot we can do to break the channel up in terms of time, and age. Horizontally it means going into merchandising. The kids market is about merchandising.
Are you looking at an initial public offering?
The market is good and we are certainly looking at it. We are a company that is ready for an IPO. There is no financial compulsion. In fact, just last year we did a private placement with a Canadian pension fund called CDP Capital for Rs 40 crore.
Also I think in this business perception matters. If you are public, your visibility is higher. So we are looking at the market. But do we have a time zone? No.
Talking about the television business, it would appear that the early channels tend to have the advantage vis-à-vis newcomers such as SABe TV or Sahara TV...
The latest entrant to the channel game is STAR TV [one of India's most successful satellite television groups]. I know the popular perception is that STAR came in early. It did, but early on it was only in English. It then had an agreement with Zee TV to beam only English programmes. Three years ago, it moved into Hindi programmes.
But coming back to my point, do you believe there is space for more general channels or will newcomers now have to be in the area of niche channels?
See, when you say niche, you actually mean something like a golf channel. A sports channel is not a niche channel because you are covering a wide range. A kids channel is not a niche channel in that narrow sense. I see it as a general entertainment channel for the age group 4 to 16, that is one-third of the Indian population.
But if you ask me is fragmentation coming in, my answer is yes. With more channels, the viewers will be much further fragmented. In that sense the Indian audience is already fragmented, with viewers in different parts viewing different programmes, at least in different languages. Completely. India in that sense is like Europe. Just like France, Germany, and Italy have different programmes, so do different parts of India. In terms of language and also in terms of culture, drama element... all of that. Which is why it is not at all easy to migrate content from one part to the other.
What differences do you notice?
In the South, there is a lot more high drama. Also, the southern audiences are more educated, and watch a lot more television. After the Bengalis, they are the largest watcher of television in terms of number of viewers.
Another complaint is that all our serials are so alike... the same mother-in-law-daughter-in-law dramas. What about alternatives, what about comedy?
There is a half-truth in what you say. Yes, content does look similar for the simple reason that because there was one formidable player that made a huge success in a specific genre, others began imitating it, churning out clones.
I think that lasted for about six-nine months when people said 'if you can't beat them, join them.'
But today, that perception has overtaken reality. There are not that many saas-bahu dramas; yes, there are a lot more dramas on air, but then dramas will be 60 percent of the content at any time, anywhere.
Is that a global phenomenon?
Excluding the US. In the US, serials go on a different tangent. In the US, the question is, why do they have so many cop series, so many law series? If you look at those two genres, they are obsessed with cops and law series. The high drama that run for 2,000 episodes, such as The Bold and the Beautiful, have moved to the afternoon slots.
Any reason we in India don't have too many comedy series?
Even that is changing. I think the serial we are doing, Khichdi, is doing very well. We insisted on not putting in a laughter track. For 20 episodes we were under tremendous pressure. People wondered if it was a comedy and if so why there was no laughter track. But we stayed the course and said there would be no laughter track and you figure where and when to laugh. And it worked.
Normally, comedies in the US are done in front of live audiences, and so there is a certain sense of timing on when to laugh. Comedy is nothing but script and timing. In India, we don't do the comedies in front of live audiences.
Talking about live audiences, in college you were active on stage. Tell us something about that.
Theatre has been a sort of hobby. I regret that I am not active, but given my job that is difficult. But those were learning days. The learning curve was the level of confidence, maturity, and reflexes that theatre teaches you is fantastic. You are alone in front of an audience for two hours and that gives you a different kind of confidence. Theatre in that sense definitely contributed to my personality.
You also pioneered the cable network in India. How was the experience? [In the late 1970s, Screwvala set up India's first cable distribution network in residential apartments in south Mumbai.]
The cable part was really interesting. I was in media, doing some anchoring, and what struck me was the need for choice. In the West there was multiple choice and one realised that at some stage that had to migrate to India. There was no satellite television anywhere then. The choice was multiple channels through video and cable.
It wasn't easy. In those days you couldn't import video, and when you did get a huge video, it was stuck in customs for days on end. In television no one knew what all was required to offer 12 channels on television.
This should sound pretty obvious that if you offer the viewer a choice, he should be lapping it up. But it still took us a year and a half to set up demos in building societies in the mornings, afternoons, and evenings to show them how it will work. We had to go into houses and connect their television to a cable and television sets had to be refixed to enable them to show 12 channels. Then, the television manufactured did not have options since there was only one channel to view!
The tricky part was that we needed a control room in every building, and the same model is still stuck. At least now wires are just slung between buildings, but then each building had to have a separate set-up. All this took a year-and-a-half to do.
Many youngsters today dream of being an entrepreneur like you, pioneering the cable network and later setting up a media company. What would be your advice to such aspirants?
First, becoming an entrepreneur is a very bold step. I think a person must check out his temperament to see if he is suited to becoming an entrepreneur. It depends on your risk-taking ability, your ability to handle stress. Not everyone can handle it. Fabulous people have done fabulously well as professionals and so there is no compulsion to become an entrepreneur.
Second, I would not advise youngsters to become media entrepreneurs right after college. It makes more sense to learn and then set up a business. I know I went into business right after college, but not everyone should follow that path. Things were different then. The media is a very evolving business, one is constantly reacting to changes.
Image: Uday Kuckian
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