PTI: What's happening with the cable TV industry? How is it performing in the face of increasing competition and revenue squeeze?
Shankar: Even though the number of channels has gone up, advertising revenues have not. Supply has gone up and demand has remained the same. So, few people are able to make money. Among all companies which exist in TV industry today, not more than three make money and any significant profits are made only by them – Zee, Sun TV and Star Network. Even for them, there are few channels which make more money than the others.

News costs suffer; low quality talent results

PTI: What has happened to the economics of the industry, including news channels?
Shankar: The economics of the business has become so crippling that people are somehow just trying to stay afloat. Investment made in news gathering is becoming less and less. Other costs are fixed, except the news gathering cost, which is elastic. So every time the pressure on cost comes, people cut news costs. News cost used to be about 50 per cent but now it has come down, for some channels to as low as 15 per cent. It would not be averaging more the 20-25 per cent. In the last five years, it would have dropped by half.

Today, new channels are not in a position to hire quality talent. A senior journalist with experience cannot be hired because you cannot afford the person. You go and hire very low quality talent.

Total revenues less than a quarter of a large corporate!

PTI: How is the revenue flow to the industry, especially television advetising?
Shankar: Television advertising business is about Rs 8000 crore. Subscription income is about Rs 13,000- 15,000 crore, of which only about Rs 3000 crore reaches the broadcasters. Even from that, Rs 1000-1200 crore gets paid back as carriage fee to cable operators.

So, just about Rs 1500-1800 crore is left with the broadcaster. Compare this with the US TV advertisement market, which is about USD 285-300 billion (around Rs 15,00,000,crore)!

The Indian market can easily become a USD 10-12 billion (over Rs 50,000 crore) advertising market in next five years provided conditions and corrective interventions are made.

So, despite 500 channels, all India penetration and 80 million cable homes – in terms of pure revenues generated from the entire country – the business is just about Rs 3000 crore. It is less than a quarter of the profit of some of the big companies in India. It is the financial health of the business that will decide in the long term the kind of content it will generate and the kind of talent and investments it will attract.

Other than three none else makes money…

PTI: How can this be rectified? What about the role of government and regulation?
Shankar: Faulty government policies and lack of monitoring, accounting for cable industry and resultant revenue leakages have put the industry in a dire situation. Most of the players are facing acute financial crisis. Other than two or three none else is making money.

The industry should be left to market forces and content be monitored in conformity with the defined policy. The government should step back from its control mindset and allow self regulation.

PTI: People keep debating about the quality TV programmes, including news. Your views on that?
Shankar: The country seems to be divided among two sets of people: those who believe that media is very valuable part of the society… But increasingly, I see a trend where a large number of people seem to think that everything about meida is wrong, that we spread rumours, we sensationalise…and the stories that we write are only commercially motivated.

There is a sense of media badgering that I get and I have increasingly been getting that from the upper segments of the society. A lot of people do it innocently, and I don't doubt that for a moment.. But when an MP says (such things), I smell a rat. Their objective is to control it.

Content is paid by the advertiser: hence poor

PTI: What can be done to promote niche channels in India?
Shankar: Cable continues to be medieval in this country. Globally, wherever cable TV has thrived, it has done so on subscription. When subscription model is adopted, it allows the broadcaster to understand what kind of content people will pay for.

Here, it is a funny situation where you create content for the viewer but it is being paid for by the advertiser. And the advertiser is not interested in great content; he is interested in spreading the same content across a wide base of people. So the content is of the lowest common denominator.

There is no audience for specialty programmes like Jazz and hence, there is no advertising support. If subscription was to come, such channels could be set up.

No one wants to talk on the cable operators!

PTI: Why has the subscription model not been adopted here?
Shankar: The subscription model hasn't been opened in India because primarily no one wants to take on the cable operators. There are 60,000 cable operators, most of them started with local toughies, and the cable business on ground has remained underdeveloped.

PTI: Do you see a consolidation in the Indian television industry?
Shankar: There will be a shake-out…I see a shakeout but not a consolidation. This may sound contradictory… It is my understanding that some channels have died, some are about to die. (But) because it's a growth market and the interest is so high in India, shakeout is being prevented by a very interesting international restructuring of media play.

What was happened is that American media has reached a state of saturation. TV in the US is not growing. It's facing a huge assault from the new media-internet, broadband and other forms.

So, American players are looking at growth markets all over the world… India happens to be the only mass market, which is democratic and has liberal media regmie.

PTI: Are you looking at acquisitions?
Shankar: No, As a group, we believe the size of the cake is much more important than the share of the cake. If it continues to be Rs 3000-4000 crore industry, no matter how many distressed companies we buy out, we continue to be a small media. But this country has the opportunity of creating a TV business of Rs 15000-18000 crore in few years.

PTI: Where does India stand in global ranking for News Corporation (Owner of Star India)?
Shankar: India is comparatively small. However, after North Amercia and some markets of Europe, India is the most important market for News Corp. It is perhaps in the top 5 important markets. It can go farther.

PTI: Are you looking at bringing back some of your old shows like Kaun Banega Crorepati and Sach Ka Samna? And is Big B going to make a comeback on the small screen?
Shankar: There are no plans of doing KBC again… there is nothing that we have yet negotiated with Mr Bachchan but the possibility always exists. He always had a relationship with Star and that has not gone away. As far as Sach Ka Samna is concerned, we intend to do the show again. But we don't have a calendar year yet, so it is difficulty to say when.