The Hindu Business Line : `Sun is not in TV, but communications'

He's a media moghul who's only going to get bigger. After dominating the Southern market for at least a decade with a variety of television channels like Sun, Gemini and Udaya, Kalanithi Maran, Chairman & Managing Director of the Sun Network, plans to get into the print media with the launch of a newspaper later this year — what language to begin with, he's not telling as yet. In a free-wheeling interview to Catalyst at the Sun TV headquarters on Chennai's Anna Salai, Maran spoke on a variety of subjects; the juicy bits were off the record and will need to be told only when he's ready to lift the lid on it. Excerpts from the interview:

What everybody is curious about is your impending print venture. So, what form will it take and when will it happen?

We will come out with the newspaper shortly. This year, this is the plan. Most probably, you should see us doing something by June. Whether it's English or Tamil or Telugu is a decision we have to take.

You aren't looking at a multi-lingual kind of entry immediately? You are looking at one language?

You know me, I don't overstep. I start one at a time, test the waters. The good thing was that we tested the waters with Kungumam (the group's entertainment magazine in Tamil). We wanted to see whether this type of marketing strategy would pay off, and it did pay off. It gave us good returns. Obviously, I have to get into print. And we will do that this year.

It will be in the South?

Obviously, our base is in the South. Actually, we have crystallised it. I want things to close down. We are looking at lot of options. It has happened. I am just waiting for it to close.

You are not trying to occupy the Internet space too with the Sun brand?

We tried. We did do an ISP business through our cable system. Tell me which Internet company is making money? It is not happening. Another problem is that the last mile is bad. It's not with us anyway; it is with the cable TV operator and it's pathetic. So, we are not able to get the reverse path properly. We are going to relaunch Internet again by correcting the last mile. In fact, we are wondering whether we can attach a modem to the set-top box and send a digital stream. But that will take time. Honestly, we don't see big money in the ISP business.

What about your Web site or a news portfolio to make your offering complete — print, TV, the Web?

We haven't got into it. Even there, tell me who is making money. Sites get many hits but nobody is able to generate revenue. As of now, we don't have any intention of getting into it.

Will broadband be an opportunity or a threat for your business?

See, I would not say threat. I have to face the reality of growing technologies. If I don't see the advent of new technologies, I will be lost in this game. Especially, in the field I am, technology makes a huge difference. Either I adapt to it or I get thrown out of the game. If there's going to be a broadband pipe, we will be there. I have always said that the corporate thinking of my group isn't television but communications, whatever form it takes. I have to adapt myself and keep going. As and when broadband comes, real broadband, that is we will be there in some form.

But isn't it already happening now? BSNL itself is offering broadband?

I am not going to comment on that (laughs). The broadband about which we are talking is what is happening in Korea and Taiwan. Koreans have really taken off. It has done better than the US. Broadband happens when you have the last mile. The last-mile connectivity is still not pucca. Giants like BSNL coming in, it gives a boost to broadband. It's unfortunate that even after being leaders in IT, Indians are the last to get broadband services. Even then, what is the connectivity? The number of people having broadband service, I was told, is 22,000 — that too, it's on a wait-list. Only when numbers become huge is there's a game for us to play.

Normally Indians seem wary of paying for entertainment. Isn't it going to be a problem in the future?

The problem is we have got used to getting things for free. For years we have got used to that culture. We are coming out of it. Now people are beginning to understand that there's nothing called subsidy. You have to pay for the service you are getting. It will take time, though. It's a process. Worldwide, you have to pay for services. Here, it's different — Governments have collapsed removing subsidies! But it will happen slowly.

Regarding pay channels, it's a two-sided problem. The fault isn't with the customer alone; it also lies with pay channels. They kept on pushing up the rates every year. That created a problem. Two, what the majority wanted was free-to-air. If the same thing had been implemented in Delhi or Mumbai, things would have been different.

The market seems to firmly believe that if Sun takes the lead and becomes pay ... ?

See, it's a chicken or egg story. Let us be clear. If I make it pay, number one, they will start cursing me because I am making a Tamil channel pay. Two, what happens to subscribers? There are only over 20,000 boxes in the market. What happens to my viewership base? Should the boxes come first or should Sun go and pay first — it's a chicken or egg story!

My feeling is that the boxes' movement has picked up. And with the new Budget and reduction in customs duty, the box price is going to crash. Worldwide, the price has come down. The next lot is going to be sold below Rs 3,000. In fact, we are going to do that from April 1. For Rs 3,000, you are going to get 120 channels. And whoever has seen TV programmes through a set-top-box hasn't gone back to the analogue mode. The only cap till now was the price. We all knew that price was a barrier. Now, we are taking the lead and saying let us now invest in the set-top box.

Let me put it honestly: nobody wanted CAS. The Government said you either implement it on this day or we can take penal action. We were pushed to do it. But after that suddenly they decided to remove it.

You didn't also know whether to invest the money?

We didn't know. One fine morning, Government said CAS is there. The next day, it said CAS is under consideration and stopped implementing it in other places. You tell me, as a businessman how will I invest if I don't know what's happening. Now, I know CAS is going to stay. We have renegotiated with all box manufacturers and said we have to get the price down. And we have got that price down. Worldwide, there's been a drop in the price. Plus, the dollar has fallen. So, April 1, we are going to see a huge offtake in set-top boxes.

What are your thoughts about DTH?

There are certain things. One, can it provide services at the price of cable? In Chennai, a free-to-air package costs Rs 75. Can a DTH operator provide at that price? Next, apartments. You need a South-facing building (for a clear line of sight to the satellite).

If the cable guy does a good job, he can be the `broadband' of the customer. If he understands consumers' needs. Cable can give you a two-way connectivity, which DTH cannot. But my assumption is that both will survive. Even in a developed market like the US, only 60 per cent of the C&S market is with DTH. In India, because of customers' aversion to cable operators and the bad quality of service, there is a good possibility of DTH taking off, but not at the price of cable. Because there is a huge investment cost.

There was once talk that Sun will go in for an IPO to raise funds?

Oh, that was long back. We had plans long back to go for an IPO but the dotcom bubble burst. Now I have my reservations about such a move. Worldwide, public companies are becoming private. Right now, I don't see a necessity. Our internal reserves are good enough to take care of our future plans.

You're number one in all Southern markets. Do you think there is scope for improvement in market share, especially in a State like TN where you are almost three-fourths of the market?

In Tamil Nadu, we have cornered a huge chunk of market share. So, only an increase in cable penetration will help the channel. Even now, cable penetration is only around 57 per cent. There's still a huge market to be tapped. For any satellite channel, the future is in increasing the cable penetration.

But isn't that going to be a very lengthy process?

Let me put it this way: when Sun started, the cable penetration was less than 1 per cent. Over a period of 10 years, it has gone to 57 per cent. That's a huge boom. So, I will not say it's a long process. If you see, it's growing at a minimum rate of 5 per cent. And thanks to new technology, fibre optics, the situation has changed a lot.

Even though we have covered the major markets — the people who really make a difference to advertisers have been covered now. If you are talking about growth by numbers, only cable penetration will help.

Why have you rebranded your music channel SCV as Sun Music?

Basically, the concept of Sun Music was to provide an alternative to people who do not like serials. For example, I am not a serial buff. The music channel is for a person who wants to switch on the TV whenever he wants and switch off whenever he wants. It's not as if you need to see yesterday's episode to know what's happening today. It worked for us. The same thing we did with Kiran in Malayalam. Now, on April 14, we are going to do the same with Aditya in Telugu.

You also been able to be on top with the production of soaps. So are you looking to extend that and enter movie production, as you have a dedicated movie channel?

Most of the producers are with us. We buy 90 per cent of the movies produced in the Southern market. We have contracts with big producers that for the next five years or so they will sell their movie rights to us. I am not going to name them but they are big producers. Indirectly, we are in that line. We are good at television, and I don't want to get into something which I am not good at. They are good at that, and we have an alliance with them.

But soaps continue to do well?

Throughout India, soaps do well. The only difference with Sun is that here news capsule at 8 p.m does well.

How is the news channel doing?

It's not giving me big numbers. That's a problem with all news channels. Even if you take NDTV, you can't see numbers because news keeps on coming. Nobody really wants to sit down at 8 o`clock to see that. They know if you miss news at 8 p.m., you can watch at 9 p.m. The next problem is that news does well only when disasters happen. For example, when the tsunami hit, Sun News did better than KTV.

But does it make sense to have a news channel in your bouquet?

It gives me somewhere around 3-4 points. That's a good number for a news channel. And when you do a bouquet of channels, it helps. If you don't do it, somebody else will do it. It might as well be me!

In an earlier interview you had talked about niche channels being the future in India. Apart from music and news, do you have any new plans in mind?

Even KTV, Sun News and Sun Music are niche channels. Worldwide, once entertainment channels settle, niche channels tend to pick up. You have a channel for golf, one for housekeeping, one for travel like Discovery has. You start segmenting your market, attacking your target group. India is beginning to be ready. We are settled with entertainment. Now we are going into specialised areas.

Disney is doing it with Tamil cartoons?

Tamil cartoons were actually done first by Cartoon Network. They had a separate audio frequency. I will be honest with you, we carried that channel on our network but got calls to switch it off; they wanted English. So, we again went back to English. Then Cartoon Network itself dropped the idea.

So, you aren't planning to put cartoon capsules in any of your channels?

We did carry Disney cartoons on Sun in the 6 p.m. band. It never did well for us. If you ask kids, their favourites are Rajini or Vijay; he doesn't say Mickey Mouse! From a small age, children here are exposed to movies unlike abroad, where there is a fascination for such characters. It's a very small segment here, and that segment prefers it in English. Some like Shaktimaan did well, however. We have to wait and see for others.

So, there will be no additions to your current bouquet?

I have four channels in Tamil. We can do a channel but we have to study what the market wants. I would say as of now our project is print and we are going to West Bengal.

How is your overseas market faring?

I would say that we are the only regional channel which can be seen from Los Angeles to Auckland. We have ensured that a long time back. We took the channel global, and it's the same feed. In each country, we have tied up with the local DTH player. In US, it's with Dish Network, that's EchoStar.

And the response has been phenomenal. Now, we are thinking whether to do cable also in the US. This is because there are a lot of restrictions on apartments having dish. The problem is that Indian population is widespread there.

Do you have the numbers?

In the US, Sun reaches around 25,000 households; Gemini 15,000; Surya 10,000 and Udaya 7,000. In UK, Sun is 17,000. We don't have any other channels there.

Do you get local advertisements from there?

I have not done that. We have to put up offices there. When we started, we were worried whether there will be a market there. Because the carrying cost is huge. And we had to convince Dish Network that there's a language called Tamil, there's a market. For them, India means Hindi and Zee was already there. In fact, EchoStar carried me after two years of signing the contract. They were hesitant. Now they are thrilled. Now, I want more money from them (laughs)!

Even when I did it in Europe, it needed a lot of convincing. There, it's not the Indian Tamils but Sri Lankan Tamils who are in greater numbers. Even now I am not able to get into Canada. EchoStar has the rights for North America, including Canada. They have not launched in Canada. I am saying they will get three times the base in Toronto alone because of the number of Sri Lankans living there.

Australia and New Zealand wouldn't be such good markets now but in the future they will be big, because I see a lot of people from here going there.

Also, logically I believe Gemini numbers should be bigger than Sun in the US. That's not getting reflected because lot of the Telugu-speaking population is living in apartments in the US where there are restrictions on dish being placed. We feel if we go into cable, it will get a boost.

Why are you looking a Bengali market?

This Bengali plan of mine was there long time back. But the initial market survey that we did showed that there is a lot of Hindi overflow. When I say Hindi overflow, a simple example could be this: if there's a super-hit Shah Rukh Khan movie on Star Plus, and if I put a super-hit Bengali movie on my channel, this Bengali viewer would shift to Star Plus. This doesn't happen in Southern languages. That overflow was a threat to us.

Now, two or three people have taken the lead. At least the market now is emerging. Among non-South languages, the affinity for Bengali is higher than others. So, it's a good place to start North of the Vindhyas.

Any targets for the year?

It's going to be a tough call. We don't know what numbers we are going to achieve. We are going with the feeling that the market has changed. We wanted to go three years back but stopped the plan. I am not going to predict anything because I don't know what exactly is going to happen there.

But will the strategy remain the same — soaps and movies?

That's what. Right now they are not doing that. We are going to do that. See we did that in Kerala. When Asianet alone was there, it was more a news and current affairs-based channel. I remember when I started Surya, they said nobody watches soaps and movies. They left the whole movie market for me. We went and picked up all the movies. We changed the market to soaps and movies. Finally, they have also changed.

Have you achieved the same dominance as in other states?

In Kerala, my market share is 36 per cent; my closest competitor, Asianet, is 23 per cent. And my new channel, Kiran, is 9 per cent. Kiran is music and after 8 o`clock movies. What I did in Kerala, because it's a small market, I combined KTV and Sun Music as one channel.

You have also strengthened your library by allying with Buena Vista?

We have allied with everybody. In fact, we have got even Fox Movies. It never gave me the numbers that I expected it will give. My English-dubbed movies never delivered numbers. For the past few weeks, we have shifted the English-dubbed movies to KTV.

But it was inspired by Vijay's success?

Vijay never did good numbers with English movies. The concept was already there with us. We had a library before but we didn't carry because there was pressure from the industry. But Vijay carried it, and when somebody carries it, we should not lose out in the race. But numbers aren't good. We got 11 points, which is not good by our standards. We should get 17 for that segment. And it doesn't deliver outside the city.

Other tech-based moves?

We are going to allow people to send their messages on screen through SMS. It's generating a lot of revenue for a lot of channels. We are going to do that with our music channels.

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