James Murdoch gives digitisation wake-up call

The television industry renewed its plea for digitisation of distribution and relaxed regulation on FDI in sectors such as DTH on day one of FICCI Frames, the annual conclave on Media and Entertainment in Mumbai Wednesday.

Delivering the keynote address, Mr James Murdoch, Chairman and Chief Executive, News Corporation, Europe and Asia, noted that if the creative sector (entertainment and media) in India were to enjoy the same share (of GDP)as it does in Britain, it would grow to $120 billion, up from the current $15 billion.

Underlining the need to digitise infrastructure, Mr Murdoch added, “With digitisation, the Indian industry will finally have the incentives to invest and create. Even more important, Indian customers will have the content and choice worthy of their nation's rich diversity.”

Of 250 million Indian homes, about 120 million have some form of multichannel television, but only 30 million are digital, he noted.

“Transparent, deregulated, market-based and addressable digitisation will unleash a content revolution in India,” added Mr Murdoch.

Pointing out that 25 per cent of total multichannel households that are addressable have come entirely from the DTH sector, he said, “Digitisation needs funding, it's true. So it is crucially important to relax investment and ownership regulations and align them to this objective.”

Mr Sachin Pilot, Union Minister of State for Communications and IT, reminded the audience when he spoke next that 65 per cent of the population lived in rural India. He underlined that developments in technology and high mobile penetration allowed for digital delivery of content, though over 90 per cent of mobile usage came from voice and text applications currently.

He urged industry players to leverage technology to unleash the creative potential of young Indians, especially in rural areas tier III and IV towns.

Bias and investment

Mr Uday Shankar, CEO, Star India, observed that while DTH companies have to shell out a sizeable licence fee, analogue cable operators did not have to. On the need for relaxing investment regulations, he added, “Digitisation of film and television infrastructure can revolutionise the sector. There is a clear paucity of funds among Indian players. But the Government is paranoid about bias in the media, especially in the news space. The bias is more likely to come from local players. We should allow self-regulation and delink bias from investment.”

Substantiating on the ‘unfair advantage' enjoyed by cable operators, Mr Aroon Purie, Chairman and Editor-in-Chief, India Today Group, noted that of the Rs 20,000 crore paid by consumers to cable operators, the broadcasters got only 20 per cent, or Rs 4,000 crore. After paying carriage fees, broadcasters were left with Rs 2,200 crore.

“This leads to heavy reliance on advertising. A 50-50 advertising-subscription revenue ratio is healthy, but we are far from it,”said Mr Purie. He also noted that government regulation on pricing of channels defeats the concept of DTH. “If the Government mandates digitisation, content will be king again – not distribution,” surmised Mr Purie.

Mr Puneet Goenka, CEO and Managing Director, Zee Entertainment Enterprises Ltd, raised yet another voice in favour of digitisation, pointing out that it would allow flexibility in pricing, and allow niche channels to be created. “In the current situation, it is a me-too across channels,” observed Mr Goenka.

Mr Raghav Bahl, Managing Director, Network 18, also noted that the future lay in digitisation, and that India was experiencing digitisation the fastest. The advent of BWA (broadband wireless access) would also be a game-changer, noted Mr Bahl, and added, “Digitisation puts us on the cusp of a dramatic opportunity.”

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