At first glance, these look like disparate developments in the television industry. But if you join the dots, you get the big picture: that the Indian television industry is getting corporatised. International production houses are getting into it and so are the major Indian corporates. Independent producers, meanwhile, are roping in strategic investors.
Says KPMG's head of media practice, Rajesh Jain: "There is an attempt to institutionalise creativity. Corporatisation of the television production sector means that producers will be backed by corporates, companies will be professionally managed and that there's immense growth and scale involved. And yes, there will be buyouts and joint ventures."
Adds television writer and producer Ravi Rai: "Film production companies have got a corporate image. It is now the turn of television production houses to get a similar makeover."
To be sure, it's not that television production has been an unorganised business. In fact news content suppliers such as TV Today, Television Eighteen and NDTV grew into corporate entities when they turned broadcasters a few years ago.
On the entertainment side, companies like Shri Adhikari Brothers, Balaji Telefilms, Creative Eye and Cinevistaas went public. But for most parts, TV production continued to be dominated by a small mom-and-pop variety of creative shops.
Shri Adhikari Brothers' promoter Markand Adhikari says that corporatisation of television producers is the natural outcome of the money -- domestic and foreign -- that's flowing into the sector. "Having started in 1991, private TV is still in its teens. We are moving towards maturity now."
Agrees Rajesh Kamath, CEO of Endemol, the UK's largest production house, which entered India last January: "The TV business in India is moving to the next scale."
Adlabs' managing director Manmohan Shetty, who, incidentally, does not buy the corporatisation theory, says the company bought into Synergy to get into the television sector. "We don't rule out picking up stakes in other production companies," he says. The question then is: why is television attracting such big-ticket investment?
The reasons why this sector is suddenly hot are not hard to find. For starters, consider the numbers: according to a FICCI-PricewaterhouseCoo-pers report, the total television industry is growing at 24 per cent a year. It is expected to grow from Rs 14,800 crore (Rs 148 billion) to Rs 42,000 crore (Rs 420 billion) by 2010.
However, the demand for software is going to touch Rs 2,500 crore (Rs 25 billion) by 2010.
Interestingly, the demand for content is being fuelled by the growing number of channels, in both the national and regional space. Experts say that Direct-to-Home television will drive this demand further when the platform owners start creating special channels to push their DTH brands.
"There's a reason why these business tie-ups and corporatisation were waiting to happen," observes Rai. In his view, television is a big money game today. "The budget of an average television show is comparable to a medium-budget film," he explains.
Entertainment channels are silent on their annual programming spends but admit that programme costs have skyrocketed. When Star started out, it spent Rs 50,000 to Rs 70,000 per episode on its serials.
"Today the cost of a Kyunki Saas Bhi Kabhi Bahu Thi is about Rs 1800,000 to Rs 2000,000 per episode," says a Star source. Adds Creative Eye promoter Dheeraj Kumar: "Zee is spending Rs 3 to Rs 5 crore (Rs 30 to Rs 50 million) just on publicity of our serial Betiyaan." And that's only part of the story.
Reality shows budgets are much higher. For instance, Sony's ongoing reality show, Big Boss, is costing the company upwards of a whopping Rs 30 crore (Rs 300 million).
Clearly, there's money to be made by programming companies. Typically, their margins range between 10 and 15 per cent.
However, if the serial garners good TRPs, the production house can charge a premium. In India, broadcasters pay programmers for the shows that they commission and in turn own the intellectual property rights.
Observes Mumbai-based producer Anupam Kalidhar: "For investors, television production is a safe business. The per episode cost is more than recovered." Kalidhar's company Tauraus Video has produced serials like Saans and Sonpari for Star Plus.
Little surprise then that investors are flocking to production houses of all sizes. Says Kumar: "Yes, there is widespread interest of investors wanting to tie up with production companies in India."
In fact, the attraction to forge ties is mutual. "Individual producers need to scale up. And corporates that are looking at content in a big way may help us go beyond TV -- into mobile content, the Internet," says producer Deeya Singh, owner of DJ's A Creative Unit.
Singh has made popular serials like Banegi Apni Baat and Jassi Jaisi Koi Nahin in the past and her show Jab Luv Hua on air on Zee's 8.30 pm slot is doing well. Singh is cagey about who she's negotiating with, but strategic investment is definitely on the cards.
"Whether producers go for venture capital, dilute their equity or merge with a larger corporate will depend on their vision for the company," she says.
Of course, Kumar feels that listed companies will enjoy an edge over the smaller production houses in the race for strategic tie ups. "Our diverse portfolio is attracting investors," he says.
Creative Eye makes serials and owns studios for pre-production and post-production work. It also acquires films for distribution on satellite television. "We are now closely looking at IPTV and the video-on-demand space on television," he adds.
Clearly, production houses, corporates and investors spot an opportunity in the booming television content business. And as KPMG's Rajesh Jain pointed out that there's an attempt to institutionalise creativity.
That trend is evident in the way some corporates are approching the business. Applause Entertainment and K Sera Sera's television company Twenty Twenty Television, for instance, are emulating the studio model that is now popular in the film industry.
In the film entertainment space, production houses like Yash Raj Films, UTV and Ram Gopal Varma's K Sera Sera follow the internationally proven studio model where these companies rope in independent directors and producers to produce their films.
It helps the small-time producers and directors to cover their risks as they are backed by the might of, say, a Yashraj Films banner. Other than being funded by Yashraj Films, the producers need not worry about marketing and distributing their films.
In the same way, Applause has tied up with at least eight television producers to co-produce their serials for different channels. Among them are people like Anupam Kalidhar, Sunil Agnihotri (of Chandrakanta fame) and Manoj Nautiyal (Lekin Woh Sach Tha).
"For independent producers this makes sense as their financing is in place. Besides, we give them marketing inputs and they do not have to run up and down to chase payments," says Applause Entertainment CEO Anshumaan Swami.
Kalidhar, whose Tauraus Video has been in the TV serials business for the last 15 years, tends to agree with Swami. Kalidhar's latest soap on Star, Ek Chabi Pados Mein, has been bankrolled by Applause Entertainment. Says he: "Television is a very working capital intensive business. You need a lot of liquidity. Applause will be my backbone and sustain me through the gestation period."
Kalidhar says that production houses can scale up operations when they are assured of funding. "For instance, with somone bankrolling me, and with my kind of experience, I could produce 10 serials at a time. On my own, however, I could barely afford to work on two serials simultaneously," he says.
Surprisingly, producers are happier getting corporate backing of this sort. Most producers say that banks are not only conservative about funding soaps, their processes are long-drawn and tedious. On the other hand, they are quite comfortable dealing with a corporate.
Meanwhile, Rose Films promoter Shrishti Arya has also tied up with the southern star Nagarjuna to create a TV serial for MAA TV. "The south Indian market for TV is growing and the big players urgently need to plan in that direction too." Arya says that Nagarjuna's company is also co-producing serials with independent producers.
Six months ago, Rai, who has directed serials like Hasratein and Sailaab, tied up with K Sera Sera Productions. The Ram Gopal Varma company, headed by Kacon Sethi, pumped money into his serial Kashish.
"Funding for my next serial will also come from the same company," says Rai. Explains Sethi: "We are trying to extend the films studio business model to television too. But I see this model galloping only in about two years. The TV producers still want to be masters of their own destiny."
Experts say that while the studio model evolves, many more foreign production companies would have entered India to add to the competition. The UK-based Endemol has already set up a full-fledged operation in Mumbai. And its focus is clear: to pitch for all businesses that any other production house will pitch for.
Says Endemol CEO Rajesh Kamat: "The focus of our Indian operation was production. For selling our format shows, I did not need an office here." Endemol is known for its international reality show formats. An Indian version of its popular show Big Brother is currently being played out on Sony as Bigg Boss.
Meanwhile, Rupert Murdoch's Fox Entertainment, too, has applied to the Indian government to set up a 100 per cent subsidiary. Among other things like distribution of content, its mandate includes content creation.
With its three-pronged strateg -- to sell show formats, develop new formats and export them and produce shows for Indian channels -- Endemol is already on a roll. It has already beaten other producers to grab contracts for making Great Indian Laughter Challenge Two, Rin Mera Star Superstar and Fame X (a sequel to Fame Gurukul) for SAB TV.
Kamat feels that international production houses will also introduce new quality benchmarks in the Indian television market. "We will raise the bar as we bring our international learnings in terms of creativity and production quality to India," he says.
To underline his point, he says that before Bigg Boss was launched, the Endemol team practiced with dummies on the set for about three weeks to iron out the glitches.
Interestingly, experts point out that the television production business would get even more vigorous funding by corporates if it changed the way it deals with the intellectual property rights. Today all IPR rests with the channels who get to own the rights to all content that is created for them by the television software companies.
"More corporate money will flow into the TV production business once the business model changes and if software companies can co-own, if not fully own the IP," remarks Rajesh Sawhney, president, Reliance Entertainment, which has a stake in Adlabs.
Kamat agrees: "The concept of margins in the business will change once producers are able to fund their own programmes and sell them to the highest bidder."
Till such time, the rapid changes in the industry are certainly a cause of worry for the small-time television producers. With corporate biggies interested in the business, consolidation and an eventual shakeout is inevitable.
Says Mime TV promoter Kapil Batra: "Small producers are in for a tough time. They may get wiped out." Or merge with the larger corporates, if they have creative brand equity.
Additional inputs: Abhilasha Ojha
| CELEBSPEAK |
| "There's a lot of money in television and that is what's attracting investors to pool in their resources in the industry. The money I make in just writing one TV show is what I might get if I slog for two years in a feature film. That's the sort of difference between television and cinema today" -- Ravi Rai, writer/ director "Smaller production houses are in a position to benefit from investments by bigger companies, because it allows them opportunities to fund growth. It gives them a lot of capital to expand operations. My observation is that investors look at the track record of the production house and look closely at the plans and operations that the production house has charted for its growth" -- Nikhil Alva, CEO, Miditech "Times have really changed. From Rs 150,000 that we were spending on an entire show, besides another Rs 150,000 that we were giving by way of telecast rights to DD, just one primetime episode of 30 minutes on any of the TV channels now costs Rs 450,000" -- Dheeraj Kumar, chairman, Creative Eye |