Barun Das, CEO, Zee News Ltd

I don’t think viewers see ratings when they watch a news channel. Ratings are primarily for advertisers, and going forward, dependence on advertising will reduce. Ratings are increasingly becoming less critical for success of news channels, which is already working out for our organisation. And trust me, I have confidence in our nation’s intellect. I am sure there is a need for sincere news content. Even ratings of Zee News channel are corroborating this.

Barun Das is the CEO of Zee News Ltd (ZNL), one of the largest news groups of Asia. He joined the company in 2008, as the youngest CEO of any news network in India. Das has since then spearheaded the expansion of the organisation’s news business. Currently, Zee News Ltd has eight news and current affairs channels in its portfolio.

Under his leadership, in the last three years, ZNL has grown to become the largest and most profitable news network of the country. Innovation, operational efficiencies and pragmatism are the hallmarks of his approach towards running a successful business. Notably, Das steered the company through the choppy waters of recession, leading ZNL to register profits even when the industry was in the red.

Prior to joining ZNL, Das was Executive Vice President in MCCS (owner of Star News, Star Ananda and Star Majha channels). And prior to that, at Astro All Asia Networks Plc in Kuala Lumpur, where he headed the international business development for the company. He has also had successful stints in top managerial posts at the India Today Group and the ABP Group. Das specialises in building brands and turning them into valuable ventures.

He is a founding member and Vice President of News Broadcasters Association (NBA), a prestigious body of news channels in India, which looks into issues such as broadcast standards and code of ethics. He is a B-Tech from IIT, Madras, PGDBM from IIM, Calcutta and an alumnus of the London School of Economics (LSE). An ex-National junior Bridge player, he actively pursues his interest in golf, tennis and badminton.

In conversation with exchange4media’s Nitin Pandey, Das talks about the journey of Zee so far and what lies ahead.

Q. Does perception play a role in pricing?

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Of course, one issue is numbers and the other is image. Perception plays a role in terms of pricing, depending on the product category. Say, for example, I am an advertiser and I sell a low cost detergent, I am not concerned about who watches a “news” programme on “Bhoot”! I am interested in the number of eyeballs. I will continue to advertise on a channel with trivialised news content. However, if I am a high-end product and I don’t want to be seen in that environment, even if you give me a rate that is 500 per cent cost effective, I won’t put my ad.

News channels were under severe criticism for not being responsible, especially during the 26/11 terror attacks. But since then, in the last two years, collectively as part of NBA, we have travelled a long journey. For self regulation, we have an ex-Chief Justice of Supreme Court as chairman of authority. All our content strictly follow our guidelines.

Q. Won’t you run the fear of ignoring the smaller channels?

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It is not about small or big. It’s about seriousness, pedigree, ownership and track record. Once those are in place, all news broadcasters are welcome to NBA.

Q. How do you view the ‘fast news’ concept?

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We are the ones who started it. From consumers’ point of view, it is a natural choice. Fast news was innovated by Zee News, and now replicated by other news channels. There were many other firsts from our network like Non-Stop News, etc. We realised that one of the biggest deterrent in news viewing were ad breaks, hence this concept came in.

Q. But still English news commands a premium?

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It’s a question of volume and premium. English commands premium more for business channels. Because it is accepted that business happens in English in India. But the volume always comes from regional languages and Hindi. Reach of Hindi news channels would be many times that of an English news channels. If you really want to be an impactful news channel among the masses, Hindi is the language to go for. Though the premium is there in English, the set of advertisers are different for Hindi and English to some extent. So, it gets compensated.

Media business in India is sustaining primarily on advertising revenue and it is going to change faster than it has changed over the last 10 years because of digitalisation. The Indian media industry has missed out and could not capitalise on the biggest USP of the Indian market, that is, the middle class. There is limited direct commercial transaction with the audience and it is still largely through advertisers. You don’t have subscription revenue to the extent it should have been. Now with digitalisation, that is the new point that will open up. The equation, according to me, eventually would be 70:30 (subscription and ad revenue), which in India is lopsided at this point in time. The total estimated subscription revenue in India is two times that of advertising revenue for television. But what comes to broadcasters is 15 per cent of the entire thing due to the under-declaration by the analog cable industry So, for the broadcaster only about 20 per cent revenue comes from subscription.

Q. What are the some of the issues that the NBA has targeted for 2011? Some achievements, targets?

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Nothing as such. The NBA has achieved a lot and we will go in the same trajectory that we had adopted, course correction at every stage that is required. It’s been 10 years of 24-hour news TV in India and we are learning at every stage. One issue that the NBA might face is that of fragmentation. There are many channels that may not be members of the NBA, which is the way it should be. We have strict guidelines and criteria for being a member of the NBA.

Q. Do you bundle the channel while selling?

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Yes and no. We are conscious about the fact that each channel should have its own proposition for advertisers. And at the same time, a lot of advertisers go for network deal.

Q. And what can be expected from you in 2011?

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All our existing channels are at certain crossroads, so you could expect some sort of strategic shift for some of them. We have consolidated well enough so far and are on track with our planning. So, expansions may be on the cards. Various options are being evaluated for this. Overall, 2011 could well be a fresh beginning.

Q. But news has still not become appointment viewing or brand loyalty?

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A news channel is a brand itself; people watch a news channel and do not watch a particular programme on news channels, unlike GECs. However, there exists possibility of creating landmark news programmes, which should command appointment viewership. As far as Zee News channel is concerned, we are possibly a rare exception in the genre, with our focus on serious and sensible news content.

Q. What are your plans for 2011 to ensure the growth continues?

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According to me, 2011 is a year of transition. In 2010, we and the entire world were coming out of the recession. The business world was coming to terms that it has left the worst behind. So, lots of planning took place and discussions took place. A lot of those initiatives that did not see light of day last year, may materialise soon. So, the level of activity this year would be far more than what it was in 2010.

Q. Will we also see a return to the spendthrift nature of 2007?

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That will never happen again. They are cautious now. It was not recession in media industry in India. It was more of a rationalisation. We would not see people funding business ventures in media industry at the drop of a hat, thinking that five years down the line on an Excel sheet there is money to be made. Hence, operational excellence will be in focus from now onwards. Current deliverables would be the mantra for all organisations.

Q. From the Zee point of view, what are some of the plans that we will see materialising?

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We went through the demerger last year. As a group, our focus was to consolidate the news operation. The Chairman’s mandate was to gain back those numbers in about four years’ time since the demerger. The top and bottom line numbers that we lost because of demerger of entertainment channels are supposed to be regained by 2014. This year so far, we have exceeded our expectations in terms of performance. So next year, we are hopeful to go for some expansions. Some of the existing channels are at the crossroads of their growth story, so new planning would be looked at for those channels.

Q. Are you on track to achieve the target for 2014?

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As far as the first few quarters are concerned, we are on track.

Q. There is a certain mandate about the ad-edit ratio. News channels are definitely not following that...

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I don’t understand why this mandate should be there. It is a free market. If I show excessive advertisements in a 30-minute slot – would anybody watch? People are exercising their choice, I think viewers have enough choice today; he will switch on to other channels. Now, the Indian media industry is mature enough not to be mandated by various restrictions. It is in our own interest that we have discipline and keep advertising within a limit as expected by our audience.

Q. There was once a very serious attempt in the NBA to correct the pricing of news channels from the ad rate perspective...

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We were looking at various issues related to business. The basic purpose is to evaluate how things are and what the way forward is. It is an ongoing process. The purpose is not to change, create or recreate anything, but to have a factual look at the industry as a whole, the pros and cons and the future trends.

Q. Coming back to ZNL, any plan for an English news channel?

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We did not start with that, but English has always been on our radar. At an opportune time, we will come up with an English channel, but not before it makes business sense for us.

Q. Does the presence of DishTV help in making your reach better?

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Yes, and this was also the vision of the Chairman of the group. The group is so very vertically integrated, well diversed, that all business would continue to derive and leverage synergy.

Q. How do the MD level changes impact management?

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As far as my three and a half years’ stint is concerned, I have worked in an idealistic scenario, where trust has been put in me, responsibilities and authority both converged to me. Possibly we have lived up to their expectations, thus despite the recession, this company has done well and never shown negative growth. Vision, to a maximum extent, comes from the Chairman of the group. When Mr. Laxmi Goel was the MD, he treated me as a responsible professional. The current MD, Punit (Goenka, CEO, ZEEL) himself is a new generation professional as well. The owners of our company are very clear that they have a mandate for the professional and as long as a professional lives up to it, they are fine.

Q. Does language news eat into national news?

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Not really. In fact, elasticity of growth in regional markets is still greater than the national market as far as news is concerned, as these are nascent markets. The Bengali news market this year is close to Rs 100 crore; Telugu this year stands at Rs 120 crore, and these were almost non-existent about four years back.

Q. In the ratings chart, Zee doesn’t even factor in the top three channels...

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Not really. For instance, in some of the core TG, Zee News channel is often the leader.

Q. Do you get surprised when you hear another news channel launching in the market?

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No, because there are more than business reasons for launching a news channel.

Q. Tipping points of the decade for Zee News Ltd?

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The first tipping point would be in 1999, when the group decided to launch a 24-hour news channel, however, that is beyond the last decade. One of the major decisions that have influenced the course of journey for the entire network in the last one decade is focusing on local and regional areas. Most thought that possibly English is the language to go for. Most networks launched an English channel first. But our group had rightly foreseen that the growth of the advertising and media industry would be significantly influenced by regionalisation of television industry. We have seen that consumerism had spread beyond the top eight metros. A decade back, most high-end advertisers used to focus on the top eight or 10 metros. But it is not the case now. Even luxury brands are looking at their growth and volume from state capitals and other smaller towns beyond metros. We leveraged that phenomenon and are exploiting that opportunity well. We haven’t gone for English so far. Hindi and regional has been our forte. That was the biggest decision point that has shaped the journey of the group over the last 10 years.

Q. From the revenue stand point and advertisers’ stand point, does a wide spread news network help?

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Definitely it does. Look at the way the news industry has performed over the last few years. Almost everyone has ‘de-grown’, barring us.

Q. Coming to the economics of this whole game, ratings should ideally convert into revenue. And Zee News is placed fourth in the list...

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With our focus on sensible news, we stay completely out of trivialised content. And often, not surprisingly, Zee News channel leads the pack amongst upper SEC strata.

Q. But ratings will always be important?

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I don’t think viewers see ratings when they watch a news channel. Ratings are primarily for advertisers, and going forward, dependence on advertising will reduce. Ratings are increasingly becoming less critical for success of news channels, which is already working out for our organisation. And trust me, I have confidence in our nation’s intellect. I am sure there is a need for sincere news content. Even ratings of Zee News channel are corroborating this.

Q. Then, how do you maintain profitability?

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Profitability is not ratings. Profitability is how you run the business. Ratings are not the sole criterion that affects the business. There are organisations that have higher ratings than us, while we score in terms of profitability.

As an organisation, we have diverse revenue streams. We are innovative and we are not dependent on one channel. A lot of our channels are on extremely strong growth path. Zee Business, 24 Ghanta, 24 Taas – they are growing exponentially.

Q. But does that impact the business?

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Of course, it leads to fragmentation. It impacts the business because a channel will come, offer unreasonable salaries to woo employees and take them away. Even though they may be jobless after sometime. The personnel cost structure will go up. Similarly, it impacts other costs like carriage fees, etc. We are living with this nagging irritant of many people coming in without objective business motive. Like in Andhra Pradesh, barring ours and a few others, news channels are politically linked. But there are options for advertisers as long as they deliver certain numbers.

Q. Why was it so?

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My view is that the industry is not cost conscious. Till two-and-a-half years back, media companies made a lot of money, but unfortunately only on Excel sheets. They only looked at valuation five years or 10 years down the line. People took their eyes from the current deliverables, a state of an irrational euphoria you may say. Also, in the industry, there is a rat race for TAM numbers. Logically, ratings should be converted into revenue. Incremental revenue for incremental ratings and cost incurred to get that incremental rating is the equation and the tipping point. Naturally, the incremental revenue needs to be more than the incremental cost. While the TAM rat race was on, cost hits were possibly derived from aspirations and not really from the business plan.

Some other issues are the over-dependence on advertising revenue, excessive proliferation and fragmentation. Due to carriage fees, distribution, which is supposed to contribute 70 per cent of the revenue; according to the world standard, has turned out to be one of the largest cost heads for news operation. Our (ZNL) success can be attributed to cost consciousness. In a network scenario, you are better equipped to leverage cost. We are not dependent on one channel. Contribution of Zee News, the flagship channel, to the top line of the company has reduced dramatically. Not because Zee News has ‘de-grown’, but because other channels have grown.

Q. Can you speak more on some of the other reasons that have impacted the genre all together?

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Lot of people view a news channel as a power centre. So people may want to leverage this power for many other aspects like other business interest, etc.