ETV is a good strategic opportunity for the business: Robert M. Bakish

Mumbai: Robert M. Bakish, president and chief executive of Viacom International Media Networks (VIMN) since January 2011, is responsible for all Viacom media networks and associated businesses outside the US, including those operating under the multimedia entertainment brands such as Nickelodeon, Comedy Central, BET, Paramount Channel, VIVA, TMF (The Music Factory) and Game One. Bakish oversees the company’s businesses in South Korea, the UK, Australia, Italy and India where it operates a joint venture with the Network18 group.

add_main_imageIn Mumbai to attend the Ficci Frames conference on the media and entertainment industry, he spoke in an interview about the company’s plans to launch new channels in the country and the impact of digitization on the Indian television entertainment sector. Edited excerpts:

Could you elaborate on plans for more channels in India?NextMAds

As I said, we do plan to have additional services in the national space. We see the Indian opportunity as a very compelling one.

As we look to capture the growth, we absolutely look at driving this by launching new products that would include new national television products. I’d very much like it to happen in 2013. We started by taking our existing assets with Nick and VH1.

We then launched Colors. Last year we launched Comedy Central, Sonic which is a Nickelodeon derivative, and Nick junior. They have helped us in the distribution market with digitization and beginning to help us in the ad market as well.

How much is Viacom paying to acquire the remaining 50% stake in ETV’s entertainment channels? Are they worth the price?

As part of a clarification, Network 18 bought half the entertainment channels of ETV and all the news channels and Viacom’s currently looking at doing due diligence on acquiring the other 50% of the ETV assets with the idea of combining Network 18’s half and half inside of Viacom18. I’m not going to get into valuations. We think it’s a good strategic opportunity for the business and regional markets have very strong growth potential. If you look at all the projections for India you’ll see that regional markets have higher growth projected than the national markets. We think being a combined national and regional player is very adequate to our position in the Indian market and we think there are opportunities to create value across those businesses. So there are a number of reasons why we are intrigued by this possibility.

Viacom has an option to increase its stake in the joint venture with Network18 for Colors. Would you do that?sixthMAds

We at Viacom are very happy with our Viacom18 joint venture, very happy with Network 18 as a partner. The joint venture has had significant success in this market... partially as a result of good management. We think the model works as it is. So we are fine with our current position.

Any concerns about the business in India?

Sure, very few things are ever perfect. If you look at our Indian business, we would like the ad market to be better. By the way, I can say that about a lot of countries in the world, certainly all the southern European countries—those are in much worse shape. But the Indian ad market is operating in a place with GDP growth in the 4.5% range, this is coming from a place where GDP was 9% growth and the ad market was growing at 15%. That’s not where we are today. We are hopeful that that equation will begin to improve as we look at the government’s forecast for next year, the 6.5% GDP range, we believe we’ll see ad market growth.

The second challenge is ensuring the second phase of digitization goes well. Phase one was and is a big deal and represented profound change in the business. Now it’s time for us as an industry to ensure phase two fulfills that promise.

Any dramatic shifts that you may have noticed in the television entertainment sector?

Certainly the most dramatic thing that’s happened in recent history is the whole digitization movement. I think it is a positive shock to the industry. You don’t usually see a whole category of business shift like that on a short time frame. I would put that one in the dramatic category... Paying for channel slots versus getting paid for fees—that equation has changed dramatically in our favour. We look forward to the second phase of digitization.

With consumption of entertainment going multi-screen, what are Viacom’s plans to tap into this new segment?

We used to have a product that could only be consumed on the living room couch and if you’re in India there is probably only one television in the house and so whoever was in control of that remote control, probably the woman of the household, would be dictating what could be watched.

Today, all around the world people have multiple television sets connected to better-than-ever pay television plans with more channel capacity. And of course they might have a wireless connection and a tablet they could use to consume content, probably a smartphone to get content on that. We have greater linear television consumption than any other point in history and then we have all these other vehicles. So at Viacom and Viacom 18 we are focused on creating great content that either spans all these devices maybe in an OTT form, or we license the same product probably in a different window.

How do you plan to maximize revenue from the content Viacom owns?

Well, because there are so many opportunities to display content, it’s vitally important that you own the rights. If you look at companies that are fundamentally built on acquiring content versus creating content, you much prefer to be in a creating content.

Look at Netflix as an example. Though it is not in India but in the US and UK, Viacom is becoming a very big supplier for Netflix. That has produced significant revenue. Our strategy is to own rights and then look for opportunities to expand the content through distribution fees with pay TV operators.

It is about participating in the related ad markets whether it’s a linear television ad market, a broadband video ad market or even a mobile market. For example, not in India but in five European countries, we have an MTV mobile service where consumers can get a handset, minutes and data in that we also have some ad inventory. So, if content is at the centre, we are looking to use these evolving media platforms as a way of fortifying existing revenue streams and generating new ones.