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Demonetisation, regulation to impact growth in India’s TV sector: Discovery’s David Zaslav
MUMBAI: Discovery Networks president and CEO David Zaslav has said that the ad recovery in India after demonetisation will take longer than expected. Zaslav said this in response to the feedback from his India team led by Karan Bajaj.
The ad slow-down following demonetisation has impacted Discovery’s revenue from Asia Pacific, which is its smallest market globally.
In fact, Zaslav considered his company lucky that it has a smaller business in India because demonetisation had hit the media industry really hard.
Discovery owns and operates 12 channels across infotainment, lifestyle, kids and sports genres, which include nine SD and three HD channels. The company is also re-launching its Hindi GEC Investigation Discovery as Discovery Jeet in Q4 of 2017. Discovery Jeet will be targeted at male audience.
While answering questions from analysts about the advertising internationally, Zaslav said Discovery is growing in every market outside of the UK and Asia.
Talking about Asia and India, he said, “The other thing that we’re seeing is that Asia is tough, and it’s likely to be tougher. In some ways, we have a smaller business in India, but I’m glad we have a smaller business in India because demonetisation has been a struggle. The recovery from that demonetisation has been longer than expected. We got a report out from the team over there.”
Zaslav also noted that things are going to get difficult due to the new regulation. Though he did not name what the regulation was, he was probably referring to the Telecom Regulatory Authority of India’s (TRAI) new tariff order that requires broadcasters to shift to the maximum retail price (MRP) model of their channels. Earlier, broadcasters were selling their channels in large bundles with consumers having little choice regarding the channel they wanted to subscribe.
TRAI has capped pricing for SD and HD channels at Rs 19 and Rs 38 respectively while disallowing bundling of pay and FTA channels and SD and HD channels. Premium channels have been exempted from price cap. Carriage fee has been capped at 20 paisa per subscriber per month.
“It looks like things are slow and there’s a government regulation regime that looks like it may be coming down in India. That’s going to put a damper on a lot of the growth that was assumed to be coming out of there. The good news for us is that’s going to have a very minimal effect on us,” Zaslav noted.
Discovery Communications CFO Gunnar Wiedenfels expects ad revenue from the Asia Pacific and the UK to decline further in the coming quarter due to continued market softness.
While interacting with analysts, 21st Century Fox CEO James Murdoch was asked about Zaslav’s comments on the India business and how he views those comments since his company has a large presence in the market.
Murdoch said that the India business is in pretty robust health and creatively it’s performing very well. He also feels confident about the Indian environment generally.
“I did note some of those comments, and I was surprised because at least from our business perspective, we take the view that you go into a market like India in the expectation that in success it’s really going to change your life,” he said.
Murdoch also noted that going the whole hog in the Indian market has paid rich dividends to the company.
“You really don’t go anything other than the whole hog and that has really paid off well. We have a very profitable and exciting business there, and I think the real differentiation can be seen across the media sector today. I think I urged you to think about all of these firms as they have different strengths and weaknesses,” he stated.