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“MSOs will die if they continue to extort and not care about giving relevant content”
Celebrity chef Sanjeev Kapoor is an angry man. As founder-promoter of a single-channel network, he has to wrestle against numerous multi-system operators (MSOs) and direct-to-home (DTH) service providers for the carriage of his food speciality channel FoodFood.
“If the industry continues to believe that by muscle power you can grow and think that specialisation impact will not be there and TV will be like a general practitioner, then the death of these distribution platform operators will happen only faster. Other platforms will come up and it will be at the cost of TV,” he warns.
The biggest TV chef in the world is also critical of the way the industry is structured and run. “This is the least organised business, which is why the size of the media and entertainment industry is small. Even in the broadcasting sector, look at the talent pool for senior programming executives. Only a handful of them keep rotating from one network to another—which tells of the sad affairs we are in. Why is it happening in such a high-impact category? These are signs of a category that is growing in an immature way,” he says.
Kapoor is now busy planning the expansion of Turmeric Vision, the joint venture company that he runs along with majority partner Astro Overseas Limited. While Malaysia-based Astro owns 55.1 per cent of the company, Sandeep Goyal’s Mogae Consultants has 4.5 per cent stake. The remaining is with Kapoor.
Kapoor is planning to launch FoodFood in regional languages. He is also going to surround the brand through multiple activities like products and services, L&M and ground events. The company is looking to invest $10 million. “What Disney does with multiple categories, we want to do with food and food-related products,” he says.
Launched in January 2011, Kapoor eyes break-even in FY17. As he bets big on e-commerce, L&M and ground events, he reckons that the revenues would multiply three times in the next 3-4 years.
In a wide-ranging conversation with TelevisionPost.com’s Sibabrata Das, Kapoor goes down the memory lane narrating his first brush with television, the evolution of the show ‘Khana Khazana’ and the challenges surrounding the media industry.
Q. How has life been for a niche, single-channel network like FoodFood?
Being a single-channel network, we find ourselves at the wrong end of the stick. Distribution is the biggest problem and we have to pay a hefty carriage fee to the multi-system operators (MSOs). It is hurting our business terribly. Even direct-to-home (DTH) operators are asking for it and that is why we are not on platforms like Dish TV.
Q. I believe the carriage payout in case of FoodFood is Rs 10 crore (Rs 100 million) a year. Hasn’t digitisation brought about changes?
Carriage fees have not dropped for us. In fact, digitisation the way it stands today is a farce. MSOs have not ceased from their extortionist practices. DTH operators are also asking for carriage. Consumer behaviour has not changed. For single-channel networks, it is still as bad as it was. While the government has gone ahead and protected minorities, there is no such protection for TV. Regulation has not taken care of us. We have less power to make an impact.
Q. Are you planning to add more channels to combat this?
We are planning to launch FoodFood in regional languages. Tamil is one of the options we are looking at. Telugu is another possibility. We have to decide when we are going to do it. Our intent is to go the regional way in the next 12 months. Expanding the reach of the brand and making it relevant to that market is part of our growth strategy.
Q. Isn’t Tamil Nadu a tough market to enter from a TV channel distribution point of view?
We understand that distribution is a big issue in Tamil Nadu, but it is a huge market for everybody to tap. We have kept in mind the cost-to-impact ratio. And there is always a smart way to get your product launched.
During the pre-launch period of FoodFood, I had come out with an idea to take the afternoon slot on a leading network. We would provide two hours of our best content to the television channel and run the FoodFood brand on it. We would share revenues. My TV executives trashed the idea. With the benefit of hindsight, I think we missed a big opportunity. So there are many innovative ways of doing business.
Q. Do you think the MSOs will care about such innovations and tame their carriage fees?
If distribution platform operators continue to extort and not care about giving the relevant content to their viewers, they will find their businesses diminish. It is in a way similar to what malls did, asking for the highest money without caring to get in the best brands. Now most of them are dying or slashing prices. Who benefited from such attitude of the malls? E-commerce companies like Flipkart, Snapdeal and Amazon. These businesses did not exist earlier in India. Look at the valuation of Flipkart today and in such a short span of time.
Digitisation was supposed to bring in transparency. Where is it? Even DTH operators are not giving the number of households they have. There is no breakdown of SEC A, B, etc. These inefficiencies will surface one day and there will be a shake-up in the market.
Distribution companies think that they will control content. Relevant content will continue to grow. Other platforms will come up and it will be at the cost of TV. These changes will come so fast and so sudden that they will not be able to react if they are not prepared from today.
Q. FoodFood has launched in the US via Dish Network. Did you find the attitude of these distribution platforms radically different as they face competition from OTT entities like Netflix?
When I went there to meet their senior executives, I was surprised by their approach. They define you as a programmer, while here the distribution executives consider you as a TV channel. They immediately think of Netflix and other rivals and say, ‘Ok, I can give this content to my subscribers, coz it is relevant for me’. They take a business decision based on that.
I am in multiple businesses. This is the least organised business, which is why the size of the media and entertainment industry is small. Even in the broadcasting sector, look at the talent pool for senior programming executives. Only a handful of them keep rotating from one network to another—which tells of the sad affairs we are in. Why is it happening in such a high-impact category? These are signs of a category that is growing in an immature way.
If the industry continues to believe that by muscle power you can grow and think that specialisation impact will not be there and TV will be like a general practitioner, then the death will happen only faster. Specialists in all categories have been growing in a real and not obscure way. People will start consuming content in alternate ways.
Q. Are you looking at aggressively tapping other mediums like the internet for consumption of your content?
We never considered ourselves as a TV company. We wanted to start with TV as it is a high-impact category. But we are first a food and food-related brand. We look at TV as a point of sale. The way we would surround the brand is through multiple activities like products and services, L&M and ground events. What Disney does with multiple categories, we want to do with food and food-related products. In an ideal situation, TV would account for 25 per cent of our revenues in the next five years.
We are increasing our focus and are planning to be relevant on all platforms including the internet. In a small way, we are adding to the death of television.
We have started e-commerce in a small way. We are drawing up a business plan for L&M and ground events. When you are hit, you learn to fight.
Q. Will you need fresh funding for all this?
We are looking at an additional investment of $10 million. If we approve of these projects at the board level, we will need this kind of funding. With this, our total investment in the venture would go up to $40 million.
Q. Did Astro infuse fresh capital in FY14 and increase its holding to 55.1 per cent?
In the previous fiscal, Astro increased its stake by 5 per cent. They believe in the venture and are committed to it.
Q. When will FoodFood break even?
We expect to break-even in FY17. In the fiscal ended 31 March 2014, we have narrowed our operating loss to Rs 10 crore (Rs 100 million). Our revenue stands at Rs 30 crore (Rs 300 million). In terms of power, strength and value, we can easily grow five-fold in the next 3-4 years. Our revenue will have multiplied three times by this period.
Q. FoodFood has launched in the US via Dish Network’s DTH and IPTV platforms. Do you see the US market as a big opportunity and is the channel going to soon launch in the UK?
Though we have launched in the US, it is not our focus area right now. We want to build the missing pieces in the Indian market first. We will approach the US market with much more aggression after 12-15 months. We definitely see a lot of business potential there.
The UK is a tough market and we have no immediate plans to launch there. The cost-to-return is not exciting. We will go there but later.
Q. FoodFood added lifestyle as its brand quotient. Does this not dilute food as a brand proposition which is represented by the father icon of celebrity chef Sanjeev Kapoor?
We are making food programming, which has mainly been about learning, also entertaining by bringing in lifestyle elements. While we are adding layers, food is always at the centre of it. We will never change that positioning. Food will continue to be the hero as that is our expertise. Lifestyle channels, in fact, are adding food programming to stay in tune with popularity.
The romance with food has increased. Health is becoming a part of lifestyle. When we say lifestyle, food is at the core of it. So, what we are doing is go to exotic locations, build a little bit of travel around our shows, talk a bit about health and use more fashionable cookware. Food is a larger category.
Q. What attracted you to launching a television channel?
No chef in the world has launched a TV channel—this thought excites me. Challenges will be there, but that is OK. When I quit my job, I was earning Rs 10,000 and my bank balance was hardly 100,000. I had no house in Mumbai. But I had already got an award as the Best Executive Chef of India at the early age of 28 and had reached my professional peak. If I was to hang on, I would get bored and frustrated. If you are not exploring opportunities and looking at things in the same prism, you would get to do the same things.
Q. What led you to become a chef in the first place?
Everybody who knew me was surprised at my decision when I told them that I wanted to be a chef. They asked me why not IIT, MBA or some such things. I told them that it was easy to enter, easy to do and there was a huge opportunity that was not tapped yet.
Q. You did get into the digital space early?
I had a channel on YouTube when nobody understood the power of the medium. I launched sanjeevkapoor.com and was offered Rs 60 crore (Rs 600 million). Those were the days of dotcom boom and Rajesh Jain had earned Rs 500 crore (Rs 5 billion) by selling his portal IndiaWorld. I rejected the offer as my logic was that I should at least get one-fifth of that value. With hindsight, I regret having said no. But I dream big.
I have always believed in food being a very large category. It continues to grow. We are a single-channel entity, but no large network broadcasting company can focus or execute things around the food category the way we can. There are challenges that businesses throw up, there is threat, there is pain, but that is all right. You have to be innovative and constantly keep challenging the way businesses are done.
Q. How did the ‘Khana Khazana’ show on Zee TV happen?
Zee had a cookery show called ‘Shriman Bawarchi’. They used to have a host and get a new chef for each episode. They approached me for one episode. I said I couldn’t associate with the name of the show as it did not fit my brand. I told them I will come up with a new name the next day. I suggested ‘Khana Khazana’. This did not go down well with the executives and they said that the channel couldn’t be dictated. But it finally got accepted. I got a chance to come on the show after being rejected six times. And that, too, was an emergency as the chef for that episode did not turn up. The producer of the show called me up and I was given a chance. The rest is history. I was with the show for 19 long years.
Q. When you decided to launch a food channel, why didn’t you do a JV with Zee? Why did you decide to side with Astro?
I had toyed with the idea of launching a channel for long and was in discussion with many people for forming a joint venture company. One day, Punit Goenka [Subhash Chandra’s son] came into the room and said that I should do it with them and ‘hamara hak banta hai’. I agreed and spent three years on this. Nothing seemed to move and I was not sure whether Zee actually wanted to go ahead with it. I had applied for licence and started producing shows. Scripps Networks Interactive also showed interest, but by then I had agreed to go with Astro.