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The Rediff Business Interview/ R K Singh

'DTH TV is inevitable, government should organise the sector'

ESPN India Managing Director R K Singh was in Bombay recently to announce the exclusive telecast schedule of the Heineken Open to be held in Singapore this month. After joining journalists in posing a few questions himself to tennis stars Leander Paes and Mahesh Bhupathi at a press conference, he returned to the answering mode as A Ganesh Nadar quizzed him about the sports channel and the satellite and cable television market in India.

What were your plans when you joined ESPN? How many of them have borne fruit?

I joined ESPN in early 1995. ESPN was launched in October that year. It was the first attempt by ESPN to provide a tailor-made service to India -- a very small region. Worldwide, ESPN provides services for large regions. Therefore this was a challenge, whether the service would be accepted.

Here cricket has a following ,but not other sports. We had also announced that ESPN would be an encrypted service and not free. So we had to make them watch other sports and also accept the fact that they had to pay.

Both these plans have worked pretty well, we have succeeded.

What is the financial position of ESPN-India? Have you touched the break-even point? Any profits?

We don't normally discuss finances. In sports broadcasting, or in the television field in general, the gestation period is long. It requires five to seven years to break even. In sports broadcasting, it is even longer because it is predominantly live. There is an escalation in cost. It is a very expensive form of television. It is not for example a movie channel where you acquire 1,000 movies and repeat them.

Are you happy with how your tie-up with STAR TV is working?

It is a joint venture only in Asia. You must realise that this is a nascent market from the point of view of sports. It was our understanding that there was not enough room for two pan-Asian sports broadcasters to co-exist. So it made perfect sense for us to get together, create synergy and create comparative advantages. On the uphill road, it helped.

But you were fierce competitors….

We were fierce competitors but because of the unsustainability of the market for two networks to co-exist. Here or in Thailand or China or the Phillipines, there is a following for one game. Look at America, there is a following for 10 games. When there is a good following, there are good sponsors -- money comes in. In this context, it has made perfect business sense to tie up. It is working and we are happy.

Zee's Subhash Chandra and STAR's Rupert Murdoch are working out some deal wherein Zee will run among others ESPN. Chandra apparently insisted that there should be no excess baggage. That includes the people on board the STAR ship. Will this affect you?

Well, that's a very tricky question and should be addressed to Subhash Chandra.

You mean it is not that way?

As far as I am concerned Star Sports is not part of the deal. Star Sports and ESPN are joint partners in a venture. This is a separate company. It is not part of the Star umbrella either. I am not competent enough to answer this question because it does not concern me.

Why is that just before a cricket tournament, controversy over subscription rate breaks out involving cable operators and ESPN is yanked off cable networks?

I hope you appreciate that hike in subscription rates is fine. There is inflation, there is depreciation in the dollar. We encrypted on May 15, 1996. Exactly a year later we hiked the rates. There was no controversy.

Most of the cable operators agree to effect the hike, but a few big ones resist. They are in an evolving market and so they are trying to keep costs down .We hike rates regularly but it comes to the fore when an event comes. You get the impression that we do it pre-event, but that's not true. This year we gave them four months leeway. We did not increase in May. We did it in September -- almost 15 months after the first hike.

Does not this give sleepless nights to advertisers besides affecting channel revenues?

Yes, it does make the advertiser nervous and there is this media hype every time there is this threat of a boycott by cable operators. But that nervousness comes out of the threat of boycott. This is imaginary to some extent.

The second threat perception arises because most of the advertising agencies are based in Bombay. So if ESPN is off Bombay television screens, they presume it is not coming in the rest of the country.

What preventive steps are you taking?

I must tell you there is no free ride, no free ticket. After all we are not assembling programmes the world over as a free kind of proposition. It's not a charity. We understand that we are part of an industry and it takes two to tango.

There is the cable industry, the programmer and there is the viewer. We have to learn to live and co-exist but we also have to learn that there is no free ticket. The cable operator to absorb the cost and pass it on to the consumer. That maturity and understanding has to be with both.

I just told you that 90 per cent of the market has come to an agreement . What do you do with the 10 per cent bad eggs.? They have a different point of view. Two sons are doing well and the third son has gone awry -- what do you do with that kind of scenario?

So there is no plan.

The central message is that there is no free ticket. We know from where they are coming from. They should understand from where we are coming. If the cable operators have to survive they have do two things. They should make their consumers feel that they are being served well. To serve well is costly and that has to be borne by the consumer.

In order to maintain the market share, they are not willing to go back to the consumer. They want competitive factors and they are missing out on one element of the big picture. I think sooner or later, they will have to realise that and start getting back to the consumer in terms of cost if there are costs.

What are the future plans vis-a-vis cricket which seems your major attraction?

The majority might enjoy cricket but there are people who enjoy football, tennis, basketball, golf, WWF, hockey and even kabaddi. We are not in the business of cricket programming alone. We are sports service providers. If 80 per cent want cricket, we are giving it to them and if 20 per cent want something else, we also offer that.

But Doordarshan offers all these free.

We are giving much more than DD. All the tennis in the world, all the football….

What is your understanding of the Indian market ?

The current problem is cable operators want to protect their pie, they don't want to educate the consumer. You have emerging competition. You have escalating costs. You have a regulatory framework that is still undefined. Business is never a cakewalk. Our business is alive to all these realities.

Some say direct-to-home transmission could solve all problems.

I am willing to speak about it from the industry point of view. It is a technology which is inevitable. It has to come. It should come as a fait accompli or it should come through a structured, organised framework. Let the government organise it quickly. The cable operators will remain. DTH will address itself to a million or two million. The cable now has 15 per cent connectivity. This should go up to 50 per cent, the bulk of India. DTH will not threaten the cable operators.

Last year the government went after STAR's CEO for Indian operations Rathikant Basu. They were contemplating action against you as well. Not much about this was heard later. What happened?

What action were they contemplating against me?

There is a rule that if you retire from government service, you cannot work elsewhere for two years without permission.

That applies when you retire after completing 20 years of pensionable service. I did not retire. I resigned after 19 years. That rule does not apply to me. Even for those who retire, the rules say that pension benefits will stop -- nothing else. Does that set the record straight as far as I am concerned?

Photographs by Jewella C Miranda

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