India is one of Discovery‘s key priority markets along with Latin America where there is tremendous scope for pay-TV growth.
Bullish about digitisation in India, Discovery has plans to expand its portfolio of channels. The latest addition in the menu: Discovery Kids from the second quarter of this calendar year.
In an interview with Indiantelevision.com‘s Ashwin Pinto, Discovery Networks International president, CEO Mark Hollinger talks about the company‘s growth markets and its expansion plans in India.
Excerpts: |
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How important is India as a growth market for Discovery? |
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Discovery has launched in many genres. When are you launching the children’s channel? |
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Is the timing right given that the kids genre is struggling?
So whether a market is up or down at any point of time doesn‘t matter; there is space for a more education-focussed network like ours. And India, moreover, highly values education. The digitisation process is beginning and is a good opportunity for us. We are not worried about the kids genre business at all. |
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Will the education component be your differentiating element?
The channel will have a healthy dose of entertainment and also satisfy the curiosity of viewers in an entertaining way. The good news is that India is a young country. There are millions of kids below the age of 14 and so the market is big. |
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The challenge here is that niche channels have to rely excessively on ad revenue. By when do you see subscription starting to contribute in a serious manner?
When we start in a market, there is a 100 per cent affiliate revenue and then we move towards advertising. India obviously is an ad sales market. But it is hard to sit here and say what the affiliate revenue stream is going to be. We can hope that digitisation will affect carriage fees and other things. |
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For the digitisation process to succeed in terms of cut off dates being achieved, what needs to happen?
Forget about fancy things like DVRs. Just to get the infrastructure in place is an enormous challenge. Luckily for us, we can watch it from afar. But once it is in place, then there is an opportunity and sort of a challenge for programmers to take advantage of digitisation. We have done it successfully in other markets. |
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Do you think that the 30 June deadline will be met for the metros? |
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How will digitisation change OneAlliance’s relationship with MSOs?
We have a great team on the ground and great brands. When The OneAlliance was started, there was no digitalisation in India, no DTH. Now that there is DTH, the OneAlliance has only become stronger. |
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Will you now make a concerted effort at marketing yourself to Indian consumers so that they choose you? |
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Discovery is in several languages in India. Could you talk about the importance of localisation? |
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More players are entering the infotainment and lifestyle space in India. Will this cause fragmentation? |
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Discovery spends $1 billion towards programming. Are content investments going to be affected by the global downturn? |
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Which are the main focus areas for Discovery? |
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What is the big challenge you face this year?
I would say that the big challenges are the impact generally of broadband or free platforms like DTT on pay television. Can pay TV penetration continue to grow? In some countries, there are regulatory issues. Some markets like Brazil have become more protectionist as of late in terms of local Brazilian content and local channels being required on packages. The availability of alternative platforms is both a big challenge and a big opportunity. |
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There has been a certain amount of operational restructuring within Discovery like the removal of the COO position. Is the basic aim to be more cost effective? |
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Last year you split Europe into two business units. What prompted this move?
Then you have Central, Eastern Europe and the Middle East and Africa which are much more growth markets. There is still expansion to be done. These are more entrepreneurial markets. So we split along the lines of Western Europe as one unit and then Central, Eastern Europe, Middle East and Africa as another unit. We did not add a region. The international business still has four regions. We just restructured Europe to grow Western Europe and put common markets together. |
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Could you talk about Discovery‘s strategy to penetrate new markets like Colombia?
There is an opportunity in Colombia and it is our fourth biggest market in Latin America. We earlier only used a local representative for ad sales. We opened an office there for the primary purpose of ad sales while offices in Europe were opened for affiliate purposes. |
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In Spain you are free to air. Are you expanding your free to air portfolio?
So now in Germany, Spain and in the UK, we have launched free to air channels. They complement the pay business and are not intended to replace it. They have allowed us to grow at a time when the overall Western Europe pay TV business is not growing. This is harder to do in other markets as there is not a big enough digital terrestrial platform or there are ownership restrictions. |
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In Korea you did a partnership with CMB. Why? |
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How did the JV with Oprah Winfrey for a channel come about?
That is how it happened. We have ambitions for the channel in terms of finding markets internationally for it. Tom is a proponent for markets in the Asia Pacific where he feels that the channel will fare well. Oprah created a lot of buzz when she came down to India. This has also been the case in Australia and in other markets around the region. But we first want it to be well established in the US. |
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Discovery bought Betty in the UK, its first such acquisition of a production company. Are you looking at more such acquisitions? |
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