Puneet Kinra, Group CEO, Balaji Telefilms Ltd. He moved to Balaji Telefilms as Group CEO in October 2008 from PricewaterhouseCoopers (PwC) where he was an Associate Director of its Investment Banking practice. Prior to joining PwC, Mr. Kinra worked in a boutique investment bank focused on Telecom and Media. He has worked on both the sell side and buy side mandates and has advised clients on M&A, private equity placement and debt syndication. He has experience in domestic and cross border transactions in Media, Healthcare, Real Estate, Retail, Pharma, Communications, Technology, FMCG and Manufacturing. Mr. Kinra holds an MBA from The Australian Graduate School of Managament (AGSM), University of New South Wales.
Balaji Telefilms Ltd. was started in 1994, by Mr. Jeetendra Kapoor, Mrs. Shobha Kapoor and Ms. Ekta Kapoor. It is a diversified media conglomerate. Balaji Telefilms has also made a strong and promising foray in motion pictures and new media space which is all set to make its mark with entertainment content across the world. Mr. Vikram Malhotra and Mr. Uday Sodhi will drive the motion pictures and new media businesses, respectively. Balaji Telefilms has revolutionized the Indian television industry and is not only perceived as a quality content provider but also as a powerful communicator, which influences the lives of the audiences. Balaji Telefilms is poised today as a media powerhouse, which is ready to take on the world.
In an exclusive conversation with Hemant P. Maradia of India Infoline, Mr. Kinra says: "We will be able to sustain breakeven in Q4 and will start looking at growth starting April 2010."
Could you explain the fall in operating loss from Q2 FY10 despite a drop in income QoQ?
Operationally, we managed to drive costs further down on per hour basis. From that perspective, the efficiency started to kick in. We achieved near breakeven for the quarter and breakeven for the month of December.
Hopefully, in the next quarter we will be able to sustain the breakeven. Going forward, we will start looking at growth starting April 2010.
In Q3 FY09, pricing of shows was carried forward for a few days from the previous quarter; that affected the numbers.
We are okay as far as the number of hours of programming is concerned.
Have your realisations (per hour) suffered? What is the outlook on volume and margins in Q4 FY10 and FY11?
In Q3 FY10, realisations for Hindi GEC were at Rs1.5mn to Rs1.6mn per hour. In the same quarter last year, the realisations were at Rs2.7mn per hour.
We have brought down the costs, from Rs1.7-1.8mn per hour in Q3 FY09, to Rs1.1mn per hour in Q3 FY10.
This means that we have had almost 50-60% reduction in operating costs in spite of higher wages and other costs.
In the next quarter Q4 FY10, we will try to maintain our volume. Secondly, we will try to maintain the breakeven.
With IPL Season 3 around the corner, some channels may take a show or two off air.
The GEC space will see action in the post IPL quarter (April-June). That’s the time when this space gets active. That is the time when we will look at fresh launches.
Do you plan to launch any new shows?
We are in discussions. We will have a visibility on new shows by the end of March. This will give us some sense of the outlook for the new fiscal year.
Even the discussion on taking some shows off air generally starts now.
How many shows are currently on air? This translates into how many hours?
Currently, we have about 7 Hindi shows on air and four in Southern languages. This translates into almost 216 hours of commissioned Hindi GEC per quarter and 158 hours of sponsored Hindi GEC a quarter.
Brief us about your cost-cutting measures?
We have not only done restructuring on the structure of the shows but also on the way we produce the shows. The production is far more process driven now.
Tell us about the company’s new initiatives?
We have launched two more brands in the October-December quarter. One of them is called Alt Entertainment. The other brand is called Hoonur. Alt Entertainment will mirror whatever Balaji Telefilms does for the urban audience. So, in Balaji Telefilms we will produce motion pictures, television content as well as mobile content keeping in mind the mass audience.
Alt Entertainment will create programmes, movies and other content targeting the younger urban audience. It will make TV shows, movies and new media content. For e.g. If we do a show for Star Plus it will come under Balaji Telefilms. If we do a show for MTV, it will be done by Alt Entertainment. The same method will be followed in making movies and new media content. Hoonur is the company’s initiative into the internet. It is a talent portal and we intend to create an entertainment marketplace wrapped around Hoonur.
What kind of investments will go into each one of them?
We will be investing Rs1bn on the movie side of the business. For the new media business, the investment will be about Rs100mn a year.
You've lost momentum since your break-up with Star? What is the roadmap for regaining the lost momentum or glory?
When I joined the company in October 2008, we were in a freefall after we broke the alliance with the Star network. We had to stop that freefall and turn things around. We have managed to do that to a certain extent. I feel we have now bottomed out with the breakeven for December.
The ship has stopped sinking. It allows us to now grow. We have a story. We have our team in place. The next 2-3 years will allow us to go to the next level, provided we execute the strategy quarter after quarter in an appropriate manner.
Do you plan to launch your own channel?
Not as of now. A new GEC channel requires substantial capital. We don’t have capital as of now. We will focus on our core competency, which is to generate content. We will continue to do that for dissemination through the various platforms – films, TV or new media. That will remain the focus for some time.
The industry is getting fragmented and commoditized. How do you plan to deal with this situation?
We are the biggest player in television content by a wide margin. To scale up in this business is really tough. Margins are very thin for somebody else to invest in the business right from the scratch. With fragmentation the smaller players will not have more than one or two shows to execute. We still have 7 shows on air.
We not only have the creative supremacy but also the operational supremacy. It is very hard for any other player in this business to execute even 3 shows. They should also have the infrastructure and processes to execute the shows.
Do you see any consolidation happening?
Not really. The smaller players are individual run entities. So, it would be very hard for them to corporatise themselves. I don’t see any consolidation on content creation.
Barring two shows, TRPs of your other shows are not encouraging. How do you plan to boost TRPs?
We are No.1 on Zee. Our show "Pavitra Rishta" is No.1 on Zee. We were No.1 on NDTV Imagine with "Bandini" till they changed the time slot last month. "Bairi Piya" on Colors is doing well too.
We are still in the process of getting back the TRPs. It has taken us over a year but I think we have made a come back. So, if you have shows among the top few slots in a channel then the chances of your shows getting replaced are slim. It is the channel to channel positioning that is critical and not the overall position.
Currently most of the shows are daily. But, we could look at one or two weekly shows as well. The discussions are still underway.
What is your plan for the regional play?
We are a regional player in South for quite some time now. We have 4 shows at present. We are launching a show next month. There are a few more regional shows that we are in discussion for. We are also looking at other regional options as well. But, other than South India, the size and scale is too small right now.
What is the outlook for the Media & Entertainment industry and TV content providers?
I think the worst has happened for the industry as well as the economy. It is always good for any industry or sector to rationalise the costs. That has happened across the industry. This will allow us to spend money on superior products. That’s always good for the industry.
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