‘Bulk buying and Discount policies of media buying houses have contributed towards the TV industry’s macroeconomics taking a hit’, says Duraid Qureshi, CEO Hum Network

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Hum TV was doing quite well in entertainment, why did you decide to include news in the network?

News was always on the cards as we are a large network, but our bouquet was not quite complete without the full spectrum of televised content. Besides this, being a broadcaster it becomes easier when most of the cost like satellite, administration, finance, etc. is already being catered to. So for us, it was only a matter of smart expansion. Also, we know the mechanisms of broadcasting, we have relationships with clients and vendors on top of ample production experience. Launching a news channel only became a matter of time.

How did you find the news business?

We understood that we lacked hands on experience with news, as content. To familiarize ourselves with the domain, we first acquired Newsline, the investigative news and current affairs magazine, and took that knowledge to launch the complete news channel.

While news is different compared to entertainment content, the medium i.e. TV is the same, and both are produced almost the same way.  The only thing separating us from the crowd is our vision.

What is your vision for Hum News?

We clearly envisioned Hum News to firstly, being an independent news channel with no political strings or third-party agendas. On this note, we have realized that the idea that the government interferes with news a lot is just a perception, since as yet, we have not had that experience. Secondly our vision is being inspirational, meaning, to become an industry benchmark just as Hum TV is for entertainment. Hum TV was able to shift attention from the likes of Star Plus to our own Pakistani dramas until everyone was copying our style. That is what we have our vision set for Hum News too.

How does Hum News sets itself apart from the other news channels?

The traditional news broadcasting channels in Pakistan tend to lean heavily on sensationalism with constant “breaking news”. To our detriment, they have fallen victim to the trap of being loud and alarming as has been the trend set by India.

We don’t endorse that.

By following a more BBC and Al-Jazeera oriented approach to news and investigative journalism, which relies less on alarms and more on fact-checked information, we stand out from the crowd. Take “Hum Investigates” for example. It is a program that reenacts crime scenes; however, we do not let it give in to dramatization. We run its segments after months of preparation and (again) fact checking all our reports. Also, our screen space is devoid of any alarming visuals. I am not naming names, but a major local news channel has already adopted our visual style.

This form of sobriety is much needed and we are happy to set the trends for others to follow once again.

Masala Channel is a niche category TV channel.  Even though it is associated with the Hum Network, it has struggled to sell airtime. What are the reasons?

Masala is a niche channel, which is unlikely to find mass appeal; hence advertisers do not consider it one of their first choices when looking for an advertising platform. Yet, this is where the economics of advertising need to be understood. For example, a brand like Dalda is likely to find a very direct customer on our channel than anywhere else, however, advertisers, especially media planning and buying agencies, do not take that into account when allocating spend for ads, they simply negotiate on the basis of mass viewership and the GRP’s any channel is able to generate, versus considering the bulls-eye target audience. Take the case of a kids’ channel for instance. Such a channel is likely to draw higher advertising for kids’ products. What clients, and especially media planners, need to understand is that planning and buying for such channels cannot be done on the basis of CPRP (Cost per Rating Point) only, rather due to their niche positioning, they should be getting a premium.

Also I believe that niche channels need to be run on subscription-based revenues. For instance, in India such channels earn 30%-40% through advertising and 60%-70% through subscriptions. So the focus should be on implementing subscription based models as they will have a massive impact on the overall growth of the medium.

Lastly, I feel that we need to reshape and tweak Masala TV into the food lifestyle channel that we had intended it to be. Right now it is a food recipe channel to cater to the cult following that enjoys cooking and learning to cook.

Are we to expect a subscription-based revenue model to happen soon in Pakistan?

Yes, that is due in the next three to six months. Talks are on-going and there is no reason for that model not to be successfully implemented in Pakistan.

Our media industry is currently facing a strong predicament, which industry pundits are referring to as the decline of Pakistan’s TV industry. What’s your opinion on this?

The entire country’s economy is in decline. There are hardly any investments happening which has resulted in decreased money circulation, and when this happens the economy automatically slows down.

Unless we see any such policies by the current government that lead to an increase in investment and cash-flow, the economy cannot grow.

However, if we talk specifically about the TV industry, news channel business has gone down by 15% due to decrease in government spending, number one. Number two; the corporate sector advertising that we receive has also suffered a 15-20% decrease due to the economic slowdown that I just mentioned. Number three, revenues are regardless low during the winter months.  The compounding effect of all this is that most channels have had to reduce costs by 30-35%, which has led to a significant number of lay-offs. See the thing is, when you are growing, you need more hands on deck because you cannot rush to train new people every time a new project comes along. You have to have a contingency of trained professionals on hand for when the time is right. It is this contingency which is now taking a hit.

Also, my personal feeling is that our media planning and buying agencies have made policies that are altogether centered around bulk buying and discounts for purchasing advertising airtime, without any focus on strategic growth or partnerships with TV channels. They also play the role of pushing certain TV channels to decrease their advertising rates. This has also contributed towards the TV industry’s macroeconomics taking a hit.

Apart from decrease in advertising, the government has cut down its advertising rates on private TV channels. PBA has been leading a number of counter measures and debates since the past recent days with the government. Where do you see the situation going?

The government is a major advertiser, and I believe that their argument is valid that there is a requirement for government advertising rates to get rationalized. However, their proposed rates are not acceptable to the television industry, and both the government and us broadcasters will work together to optimize rates in due course of time.

Meanwhile, there are some inconsistencies where some channels are being favored above others, which the government needs to standardize.

Will PBA be acting as a spokesperson for all TV channels or will the channels be on their own in this regard?

The government has addressed the PBA on behalf of all TV channels; they did not reach out to channels individually. So, PBA will represent all the channels to get the government to rationalize the rates through our dedicated members.

You mentioned how bulk buying and discount policies of media buying agencies have contributed towards the TV industry’s macroeconomics taking a hit. In what way does Hum Network plan on addressing this?

Hum Network has already cut down on awarding bulk discounts to large media buying houses and will continue lowering them by 1 to 2% every year from now on. In fact, we will try to make our measure of bulk discounts a standard all across the industry.

You see, such discounts are not beneficial for TV channels because good content cannot be made unless advertising is being done on proper rates, since this is what we earn through.

The PBA mechanism is to blacklist agencies if TV channels do not get their dues paid. Currently, the government has said that they will be releasing ads directly through the Press Information Department only, with no media agencies involved in between. How will PBA exercise its authority to ensure recovery of dues then?

I believe that is not going to be the case, and the government has agreed that they will continue to place ads through advertising and media buying agencies, when they advertise.

Stepping into 2019, how do you see the industry?

The year will start off tough. The government, as well as the corporate sector, will not increase their advertising budget any time soon. Hence, we will continue to see big layoffs, and more TV channels will close down. There will also be mergers, while certain TV channels will put their licenses up for bidding to other broadcasters. This will spark a bidding war as the licenses will be offered at very low prices due to such TV channels reaching closure status. Although TV channels will not be able to increase their advertising rates, bulk discounts that they are offering to media buying houses may decrease too, just as we have brought ours down.

However, I do expect the situation to improve by June 2019, as the economy is expected to stabilize and eventually grow, creating more business opportunities.

In the entertainment industry, the digital space will offer more opportunities to Pakistan since Netflix and Eros will gravitate towards Pakistani production houses. Yet, there will be more original content produced for TV. Also, I expect that our film industry will come a long way in 2019, and if we play our cards right, it will become big business by 2020.

What is your opinion on PTV as a national asset, especially since we are talking about mergers and retrenchments in the television industry?

Currently, PTV costs around Rs. 10 billion for the government to run. My question to the government and to the media industry is: What is the objective of PTV? Who is it serving? What need is it fulfilling? Is it absolutely necessary to continue bearing the cost of an overstaffed and underutilized PTV, especially when it is coming out of the taxpayer’s pocket?

While PTV has an advertising revenue of around Rs. 2 billion and collects approximately Rs. 6-7 billion through WAPDA fees, even in the best case scenario, it is still suffering a loss of Rs. 1 billion, annually. Regardless, next year’s budget for PTV is going to be even more than the previous one. When PTV was founded, there was a need for it because it provided high-quality content for mass consumption. Now, private channels like Hum TV, ARY, Geo etc. have started creating higher quality content at no cost to the taxpayer and hence, the need for PTV, I believe, has subsided.

The government says that PTV provides them a platform to broadcast news and information from their perspective. My point is that now since they have decided to make it independent; it will be just another news channel amongst the 35 others. Another rationale they offer is that PTV airs sports almost exclusively. However, the content will be equally accessible if they share and sell the license to private channels, while making additional revenue alongside.

Therefore, in my opinion, PTV, as an organization, is redundant in today’s time. Instead of having one channel to be their voice, if the government were to give advertising worth Rs. 10 billion to private channels, the channels will actually strive to help the government reach its objectives.

 

*This article actually appeared in Synergizer magazine and also in digital version of Synergizer

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