“If you keep your audience engaged, money will follow”

Mukund Cairae, CEO Middle East and Asia Pacific at Zee Entertainment Enterprises Limited, on the focus of the company’s media offering in the region and globally.

How has the acquisition of the UAE’s first and leading radio station, Hum 106.2 FM, added to Zee’s brand equity?

The process started in November last year, when the Board of Directors of Zee Media Corporation Limited approved the acquisition of a 49 per cent stake in 92.7 BIG FM, the radio broadcasting business of Reliance Broadcast Network Limited. As per India’s Ministry of Information and Broadcasting Regulations, it will be an 18-month lock-in period, after which time the gradual movement from 49 per cent to majority ownership should take place. So, while the stage-wise process of acquisition for Big FM in India is still underway, it was also around the same time that we had taken a call of moving into the radio segment in two geographies: the UAE and Singapore.

In the UAE, negotiations were underway with Shahid Jamal, MD, Shamal Media Services, the owner and operator of Hum FM, as well as with Umm Al Quwain Broadcasting Network (UBN), from where Hum FM’s frequency originated. Shahid Jamal’s contract with UBN was coming to an end on December 31, 2016. So we thought this is the right time to acquire Hum FM’s contract from UBN, which came into effect from January 1 this year.

However, many media outlets have since been widely reporting that there is a buyout or acquisition of Hum FM. This is completely incorrect. The truth is that Hum FM was only renamed as BIG FM, coinciding with our acquisition in India. It was essentially the case of one person moving out and the other person moving in; so in no way can it be called an acquisition.

What’s going to be the focus of your media offering in the region and globally: TV, radio or digital platforms?

In the current economic environment, advertisers are looking at the best optimum ROI solution. That’s where our core value proposition lies: having a network concept will always work.

We’ve got the number one channel – Zee TV, the number two channel – Zee Cinema, and we have now got radio, catering to a wider mix of Arab and South Asian audiences. What we are offering right now is a one-stop creative solution for maximising whatever budget the client has today by presenting a much more homogeneous and a much more synchronised picture in front of advertising clients.

Eventually, our next objective is to move into digital too, hopefully by this Ramadan. We are setting up a large office in IMPZ to dabble in video content for the Arab audience.

How do you plan to monetise the video venture? Through subscriptions or ads – or both?

Through ad sales. Pay TV in this part of the world is not going to work, unless the operator has a very deep pocket. This is an advertising funded market, where we must look at engagement and eyeballs. If you keep your audience engaged, money will follow. But if you expect the Arab to continuously pay every month for entertainment, that’s not going to happen. MENA, unlike the West and Indian market, will always be an advertiser-funded market, not subscriber-based.

So, any pay TV operator in the region should have a solid advertising base?

That’s true, but that’s also the unfortunate part. Most of the pay TV operators here, whether it’s IPTV operators or the DTH operators, focus only on subscription. They don’t focus at all on advertising sales. There’s under ten per cent of focus on revenues coming in from advertising sales.

How did the India story come into the picture?

India’s 92.7 BIG FM is part of Reliance Broadcast Network Limited, which runs the largest network of FM radio channels in India. The FM reaches 45 cities, 1,200 towns and more than 200 million people, and engages with a large number of national and local advertisers. This is BIG FM’s India story. When we acquired BIG, we thought it better to bring the same brand name (BIG FM) to the UAE to have synergies across wherever our radio network goes. The original brand was Hum FM and now the same frequency is called 106.2 BIG FM.

From satellite TV to film production and now radio, what’s next for Zee Entertainment?

Zee started beaming in the Middle East in 1994. Over a few years, the channel became very popular in the region prompting local advertisers from the region to start advertising apart from Indian brands. Around a decade later in 2004, we set up our own operation here serving Indian content to NRIs.

A year later, in 2005, we started creating Indian content for the local audience. Based on the experience of our local channel in Malaysia called ’Bahasa’, we launched in the Middle East with a new music channel, ’Zee Arabia’. However, by the beginning of 2008, we realised that a music channel alone is not a commercially viable proposition, unless it is backed up by add-ons such as talent acquisition or record publishing or artist management. This allowed us to go back our core competency, Bollywood. That’s how Zee Aflam started here in 2008 and then Zee Alwan in 2012, serving Indian content to the local Arab audience.

Now in 2017, we have started a radio network for expats, the first radio broadcast service by Zee outside India. Going forward, we are hopeful to have a full-fledged network of between three and four frequencies across multiple Indian languages and possibly in English and Arabic too.

Any plans of venturing into print?

That would be a backward integration, we believe. We have a very strong digital print – if you want to call it that – presence in India. And we have partnerships with digital publishers specifically from the news content side.

But starting a new print-only product now would be very difficult to understand from anywhere globally, because it seems to be a case of people consuming print but not in the paper format. The written word has become digital. Print is here to stay, but the technology and the format are changing.

I don’t agree with anyone saying print has gone. This is not true.

How would you see the growth of the Middle East entertainment and media industry?

It’s been a challenging period for the sector. If you ask me if 2017 is worse or equivalent to 2008, I would say yes, it is.

When the economic scenario softens, the first thing that companies slash is their advertising budget. And that’s what is happening today, i.e., advertising expenditure is getting consolidated. If, as a group of channels, you are able to present a sizable number of eyeballs, you will have your share of revenue. But the smaller players are going to decline, as it will be very difficult for them to survive. This year especially is going to be excessively difficult from the point of view of the economic scenario in the MENA region.

Across TV, digital video, radio, and print formats, which one do you think will get the higher ad spend?

TV has always been and will always continue to get a bigger pie of the ad spend in the region – and anywhere in the world.

The second one would possibly be digital and the third one would be radio. But the good part is that, like in 2008, radio has more or less remained flat. It didn’t go down.

This year too I’m seeing the exact same trend repeating. TV will consolidate; digital has gone down in the past quarter, but radio is going to be flat or may even grow. This is the reason why we have ventured into radio.

In terms of numbers, what do you expect the ad spend will be in this part of the world this year?

I expect a decline of approximately ten per cent, compared with 2016 at least, across the board. 2016 was a flat year compared to 2015, but in 2017, I’m seeing at least a ten per cent decline in the MENA region. On the other hand, Asia-Pacific, which is another region I’m managing, is booming in terms of ad spend growth.

 

An expanded version of this interview appeared in the May 2017 issue of Gulf Marketing Review.

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