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One look at media mogul Harish Thawani's growth plans is enough to forget the global economic slowdown. The flamboyant CEO of Nimbus Communications wants to take the Neo sports channel to such new markets as Malaysia, Thailand and Indonesia, and even expand into Europe and North America. The aim, as Thawani reveals in an interview with Nevin John, is to achieve an over 50 per cent growth in market share next financial year. Excerpts:
Corporates are deferring their investment plans and cutting costs to preserve cash. Has it affected your advertisement revenues?
Sports channels, especially cricket channels, have a guaranteed audience, unlike news and entertainment channels. Neo earns 98 per cent of its revenues from cricket and the remaining from other sports. Whenever there is a live international cricket match featuring India, the channel's ratings shoot up. Also, advertisement rates are more steady for cricket channels as they have a steady audience in the age group of 15-45 years across all socio-economic groups. That's difficult to obtain for any other media. Whether rich or poor, educated or uneducated -- all watch cricket. That's why cricket channels are the right platform for both -- a Mercedes car as well as a moped-maker. We have 235-240 million youth in this country in the 15-25 age group. Only cricket can reach that audience in one shot.
Which sectors are still advertising on cricket channels?
Well, advertisements from automakers fell in the quarter ended December after the demand for four wheelers was badly affected. However, it's picking up again in the current quarter. For the recent India-Sri Lanka series, Neo Cricket got Tata Motors as a co-sponsor. Then retail and real estate sectors took a hit, but that affected the print rather than visual media. Advertisements from financial services continue to be low for sports channels. However, insurance is growing massively since the economic slowdown has created a scare among the people.
Neo Cricket has five major insurance firms as advertisers -- IDBI Fortis, Kotak Life Insurance, HDFC Life Insurance, Birla Sun Life and Bajaj Allianz. Lifestyle product-makers are also advertising heavily on cricket channels. Virgin Mobile is one example. In fact, telecom is going to be the single biggest advertiser in 2009-10, with Vodafone and Idea expected to be the biggest spenders in the segment. The ad revenues are expected to rise further in this sector as there will be six new GSM players. Our internal forecast is that there will be an approximately 9 per cent growth in advertising on cricket-led sports channels during 2009-10.
How well placed are you for ensuring growth?
Neo Cricket has the telecasting rights for six international series and tournaments involving India. We started recently with the India-Sri Lanka series. Then we have the Afro-Asia Cup in June-July, India-Australia series in September-October and the India-Sri Lanka series in November-December. Neo also has the broadcasting rights for the India-Bangladesh-Sri Lanka triangular series and South Africa's India visit in January-February. Moreover, the cricket channel telecasts such shows as Dial C For Cricket, Sports Zone and Balebaaz.
They have become highly successful and are earning us additional revenues. We expect that Neo's annual subscription growth in the rural market could be at least 35 per cent. While the DTH subscriber base will grow 35-40 per cent with 27 per cent growth in overseas markets, including West Asia, Sri Lanka, Bangladesh, Singapore, Hong Kong, Japan, Korea and Taiwan. In 2009-10, Neo is expecting its market share to grow by over 50 per cent, which will take our sales to Rs 550-600 crore (Rs5.5-6 billion).
Analysts say that the downturn has turned out to be good for television industry. What is your take?
The financial crisis has forced people to stay at home rather than go out and spend on movies or shopping. This has helped TV ratings. In the last quarter alone, we saw a big jump in our subscription because of this reason.
With cricket entering new markets, what are your plans?
We are at the final stage of launching Neo channels in Malaysia. Soon after that, we will enter Thailand and Indonesia. Europe and North America will follow later.
How much investment have you lined up for this expansion?
We have already invested Rs 700 crore (Rs 7 billion) for Neo channels. Now institutional shareholders, such as Cisco, 3i and Oman Investment Fund, plan to infuse an additional Rs 250 crore (Rs 2.5 billion) in Neo for launching two new entertainment channels and buying more broadcasting rights.