As the CEO of Colors, the Hindi general entertainment television channel from the Network18 group, the 35-year old Rajesh Kamat, is in an enviable position.

What made you number one in such a short time?

At the time of the launch we said that we were banking on differentiated content. It was coupled with disruptive scheduling (of programmes) and backed by effective distribution and what I would like to classify as smart spending.

Meaning?

That is, our total annual budget was similar to what others were spending but we packed the shows and played them out in a manner which gave us the momentum we really needed. The strategy behind launching Khatron Ke Khiladi and Big Boss back-to-back was to create a buzz and a window for our fiction shows.

We spent 5 to 10 per cent more than the others on cable distribution but that money was spent to ensure that we sat right next to the outlet which had the maximum footfalls. So Colors sat between Star Plus and Zee on cable networks. The judgment was based on the observation that the Indian viewer has the habit of scrolling up and down the remote to surf rather than pressing specific number buttons.

While going 'up' and 'down' the chances of him sampling your channel were very high. So it was not just about getting a place in the prime band, what was equally important was 'where' in the prime band you got placed. In each market, Colors sat next to the market-leader.

An example of smart spending was getting Akshay Kumar. He was a boon to our marketing plan, acted almost like a brand ambassador and helped us break through the clutter in single-TV households.

Was there a Plan B?

We played to win. The goal-setting was aggressive but the approach was systematic and pragmatic. The scheduling was scientific : When Balika Vadhu started working, we gave the audiences multiple entry points to the show (11 at night and 2 in the afternoon, other than the prime time).

But you have spent around Rs 700 crore to reach this far. When you stop burning cash, the TRPs will decline.

I cannot comment on the actual numbers. But let me put it this way, you may say "I'm burning cash" but I call it the phasing of cash. In India, fiction is the staple diet for TV viewers. You need a big-ticket show to get the 15 to 24 year-olds, who are the most flirtatious among television audiences.

They are the ones who will sample you and get you into the single-TV households. Then the lady of the house, who is the stickiest of all viewers, will actually spend 2 to 3 hours on your channel. But she watches fiction. So you have to smartly channelise these eyeballs towards your sustainable, long-term properties which are not very expensive.

If you cannot migrate your audiences from your big-tickets to your fiction properties, then you are only burning cash. In our case, fiction is working. (Analysts estimate that while Balika Vadhu costs Rs 15 crore to make, it earns about Rs 100 crore a year though a Khatron Ke Khiladi would be loss-making).

What is the cost of a successful national Hindi General Entertainment Channel (GEC) today?

Between Rs 300 and Rs 500 crore (Rs 3-5 billion)a year. The costs have not gone up dramatically except for some inflationary growth.

How many Hindi GECs are profitable?

To be profitable, you have to be in the top three. The GEC advertising pie is roughly Rs 2,000 crore. The top three earn any where between Rs 400 crore (Rs 4 billion) and Rs 700 crore (Rs 7 billion) each, or about Rs 1,400 to Rs 1,500 crore (Rs 14-15 billion). Now if you add subscription revenue to that, from India and the international market, you start making money.

In which case, why aren't some of the channels dead by now?

No channel has shut down so far. I suppose, it depends on how long they can sustain the bleed.

Colors is said to have incurred a Rs 250 crore loss in the first year and is expected to turn in a Rs 160 crore loss at the end of year two (2009-2010)...

I cannot comment on the losses but we are likely to be profitable much ahead of our plan.

Do you have cash-flow issues?

No, not really. Both Viacom and Network 18 are strategic partners and there is no question of any cash-flow issues.

Colors became a pay channel in April and struck a Rs 100 crore minimum guarantee deal a year with One Alliance...

No comments on the deal size. But no channel has gone pay in the first year of its operation. Yes, the pay-revenue has already started trickling in. The deal was well-timed for two reasons. First, our content had created enough pull. Secondly, One Alliance (with Sony and Discovery bouquet in its fold) was also selling the Indian Premier League at the same time which was beginning in April. So the Colors-IPL combination worked.

How much do you think Star and Zee make from subscription revenue?

They make about Rs 120 to Rs 150 crore (Rs 1.2 to 1.5 billion) in pay revenue. We hope to cover up this legacy gap in the next couple of years.

Shows on almost all the channels now are catering to small-town India. How have tastes changed in the last couple of years?

In our very first presentation last year, we had said that there is an India and there is a Bharat. Today, between 7 pm and 9 pm, the viewership is skewed towards smaller towns. From 9 to 10 there is an equal split between the metros and the small towns. From 10 onwards, viewership leans towards the metros. The content has a tone and a setting. While Bandhan was set in UP, the on-going BhagyaVidhaata is set in Bihar.

The audience tastes have changed in that earlier the housewife used TV to escape into a surreal world. Today entertainment which is real is accepted.

But not all the shows deliver.

Such shows go off air. We have actually changed four of our shows in the last one year.

Do you plan to launch another entertainment channel?

No, it's not on the radar. We have to take Colors international first. We will launch Colors in the UK, the US and the Middle East in September.

With Sach ka Saamna, Star Plus is back with big bang. Are you worried?

There is no need for a knee-jerk reaction. It is one of the shows which has worked quite well for them. It is looking good.

Will there be a clear leader again in this space?

Not for sometime to come. It will be a seesaw. There will be pressure on the broadcasters to deliver content that will work for the advertiser. The days of disproportionate advertising premium which leaders charged are over.