Sun out in the cold

Kalaignar, DMK’s new channel, is making a concerted effort to edge out the market leader Sun TV

A hoarding inside Sun Network’s headquarters, facing Chennai’s arterial road Anna Salai,

proclaims the arrival of Kalaignar TV. The new channel isn’t Sun’s baby. Rather, it is a rival’s. The hoarding paradox could flummox those uninitiated with Tamil Nadu’s politics and media. The fact is that Sun broadcasts out of the DMK party headquarters, with which it has shared an extremely cosy relationship until recently. In fact, Sun was something the DMK helped promote 14 years ago. They fell out in early May this year when Sun’s affiliate newspaper Dinakaran published an opinion poll on who would replace Tamil Nadu Chief Minister M Karunanidhi, also the DMK chief. Angered, the DMK decided to back a brand new channel to counter Sun. Kalaignar (Tamil for ‘artiste,’ which is one of Karunanidhi’s titles) is its answer. The new channel reportedly has shareholding by members of Karunanidhi’s family. Significantly, it is being headed by Sharad Kumar, an old friend and associate of Maran.

The media-crazy state of Tamil Nadu, which enjoys one of the highest per capita access to cable television in the country, has seen a number of political parties backing TV channels over the years—some of the other examples being Jaya TV (AIADMK) and Makkal TV (PMK). From the point of view of that trend, Kalaignar’s entry is not against the run of play. The industry view, however, is that Kalaignar could be a tougher rival for Sun to handle than others.

Until now, Star Vijay, Jaya, Raj and the Doordarshan channel Podhigai could collectively, at best, clock a third of a viewership of Sun TV, Sun’s flagship channel. What’s more, in Tamil Nadu, the channel that has been a clear number two over the years has been Sun’s own KTV.

The result of such domination is the leverage that it has with production houses and advertisers. In its early days, recalls an industry executive, Sun used a model wherein it would sell, say, a 30-minute slot to a producer, who could then market airtime with advertisers. This system could be likened to an owner of an apartment who rents out individual houses.

As Sun gained in strength, it tweaked the system a bit: it started retaining a portion of that airtime, which it could market itself. In short, it developed a model wherein it could get both the fee for the slot as well as monies from ads. Today, Sun earns as much as Rs 2 lakh as fee from selling a 30-minute prime-time slot, and gets two to three minutes of airtime that it can sell to advertisers, says a source. For the same reason, it has been able to hold on to the card rate, perhaps the only Tamil channel to be able to do so. Prime time, a 10-second slot in Sun sells for Rs 25,000. Its nearest rival may get a fifth of that with some difficulty.

The over Rs 700-crore company’s hold on viewers hasn’t been a result of novel programming, says an official of a rival channel. Nonetheless, he adds, it hasn’t been shy of quickly launching take-offs of novel programmes of its rivals that have become popular.

Pull Factor

Sun’s content formula, which has only become more robust over the years, has two

The new channel(Kalaignar) has managed to woo big upoduction houses such as AVM, as also some Tamil film directors to make soaps for it

components: soaps and movies. At the national level, where rivals have a vastly bigger Hindi audience to tap into, Sun’s programmes account for a fourth of the top 100 programmes, and almost all of it are soaps. Also, Sun is said to hold the rights for 60% of the Tamil movies made till date. But what backs the content is the ground distribution, which Sun controls through an arm called Sumangali Cable Vision. Maran knows the value of distribution; two years ago, it had been reported how he held back plans to move beyond South (with a channel in Bengali) when he failed to win a bid for distributor RPG Netcom. Maran could not be reached for an interview for this story.

It is important to understand Sun’s model. Kalaignar seems to be largely mimicking it. Sharad Kumar didn’t respond to a questionnaire, but industry sources reckon the programming mix of Kalaignar would again hinge on soaps and movies. The new channel off the block, the sources add, has managed to woo big production houses such as AVM, which was with Sun till recently, as also some Tamil film directors to make soaps for it. Sun also has had to face competition in the movie rights market. Kalaignar has won the rights for the Rajinikant blockbuster Sivaji as well as the upcoming Kamal Hassan movie Dasavatharam. Also, the new channel, in an arrangement with Raj TV, could dig into the latter’s well-stocked library of movies. This war for movie rights is also proving to be a boon in disguise for the film industry. Says Oscar Ravichandran, a leading producer: "The increased competition for satellite rights means more money for producers, who can use it to fund more projects. This will also result in more investment in theatres and multiplexes (as more movies hit the screens). So it’s a win-win situation."

However, the focus on movies and soaps alone can’t ensure a good contest against Sun, as Jaya and Raj over the years have found out. Kalaignar will have something extra: ground support. The Government of Tamil Nadu has decided to enter the cable distribution business shortly. So, industry officials point out, last mile connectivity wouldn’t be a problem.

Fall From Heights

The coming of Kalaignar has had its impact on Sun’s stock, whose fall has been greater than other stocks in the floundering media segment (see: Stocktaking). A recent report by Media Partners Asia mentioned that Sun "has long enjoyed a virtual monopoly in the south but this is under threat following political change and fallout." Since the publication of this report, the Sun stock has gained some of its lost ground (which some analysts attribute to markets’ positive response to acquisition of a stake in Red FM) but it is still 29% off 52-week highs (according to the closing price on September 14).

A finance expert, who has kept tab of Sun’s evolution, says Kalaignar is "obviously a threat, as a part of Sun’s success has been no doubt due to political patronage." Says he: "The challenger is armed with an ammunition of funds, lineage and connections in the media world." The fact that the Sun stock has not fallen by a greater percentage validates the inherent strength of Maran’s business. "Having said that, viewership won’t shift in a hurry. And Maran wouldn’t wait for that to happen."

Analysts also believe that the ad pie is not going to grow significantly, so all channels playing the soap-and-movie game might take a hit if Kalaignar grows. Star Vijay, which has stayed away from this formula, might not be impacted in that case. A media planner agrees. "This is going to be the biggest competition Sun has had to face until now," he says. A situation the Sun chief has rarely been in. And, unlike other instances, where he used KTV (his number two channel) as a front to ward off competition, this battle could directly target Sun, says an industry executive.

No Smooth Sailing

The coming of Kalaignar has had its impact on Sun’s stock, which saw a sharper fall than other stocks in the floundering media segment

But, it is not going to be all that easy for the new challenger. The official of Sun’s rival channel says, "The loyalty developed by Sun wasn’t built in a day. Though Kalaignar is likely to follow the same content strategy, and has wooed a large number of Sun’s personnel, it would certainly find swapping viewership loyalty tough. It would have to sweat it out." Also, "how and when the distribution foray of the government is likely to happen is to be seen."

Kalaignar has to build viewership, says the media planner. Until now, Sun has been able to deliver reach to its advertisers. Such ability is useful in the ad market, conservatively estimated at Rs 350 crore (for Tamil Nadu). "With the kind of content that they are talking about, they can create a short-term impact," says the media planner. "But what’s vital is can they do it for the long-term. They haven’t had much time to plan this channel." He says the channel would get retail and film advertisers from Day One but the key would be wooing corporate advertisers, who make up two-thirds of the ad pie. The latter would like to wait for viewership numbers before committing itself in a major way.

Kalaignar apparently quoted Rs 10,000 for a 10-second slot for some prime time programming, which is twice what other Sun’s rivals could afford to do. This, when the channel was not even on air. But advertisers are waiting and watching. Surely, there’s much to watch in this part of the country.

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