The network strives for the right mix of guts and insight in its decision-making to cover lost ground, and CEO Sudhanshu Vats is already on the job
It is not easy to be a player of reckoning in the Indian media industry, and who better than Viacom18 to testify to that? While its parent companies Network18 and Viacom have had their share of highs and lows in India and globally, Viacom18 has inked its own breathtaking tale of life in extremes, some of which primarily came from what one would poetically term as being a ‘victim of one’s own success’.
Media is not for the fainthearted and perhaps it is for this reason that when Viacom18 channels – old and new – were taking leadership positions in their respective genres, they became the most talked about examples of rarely achieved success in the Indian media industry. But when that success needs to reply to hard business questions or respond to changing competitive dynamics or keep up with pressures of a fast moving terrain, the first signs of even the slightest error leave the deepest dents. For Viacom18, the good part of the last two years has been around that low phase. The industry, though, continues to keep a close watch on the company. And the reason now is the dawn of new leadership in the form of Sudhanshu Vats, who essentially speaking is Viacom18’s first ever Chief Exec.
THE ROUGH MARCH
The company had a formidable leader in the form of Haresh Chawla since its inception, but Chawla was first the CEO of Network18 and hence member of the Board that the Viacom18 CEO is required to report to. Neither Network18 nor Viacom eventually found a CEO for Viacom18 and Chawla’s ability to slip into the role made immense sense for both partners because more than anything else, Viacom18 was the most expensive gamble that both these media companies were playing.
In its initial phase, the gamble paid off but everything that goes up has to come down. From its No.1 position, Viacom18’s Hindi general entertainment channel (GEC) Colors became No. 4 amongst the GECs because Star Plus, Zee TV and Sony TV made it tougher for them to look good on weekly ratings report cards. Competition for its youth brand MTV intensified so much that channels such as Channel V succeeded where MTV had failed to create appointment viewing in youth entertainment. Viacom18’s kids brand Nickelodeon steadily kept building its own network, but competition from Disney and Turner never kept the task simple.
While Viacom18 did make some moves in the English entertainment genre, it was not at the pace of what its competition was doing. To add to that, the company’s expansion plans into the movie genre or a second Hindi GEC were no longer on the active drawing board. To worsen this, all other networks were adding more to their bouquets and creating offers for viewers and advertisers by adding more options to existing genres as well as adding more genres to their mix.
It was in this backdrop that Sudhanshu Vats walked into Viacom18’s newly occupied office building in Andheri (Mumbai) in August, 2012 to lead the company’s charge into a new growth phase.
IN COMES THE NON-MEDIA MAN
The first thing that stands out about Vats is that media does not feature in his illustrious career spanning over two decades, most part of which was spent at Hindustan Unilever. But as he says, moving from a fast moving consumer goods company to a faster moving consumer business was not such a bad deal. For Vats, there were other similarities between his previous job and media that made it apparent to him that this was one challenge he was game for. The basic philosophy of consumer being at the core and content being king (like the product is key) or the newer opportunities emerging from consolidation in the distribution space were some aspects of the business that Vats was no stranger to. The elements that were different only added appeal to the job. Unlike FMCG, which is a mature sector, media is young and is seeing newer genres emerge. Media’s inclination to be entrepreneurial and hence be more gut-driven than datadriven also was a difference that made things interesting for Vats in his early days at the company. “In all honesty though, I was anticipating all this – I knew what I had opted for,” he reflects.
For all the stories that he may have heard about the dynamic Indian media industry, Vats had joined the business in one of its slowest years. But that was not about to bother him easily. “It is true that in the short term timeframe, there were issues with growth rate of advertising revenues coming down from strong double digits to single digits. As the industry progresses, though, it is the ability of the individuals in the industry to be able to make the most of what is around. It is time to introspect and in some ways tighten our belt. But in all this, one cannot lose sight of the long term perspective, which continues to look very strong for media,” states Vats.
ROAD TO RECOVERY HAS BEGUN
‘Long term view’ is the guiding principle for the company at present. Keeping this in mind, Vats has devised a four-legged game plan that will guide the company in its future growth. He is also quick to point out that despite the rough patch, Viacom18 still has two assets that keep it strong – its people and channel brands.
“There was a phase in between when we were not up to our potential in the Hindi general entertainment space but if you look at the last few months, Colors is well on its path to recovery. Our mantra, which is innovation and high quality programming, is back. Innovation is about doing things better and sustainably. We are doing things in a concerted fashion today, in a way that was not done in the past. If you see our marquee properties such as ‘Jhalak Dikhla Jaa’, ‘India’s Got Talent’ or ‘Bigg Boss’, all were stronger than previous years. We are back on our feet and in the reckoning set of leading channels in the space. The market per se has changed to be a set of leading channels than any one leading by any notable margin. We are all doing a good job and we are all finding a place for ourselves,” explains Vats.
While the plan for Colors is to continue the content innovation attempt, the plans for the company’s youth offer, MTV, is to find the right space between music and youth entertainment. The genre itself has seen intense competition and the likes of Channel V have managed to create fiction programming that allows for daily appointment viewing. Vats explains, “Music is in our DNA and to that extent we would like to stay true to it. We are by far the value leaders. Our revenues are bigger than all the so-called youth channels put together. Moving forward, our attempt would be to create an ecosystem that allows us to connect with our consumers in various ways.”
Creation of such an ecosystem is important for Vats from the future growth perspective and it is one of the principles that he looks to apply across the Viacom18 brands. It comes on the back of his second guiding thought, i.e., segmentation.
SEGMENTATION, ECOSYSTEM, SYNERGY
“As India matures, we have to segment audiences to drive business. Mass entertainment is big and would remain so, but the space that would be bigger is the small and niche entertainment. Segmentation, hence, will be very important and with our specific brands, we are able to already provide it for certain audiences,” says Vats. To truly drive this segmentation, Viacom18 looks to create ecosystems for each of its brands.
Vats explains that while at the core, Viacom18 is a media company, it is also important to build revenue streams which are in the space of entertainment and have linkages to television, but can be in and out of television. He explains, “You have TV screens, screens outside of TV such as tablets, you have experiential entertainment such as malls and other face to face forums like live events and then you have consumer products. Creating an ecosystem is a combination of all of these together.”
One of the first steps in this direction is seen in Viacom18’s kids brand Nickelodeon. Apart from the flagship channel Nick that caters to the 4-14 TG, Viacom18 also added Sonic for the older category of kids TG (8-14) and Nick Junior for the preschool group. The move segments the kids TG further for Viacom18. Nickelodeon already has presence in consumer products, taking it a step closer towards the ecosystem creation.
The game changer for the company would be the ability to get synergy across its brands and drive strength across brands. “In the first phase of our growth, we did a lot very fast. We have a GEC, kids and youth channels, English programming and motion pictures business - now we need to see how to synergize,” says Vats, admitting that since Viacom18 is only in the first step of trying to synergize, the road ahead that some of its larger competitors have found difficult, should be comparatively easier. He adds, “We have to drive synergies. For us, it is staring in the face. The initial bits are very easy to see and we are thinking it through on all the various points where synergies are possible. I am very confident that we will be able to demonstrate how you can synergize across the Network. Since our journey is only just beginning, for us to get to the first stage is a very low hanging fruit.”
FROM GUT TO INSIGHT
Vats’ overall approach to the media business is to bring in some of his non-media expertise as well. One clear difference between various other businesses and media is media’s entrepreneurial culture which means more gut and instinct-based, than research and data-driven, decisions. Vats believes that the fourth focus area for the company is to see a combination of gut and insight. “As the industry matures, the journey has to evolve. We have to begin building things on fundamental insights because that will help us find longevity in our programmes. It may be true that people switch loyalties by just pressing a button on the remote, but television too sees loyalties. Research can help you in finding those and make your consumer stick to you,” concludes Vats.
‘I AM A TREKKER AT HEART; AFTER SCALING ONE PEAK, YOU HAVE TO MOVE TO ANOTHER’
His appointment made waves in the Indian media industry. One reason could be that he is amongst the rare breed of non-media CEOs in the broadcast usiness; another could be that he helms Viacom18, which is one of Indian media industry’s mosttalked-about companies with all eyes trained on what it does next. In either case, Sudhanshu Vats is the current ‘who’s the new guy’ of Indian media. It’s been only five months since he has taken charge, but expectations from Vats are high - both within the organization and outside As Sudhanshu Vats, CEO of Viacom18 talks to Noor Fathima Warsia about his plans for the company, two things about him stand out – clarity of thought on what are Viacom18’s true assets and liabilities, and what needs to be done
Q] The Indian media industry wasn’t seeing the best of PR at the time you decided to join the business, with viability of business models in question and allegations of lack of long-term thinking. What was your thought on making the switch to media anyway?
Every individual has a quest and the media piece fitted with mine. There are some nuances about media that I think bear similarities to the FMCG sector. Most fundamental in that is the consumer. In order to be successful in FMCG, given the involvement of the consumer with the product, you not only need to know your consumer but also your product really well – product is the hero. The media equivalent of that is content. The second element is distribution. In FMCG, there is a large portion of Mom & Pop and kirana stores. We are now seeing the emergence of organized retail, which will bring consolidation. In media, the cable operators and the multiservice operators are nearly a similar case. The change in distribution will bring new opportunities to media too and the nuances of dealing with it may have some similarities. The last thing is perhaps the pace of the business. I am coming from a fast moving consumer goods company to a faster moving consumer business. It is the joy of just doing what needs to be done at this pace. I am a trekker at heart – once you have scaled one peak, you have to move to another.
Q] These are interesting similarities, but media has some stark differences from other businesses...
True, but that only adds to the appeal. FMCG is mature whereas media is young, and then there is new media, which is a much newer sector. The way decisions are taken in FMCG are more data-driven and media is more gut-driven. But these are challenges I had anticipated. For me, at this point, to lead an organization and give direction was important.
Q] Some would say Viacom18 itself was a challenge, given that it has been in one of its rougher patches...
Most challenges can be turned into opportunities. Questions can be asked on subscription revenues, business model and so on but all this is the opportunity for someone like me who was not from the industry. It was also the conversations that progressed with Raghav Bahl and Bob Bakish and that was another clincher for me to take up this role. The most important thing is the potential of the industry, which we all know is going to be even bigger in the next few years.
Q] You have articulated Viacom18’s vision on four key legs –segmentation, ecosystem, synergies and insights. But there is no move towards adding more offers...
We just did in the kids genre which was in line with our thought on segmentation. We are keen to dial up ecosystem-building in a big way and then leveraging group synergies. There is quite a bit to do over there and this philosophy cuts across all genres we are present in. We will continue to explore what is right but at the moment, there are no plans of any new launches. As we speak, we look at every opportunity to see what makes for a strong business case and where Viacom18 brings differentiation. We are committed to growth.
Q] What will make it to the checklist of your success when you take stock a year later?
• Focus on our people and ensure that the joy they have of working in Viacom18 grows
• Our brands are very strong, ensure more power to them
• My own satisfaction of having done a job I had set out to do
Feedback: noorw@exchange4media.com
