TV does not have good margins anymore: Shobha Kapoor

Interview with Managing Director, Balaji Telefilms

With her genial demeanour and frank attitude, Shobha Kapoor, the managing director of Balaji Telefims, may seem like the mother hen mollycoddling the little ones. But when in office, the mother hen takes a backseat with the emergence of an accomplished businesswoman with a keen sense of the game and an eye for detail. Kapoor reveals her take on the business of television and films to Gaurav Laghate and Urvi Malvania. Edited excerpts:

You have done restructuring of businesses and downsized significantly. Is it for cutting costs?

The best you can do is cut costs and downsize as your sales price someone has already fixed. We’ve been undertaking downsizing exercises for the past nine months now.

 

We have reduced people cost. Now that we have reduced the number of shows, we do not need so many people to make and manage them. We are going to keep only so many people that are required to run the business and thus we have done away with a Group CEO for Balaji Telefilms. There are CEOs for the film division who are doing their work and generating revenues. Every employee has to be a revenue generator otherwise he is not going to be useful to me.

 

Be it films or shows, we plan a project we are very strict about the costing. It has become a routine to do the costing much before we even launch the film. We may make very small margins at times, but we make sure there is a margin. Being a public listed company, we cannot afford to take too many drastic chances. There are times when we have gone wrong, but we try and de-risk ourselves as much as possible.

 

We are not going make anything that is not profitable.

 

Balaji Telefilms has dominated the television space for a decade now, but off late, the total number of shows from your stable has come down. Why?

Television does not have good margins anymore. With digitisation and falling ratings, there is not enough clarity and the channels are not making what they used to earlier. The television rating points (TRPs) are nothing like they used to be in the Kyunnki (Kyunki Saas Bhi Kabhi Bahu Thi ) and Kahani(Kahaani Ghar Ghar Kii) days. That time shows had peak ratings of 14, 15 or 17 TRPs and averaged at 13 or 14 TRPs. Now, shows peak at 5 or 6 TRPs and the average is around 4.

 

Consequently, the budgets given to production houses are also much less. Balaji still has the best budgets in the industry, but it is nothing as compared to the pre-2008 days. The margins today are very low (in television).

 

Is that why you exited from the regional space?

We are not exiting from regional, but are waiting for the right time. Currently, we are not doing any regional shows because we are not getting good slots. The market is not so good for sales. Also, a lot of the regional market is seeing the Hindi shows dubbed in their respective regional language.

 

In regional space the margins are too small and budgets are very tight. So it is not worth it. Also, the quality of a dubbed Hindi show is still much better than the quality of original shows in that budget.

 

That is the reason we discontinued with Sun TV also because they were not giving us good slots and the returns were not very good.

 

So lesser margins forced you to shift focus to films?

You can scale up better in films and not in television. There is no point having 8 shows on television because eventually, profits will be very less. We have reduced the number of shows on TV.

 

We have been able to adapt to this change and invest our energies into something which is more profitable and gives us the IPR (intellectual property right) - movies.

 

Also, in case of television, you do not hold the IPR. In films, the IPR rests with you as a producer and the films have library value. The channels are not easy when it comes to giving me IPR.

 

Having said that, we are a television production company and at any given point we will still have four shows on TV. We have started a separate entity called BOLT for this purpose.

 

For films you have two separate divisions Balaji Motion Pictures Limited (BMPL) and Alt Entertainment. Why?

We aim to release only 5 to 6 movies a year between the two entities. There are two main reasons for this - one we are not in the business of trading. We want to be present from script to screen and thus are fully involved in all aspects of the movie. Secondly, there are only so many good release weekends in a year and if we produce more than 6 to 7 movies, when do we release them?

What is the amount you have put aside for funding the movie business?

The peak funding for our movie business is around Rs 150 crore.

 

How’s BOLT different than Balaji Telefilms?

It will focus on the lower budget shows. The team at BOLT will be taking care of the production of shows with lesser budgets, while Ekta will focus on the bigger projects.

 

BOLT is also into producing different kind of content that Balaji Telefilms Limited (BTL) was not into. For example it has done customised ad films. It will not be competing with BTL shows, but complementing. They are doing two shows - Rakht and Dhramkshetra for new channel EPIC.

 

You have resolved you issues with Doordarshan?
I wouldn’t call them issues as such. Yes, there were a few misrepresentations of numbers which has been sorted out. DD has started commissioning shows and want us on board to turn around the channel. We have another team that is dedicated to shows on DD and have now got two shows on the channel, one of which is set to launch in the end of July.

 

Star India has been vocal about offloading its stake in Balaji to promoters. What is your take on that?

We shall look at buying back stake from Star in the future, once we are in a more comfortable position financially.