We are not going to retrench anybody: Viacom 18 Media CEO Sudhanshu Vats

The Rs 3,667-crore Viacom18 has had a great 2019. Its broadcast (Colors, MTV, Nickelodeon etc), film (Padmavat Andhadhun, et al) and digital (Voot) businesses were in good shape till the corona crisis hit. As everything comes to a screeching halt, Sudhanshu Vats, group CEO and managing director, talks to Vanita Kohli-Khandekar on the impact. Edited excerpts:

How is Viacom18 tackling the corona crisis? 

We started looking at it in the week starting March 9. We put together a small task force to look at it. It has seven members from strategy, IT, communications, commercial, production, HR and myself. We looked at various scenarios: What would happen if everything shut down, how we would operate, can we do it by rotating one-third of a team in a week? This was the first phase.
 

On March 16, 12 members of the leadership team met in office and we tried to figure out how to keep critical functions, which are the backbone of the broadcast operations, going. The big challenge was concurrency. We needed to give people concurrent and secure access. We tested it on the March 16 and could have 170 concurrent users, now it is up to 400.

We also put together work from home guidelines, which started on March 17. On March 23, the lockdown began. Out of a workforce of 1,600 we now have a total of only 15-20 people in offices spread across India. That is about 3-4 in each office for some critical functions. The production of TV shows stopped from March 18-19. We will have a bank till this week. Thereafter, we will go to repeat. And since it is budget time, we also did some scenario planning.

What scenarios?

The first, which we were originally working on, was the pre-Covid best case scenario. That is now out. The second is a base-case scenario. That is we take a year when business was bad and peg it to that. We took 2008-09 when the economy was hit in the wake of the global crisis following the Lehman Brothers collapse. It would mean a 20 per cent ad decline, 2-3 per cent decline in subscriptions, while digital will continue to grow. This assumes that we will be limping back to normalcy in June and be fully normal by July.

The third worst-case scenario assumes that it will be 6-9 months before things come back to normal. In that case, there could be a 50-60 per cent decline in advertising and a decline in subscription as well. That is a very hard scenario. We are still treating it as a base case.

What about jobs and salary?

We are not going to retrench anybody. We paid March salary on the 24th instead of the end of the month. And, even for the extended universe, we are ensuring that jobs won’t be touched. At production houses that work on our shows, we have agreed that people getting below Rs 30,000 a month in Mumbai and people below Rs 20,000 a month outside of Mumbai won’t see any cuts. This covers 1,500 people. For these people, 60 per cent of the cost will be borne by us and 40 by the production houses.
 

How do the scenarios differ for your film and TV businesses?

We get 10-15 per cent of our top line from films, depending on the films released that year. There are challenges there since projects have been stalled. Laal Singh Chaddha, the remake of Forrest Gump starring Aamir Khan, was to release on December 20. Some production has happened. If the clouds clear out and we can shoot some more, we could still make it. But both in film and our drama series, production work on writing and development continues.

Your assessment of the impact on the industry...

The broadcast scenarios we are planning are roughly same for the industry – it could be higher for the industry by maybe 25-30 per cent. Films will suffer, maybe by 30 per cent overall. Films will also suffer a little longer for psychological reasons. The multiplex and higher-end audiences are more fearful and conscious. Therefore, it will take time for them to come back to the theatres. That is not true for the single-screen and fan films, like the ones with a big star like Salman Khan. On the digital side, subscribers will rise, streaming video-on-demand will do better at high single-digits or maybe mid-teens. Digital advertising would see mid-single digit growth.

But hasn’t there been pressure on subscriptions post the new tariff order (NTO)?

Post NTO, the industry has seen 20 per cent growth in subscription revenues, though absolute numbers have fallen. Post Covid-19, there will be some pressure especially at the higher end of India. Once people are used to seeing on digital, they will question the relevance of the conventional cord.