Cross-Media Companies are on the Rise


By

Prof. Medha Chintala
Ex-Faculty Member
ICFAI University
MS Program
Nagarjuna Hills, Hyderabad
 


Cross-media control is increasing in order to adapt to the changing business environment fuelled by technology and changing consumer habits.

The recent announcements made by the two big TV channels Sun and Star, to offer complete media services is accelerating the pace of cross media controls in India. In fact most media companies in India and abroad are integrating vertically, to sell cross media; they are seen to be acquiring multi- media platforms for their operations. Much in their pursuits, Star TV India and Sun TV already own private radio FM bands. In addition to this, Sun Network, has fourteen TV channels in four states and cable assets, has four magazines and two newspapers. Star's cross media Indian operations include entry into Newspaper, Internet, Mobile entertainment, and Home Video in India. Star TV India has   dropped TV from its name, is rechristened to Star India.

Media's Growth calling Cross Media

Even though cross media communication is not new, Times Group, under the largest selling English daily The Times of India, is considered to be the most vertically integrated media company with several cross-media ownerships like mobile advertising under 8888, Radio Mirchi, its FM radio operations, and TimesNow, Zoom TV channel, OOH - out of home advertising and also holds media distribution and networks. But cross media is becoming the new buzz more so due to a number of recent developments supporting cross-media ownership.

The growth of Indian economy is directly reflected in the Entertainment and Media Industry. The Industry is growing at about 20% expected to reach $ 4.3 billion USD, by 2007. Typically it is the boom in all of the media segments. But what is very interesting is that the conventional media -television, radio, film and music holds the bulk share in the media pie, and promises to wield so even, up to 2010, as can be seen in the PwC analysis of Indian media as seen below:


Apparently television occupies the highest share in the media pie; In terms of revenue it holds 70% of the share. TV in India has come a long way from a single channel, black and white terrestrial transmission with privatization. The growth in TV is still on and will continue its dominance with the coming of DTH (direct to home), digital cable and IPTV into Indian homes. With more than 100 odd the satellite TV channels today catering to regional languages, the competition is fierce, and that reasons Sun and Star's entry to other media platforms with a secure stance in television segment.

Besides television, radio is also showing growth and revival. With the privatization, 338 new FM licenses have opened up. In the first phase of FM radio bidding, 60% of the bidders for the radio spectrum were among the top media firms of the country (showing signs of cross media ownership). As for the other two conventional media which are purely in the entertainment sector- the film and music occupy a significant part of consumer's mind-space, with 40% of the industry's pie. Analysts point that they are about to soon emerge into higher prominence.

Against this backdrop, other media holders are vying intensely to acquire cross-media businesses, like Vaarta, after a decade of business in Telugu daily newspaper has announced to start Telugu TV news channel. So also the magazine India Today is operating in Television segment under Aaj Tak and Headlines Today, and has plans to open another English News TV channel. Similarly Malayala Manorama(MM) from print media is going to start a news channel called MMTV.

Technology's Effect:

Technological breakthroughs in communication are so advanced that costs are crashed many times to give mass accessibility. The emerging new media with the digital connectivity is going to redefine the consumption and delivery of content. Which makes no media platform a sole avenue for market share, media firms are finding a need to integrate their services and expand their audience base. With changing technology media habits are distorted and so the competition. The broadband Personalized Digital Assitants are creating new media options to venture.

Media Habits are Changing

Technology is changing or even eroding consumer's media habits. Because of new alternatives, the audience is switching loyalties. Also the consumption timing, place and form are seen changing. It's not just listening to TV news or reading the newspaper, but consumers want to respond and communicate for interactivity. Today, in a flash any newspaper can be downloaded eliminating geographical boundaries. Newspapers with their website have a feedback window, allowing two-way communication; consumers are co-creating content, giving their opinions and information. Further with the blogospheres, consumers are seen as prosumers or netizens. But all said and done, co-creation happens only when initial interest to a topic is generated by traditional mass media. Hence, emerging media may not ever bypass the mainstream conventional media's dominant role. In this context, Deepak Kapoor, ED of PwC -E&M, commented recently on growth of Indian media in the Frames 2006 media summit that all sections of media are doing well with great potential for growth both long term and short term. That's why media barons have a chance to cross-sell their stories, or the content. They are showing extreme optimism, leveraging their flagship brand value.

One more potential for cross-media communications is the audiences "multiplicity of media needs". According to Anurag Batra who is the Editor-in-Chief of exchange4media group and media analyst recently said - "We are living in a world of "media multiply" because audiences are seeking one more source of media to get the same information i.e., once a piece of news is read from a newspaper, they dig for more details from available media like  internet or TV. This has been empirically proved". Presently, consumers seek depth of the issue, and for media firms, its leveraging their brand to cross sell their content or information.

With such consumer behavior, accurate demographic profiling of media consumption to know people's media habits is getting complicated. The option to record a live program with "TiVo" to later edit and view or use the personalized newsletter format for online information exists. On the contrary, two people having same media consumption habit might be entirely different personalities. In the absence of clarity, media firms want to have their feet on all media platforms. They are redefining their businesses to catch the attention of the audience. Analysts say it's the dawn of "lifestyle media opportunity", with the objective to capture people's attitude and not mere eyeballs or ears. Media firms have redefined their businesses to be in the business of reaching the audiences; they are competing to reach them at any cost, hence their quests to cross-sell.

Competition is new:

Media firms are aiming at having their presence on multimedia platforms because competition today is changed. It is not between any two media vehicles or two channels of a television but on entire media per se. This is governed by shifting audience's media habits enabled by technology. In fact the audience, (target segment) is unconcerned of media type. It is only the convenience and quality of content, that matters to them. Once the consumers are guaranteed of this, the media company can catch the customer in any media option at any time or place. That is why Times Group is one of the largest cross-media owners of the country harnessing their brand value in Zoom television or 8888 SMS advertising for instance, besides its new venture in OOH, out of the home advertising.

Most media firms are looking at defending their old bastions in conventional media and expanding their foothold in other media. With the boom in the media industry and its growth prospects, players of other businesses are seen entering; Reliance for example is spearheading for three new media channels. New entrants can threat business of existing media players. That's why Star India's Rupert Murdoch international media baron in this context opines we have to be multimedia firms in order to survive; signifying the spectrum of media NewsCorp owns. Right from production and distribution of films, television, magazines, newspapers, books to on line networks. Established media players are pioneering in new media options ranging from online narrowcasts like (vlogs, webcasts and video podcasts), to online social network broadcasts. Even The Washington Post with its online web services and other integrated media control is a successful cross media model, for grappling cross media firms to learn. Also, Rupert Murdoch's "mySpace" connecting 600 million consumers all at a time is creating tidal waves in transactions and networks.

With new broadband personal digital devices, the change is felt in content too. Some of the previous, wireless operators, music and film companies, comics content developers, game developers and musicians of India are seen to enter mobile content for ringtones, gaming, mobile imagery to compete with present players like, Mauj, Indiagames, Hungama, Soundbuzz , Coruscant Tec, etc. Also the movie makers of Rajshree are going to expand into broadband content media.  With the advent of Apple's ipod heavy global investments were made to create its visual content in a novel format suitable for podcasting.

Strategic Tie-ups

In a bid to start cross-media operations, media companies are entering into strategic tie-ups and alliances. There are synergies, like advertising, sales and building brand equity. Some of them noteworthy are - Times Now from the Times of India Group has 26% stake with Reutors, for quality news. The group also has 51-49 partnership with BBC. Raghav bahl's CNBC has partnership with TV18; CNN- IBN has partnerships with Motion Pictures. The government's policies enable foreign investments; some of the major investments for cross-media are mentioned in the table below.


Unraveling the Benefits:

Cross-media selling create economies of scale and to synergize brand value. Besides catching all types of audiences, cross media ownership can guarantee the advertiser a 360 degree communication advantage with one rate card in the media space and a scope to economize due to large scale operations. In this view, media firms are aiming at one stop media shops to meet all needs of customers and advertisers alike. But, cost as the advantage is not the sole benefit to have cross-media business. This is because media firms aim to have standalone ventures, with at times transfer pricing taking place. The media firm's revenue in cross media control is seen to be done on a single media platform basis: they want to incur marginal benefits.

This said, media analysts say cross-media properties allow a vertical integration to promote its stories or content across variety of platforms. Integrating content production, distribution and execution like the way done by Times Group. Even though new media platforms require new content, content can be reused or modified to suit a new platform, like Times Now the TV arm of Times of India Group, which is presently leveraging its brand equity and working on strategies for audience loyalty. Zee TV can also make use of its existing library for content to cross-sell.

Any Pitfalls?

Media analysts say that success in one domain, does not automatically guarantee entry into success in the other domain. Both the businesses may eventually be immensely successful though. New business should have merit of their time to give it enough gestation periods. TV for example works on an entirely different distribution platform- like operations are based on the carriage fees which the cable operators are charged with. And success of a channel may depend on the best fitting distribution rate. Also the strategic alliances may not be all synergistic to the extent expected, like the AOL and TimeWarner's case of de-merger.

With cross-media holdings on the rise, an implication of media monopolies may arise dominating prices to restrict smaller, local players. Media owners should look into diversity of news coverage due to media consolidation by way of cross-media communication. The diversity of news issues can become one sided with conglomeration from cross-media. The Information and Broadcasting Ministry is going to pass broadcasting bill for cross-media ownership  Yet international cross-media controls show successful experiences, democracy may stifled by such broadcasting bills, and the issue is debatable.

To conclude, media analysts say that new media options and cross- media controls are in growth stages. It is only the knowledge of consumer activity will launch success, rather than ownership of content or distribution assets. The cross media boom is dictated by macro economy and has come to stay. Implication for media owners is to just play their cards right.
 


Prof. Medha Chintala
Ex-Faculty Member
ICFAI University
MS Program
Nagarjuna Hills, Hyderabad
 

Source: E-mail January 8, 2008

          

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