Media Group Ukraine chief on working the way up to the top. Exclusive interview. Pt.2
Continues from http://ceetv.net/readItem?id=35797
In April you announced that you ended 2016 with a loss. What are your expectations for this year?
After two crises in succession Ukraine’s TV business generates no profits for its players. The Media Group Ukraine is no exception whatsoever and thus it was subsidized by its owner as of the end of 2016. The Group management is, however faced with the task to make its business effective and is aiming, first and foremost, at reducing losses from TV channels and deriving profits from other areas, such as digital projects and in-house production of media content.
As of late, it is an evolving business targeted at optimization of its management model within accomplished assets and assignment of new business areas. It is due to such transformations that we have managed to reach a 3 time subsidy cut for the last three years and approach the break even point in in-house production and digital service.
In an interview, you also commented that financing for 2017 would be reduced for Ukraina channels compared to previous years. How will this affect your business and what are your cost-saving measures?
We need to produce high quality content so that it would be in demand with viewers, while possessing a potential for sale. That is deemed our priority goal. Last year we developed a coproduction model with a few Ukrainian companies (Star Media being one of them) according to which we co-produce a primetime line-up meant for further sale. The project proved to be quite successful and we are planning to gain momentum in this area. We intend to follow the formula which stipulates the channel Ukraina as customer, Media Group Ukraine as investor and a production company as producer itself. Thus, Ukraina gains a quality product it requires within a sensible budget, MGU gets revenues (on top of other sources) from content distribution on other markets. This is the model we follow when cooperating with Star Media and ABC Film.
Have you also planned the launch of new niche channels in Ukraine? Will this be the next step in your strategy for growth?
As of today a group of terrestrial channels has been fully formed and balanced. Within the framework of the Group strategy we have forecast the need to further echelon the channels deeming that it is a must for us to be present in each echelon. First of all, it is only logical from a commercial perspective, since advertisers would be less keen on a single channel (even if it is push button No.1) than on a few ones targeted at different audiences. Secondly, allocation of operating costs and content optimization for three channel would ensure a higher business effectiveness.
New channels would not provide either for the Group commercial growth or for its higher operating performance.
What is MGU’s digital strategy? Have you planned content specifically produced for digital platforms?
Our overriding priority is to spin off TV series and franchise production so that it becomes a separate business area with one of its key tasks being producing multimedia products for all distribution channels possible, such as classic TV, YouTube, digital media services, etc. This would enable us to monetize content not only through advertising revenues gained by the Media Group channels or sale (limited though) of licenses to CIS countries’ TV channels, but via all possible means in a number of territories
What are your expectations for the development of the ad market in Ukraine?
Yulia Kostetskaya , Director, Mediapartnership sales house:
As of the last year end the TV advertising and sponsorship market volume showed numbers similar to the 2013 pre-crisis period in hryvnia terms, with the favorable trend well-preserved, the market volume, nevertheless, amounts to US$ 275 million as compared to US$ 281 in 2009 due to hryvnia’s devaluation. The top categories in direct advertising are as follows: pharmaceuticals, food products, cosmetics, hygiene, trade, non-alcoholic beverages, communications. Speaking of the “commerce” category one has to mention that growth has been primarily driven by investments in TV advertising by the e-commerce representatives.
Media Group Ukraine is the country’s market leader in producing and broadcasting series which makes possible to retain viewers on the Group’s channels and to offer integration projects to advertisers. Such projects suggest the most long-term contacts with the target audience. Multimedia advertising projects also tend to grow in sales which might be attributed to new multimedia platforms on Ukraine’s market. The first of them was launched by MGU in February 2017. That was Segodnia (Today), a news platform incorporating all communication channels, such as TV, print media and internet.
2017 has proved that advertisers readily invest into sponsorship, including the Group integration projects enabling to stand out of the ad clutter, maintain a higher consumer communication quality, winning the audience loyalty to promoted goods and services.
You recently announced the launch of a “unique” package of channels for viewers abroad which includes four of your channels. Tell us more about the package and its distribution?
Aleksey Kurakin, Head of Business Development of Media Group Ukraine:
It was in April that Media Group Ukraine presented a package of Ukrainian channels with international rights throughout the world. In fall 2017 the project is to be presented in HD quality within a 24/7 regime for various providers, such as analog, digital and satellite operators, OTT providers, etc.
The project was launched and implemented to meet the interest in Ukrainian content shown by foreign broadcasters. We have been more than once approached about broadcasting our channels in a number of countries. That’s why we have developed a comprehensive solution – a package of channels for a whole family. The product is targeted at Ukrainian diaspora, first and foremost. But we are only at the outset of our journey, so we are going to analyze different markets, respective supply and demand and it is quite probable that the package might be adapted to other audiences. At least subtitles in English and other languages might appear in the very near future. Our entry into foreign markets is primarily a business solution since Ukrainian content is in a position to make money abroad and we should take advantage of the opportunity.
What is your strategy for the news platform Segodnya?
The site Segodnya.ua has already become Ukraine’s leading news platform. Our TV news have been readjusted so as to meet the Segodnya (Today) brand. Our further strategy in this area suggests convergent news formats and multiscreen work with users. Traditional TV maintains a high profile in Ukraine and digital consumption is ever growing. Content (news in cluding) is fed directly to viewers and we rely on it. Our strategy is: news to be found everywhere: thus we do not pull viewers to wherever we find it more suitable to write or broadcast but, on the contrary we carry our content to wherever the user feels comfortable to consume it. While being a new project for Ukraine it would hardly surprise anybody in Europe since it is deemed quite routine practice for news media brands the world over.
What is your position on the plans of the government to move forward with the analog switch off? Will this also change your relationship with cable operators?
Media Group Ukraine favors and supports the analog switch off. Transfer to the digital broadcasting would affect cable providers for sure, but, moreover, it would have implications for the entire market. Our relationship with cable providers would not change in principle. Besides, providers would expand their subscriber base due to analog viewers redistribution and ensure their additional revenues on our channels. Logic suggests that they would find our media product more valuable and money making would seem easier for both of us.