Sun TV: Rising from the South

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In December 2007, the sun almost set on Kalanithi Maran’s media empire. The television mogul, who rose from a cassette magazine entrepreneur to a billionaire in just 16 years, had crossed the path of the most powerful political family in Tamil Nadu. The apparent trigger was a poll published in a daily owned by him that favoured MK Stalin, younger son of chief minister M Karunanidhi, as his successor over the elder son, Azhagiri.

This drove a very public stake through Azhagiri’s political ambitions and a wedge through the cozy relationship between the Karunanidhi family and the Marans. This was seen as the outcome of other conflicts between the Marans and their granduncle, Karunanidhi.

First, Kalanithi’s younger brother, Dayanidhi Maran, lost his job as union minister. Then it was Kalanithi’s turn. Three employees died in an attack on the daily’s office. Azhagiri launched Royal Cable Vision (RCV) to take on Sun Network’s Sumangali Cable Vision (SCV), the largest cable operator in Tamil Nadu.

Soon, the state government launched Arasu Cable Corporation (ACC) to target at SCV. The Karunanidhi family also launched Kalaignar, a Tamil TV channel to counter Sun TV, the most watched channel in Tamil Nadu and the crown jewel of the Sun Network. In a state where government support could lift businesses to instant glory or its wrath could choke them to death, Kalanithi’s position seemed precarious.

What a difference just one year makes!
Kalanithi launched his Direct-to-Home (DTH) offering, Sun Direct in January 2008, under adverse conditions. Not only had his home territory had become too hot for him, but the rivals in DTH business were so formidable that not many gave him a chance.

As luck would have it, the families patched up in December 2008, throwing the southern field open for conquest once again. Very soon, Sun Direct proved its worth. In less than two years since its birth, it has equalled Tata Sky as the second largest DTH operator in India with 4.6 million subscribers.

“We are clearly Number 2 at an all India level, and by far Number 1 in south India. We are also picking 35-40 percent of all new subscribers added by the entire DTH industry on a monthly basis,” says Tony D’Silva, Sun Direct’s CEO.

Also, SCV’s major threats have all been decimated. Government-run ACC has pretty much ceased operations and may auction its infrastructure worth over Rs 100 crore. Azhagiri-backed RCV is nowhere to be heard of. As if that weren’t enough, Hathway Cable, the only real alternative to SCV in Chennai, inexplicably packed its bags and left the city in June.

On the channel front too, the Marans have beaten back their challengers. Sun TV has a viewership of close to 70 percent in the Tamil entertainment category according to Television Audience Measurement (TAM), a media research firm. Its sister channels occupy the number one slots in the Tamil Music and Tamil News categories. The strange thing is that for all their media might in South India, Sun’s DTH success has come as a surprise. “The unprecedented success of Sun Direct has surprised the Marans too,” says Vivek Couto, founder of media research firm Media Partners Asia (MPA). It is not often that a DTH business grows from zero to 4.6 million subscribers in 24 months.

D’Silva has used a counter-intuitive strategy to capture market. His game plan consists of three key moves — focussing 80 percent of efforts on the four South Indian states; competing aggressively with cable operators on pricing; and providing fewer channels to viewers.

Change the Rules
Why did Sun decide to alter the playbook? Sun wanted to attack the mass market rather than go for high-value niche market. Since it already dominates the mass market down South, it was natural to focus there.

Parent Sun Network has a slew of popular channels in Tamil, Telugu, Kannada and Malayalam which could easily be made available on Sun Direct’s DTH platform. Each state also has a clear bias for channels in its own language over those in Hindi and English. The South also accounts for 47 percent of the cable and Satellitite TV households in India.

With close to three-fourths of its subscriber base concentrated in South India, Sun is quite clearly the largest DTH operator in the region. In contrast, the subscriber base of Dish TV, Tata Sky and others is fragmented across a large number of states. “Sun’s focus on regional markets from a customer segmentation point of view has helped them,” says Rajesh Jain, a director with KPMG

Even when Sun did step outside South India, it shunned metros and bigger cities. “We knew we had to find a gap in the market that our competitors had not taken,” says D’Silva. He found that gap in smaller towns and villages in states with a fairly strong set of regional language channels, like Gujarat, Maharashtra, Punjab and West Bengal. There was only the local incumbent to compete with after all.