Value

Chain of Media Industry

Value Chain
| O F M E D I A I N D U S T R Y |

Institute of Business Administration.

Submitted to: Mr. Shakid Zaki
Course: Corporate Strategy

Value Chain of Media Industry

Contents

1. Industry Overview .................................................................................................................................... 3
2. Electronic media ...................................................................................................................................... 3
3. Growth of Electronic Media in Pakistan .................................................................................................. 3
4. Growth of Industry Revenue ................................................................................................................... 4
4.1 Pakistan Media Spending ................................................................................................................... 4
5. GEO TELEVISION NETWORK ..................................................................................................................... 5
Vision Statement ..................................................................................................................................... 5
Mission Statement ................................................................................................................................... 5
5.1 Market Share of Geo .......................................................................................................................... 6
6. Porters Five Forces Model ...................................................................................................................... 6
6.1 Sellers ................................................................................................................................................. 7
6.2 Substitutes ......................................................................................................................................... 7
6.3 New Entrants ..................................................................................................................................... 7
6.4 Buyers ................................................................................................................................................ 7
6.5 Distribution ........................................................................................................................................ 7
7. SWOT Analysis of Geo TV Network .......................................................................................................... 8
8. Value Chain Analysis ................................................................................................................................ 9
9. Core Functions of Product Development .............................................................................................. 11
10. Competitive Landscape ........................................................................................................................ 14
11. Conclusion ........................................................................................................................................... 16

Value Chain of Media Industry

1. Industry Overview
The Media industry is primarily involved in the production, dissemination and consumption of
information and content. The Media industry consists of all different sizes of businesses. Media
is a fairly general term and can include such industries as Television, Radio, Magazine and
Newspaper publications, online publishing and websites. The Media industry plays a very
prominent role in our society and economy.
The electronic media business within the industry typically has the major revenue streams of
advertising from the selling of time for commercials.

2. Electronic media
The primary electronic media sources familiar to the general public worldwide include radio,
sound recordings, television, video recording and streaming internet content. It denotes, the
main means of communicating with large number of people. The electronic media have four
basic functions; to inform, entertain, educate and influence the public opinion.
The 20th century can be termed as the century of communication. The main mean of mass
communication grew in succession as the century unfolded. Motion pictures arrived on scene in
the first decade of this century. Regular radio broadcasts started in 1920s. Television entered
the arena in 1940s, followed by cable television in 1950s, and satellite television in 1970s. Lastly
the personal computer gave access to Internet in 1980s. It transformed the interconnected
computer networks through World Wide Web by the 1990s.

3. Growth of Electronic Media in Pakistan

The electronic media in Pakistan has made rapid progress. Only three or four decades ago,
radio and state owned TV was considered to be the main sources of information. Today, we
have more than 77 Satellite TV Channels, 2346 cable operators, 28 landing TV Channels from
abroad. The growth has made available more knowledge and up to date information in all
spheres of life to the general public.

Value Chain of Media Industry

4. Growth of Industry Revenue

Industry cost per minutes trend continues

Pakistan Electronic Media Industry
downward in 2010. Due to the increased
number of channel the rate of per minute Mounted to Rs 17.8 Billion in 2010.
advertisement has reduced drastically and
now small advertisers can easily get exposed to TV which was almost impossible for them 5
years back.

4.1 Pakistan Media Spending

Value Chain of Media Industry

5. GEO TELEVISION NETWORK

A resounding Success Story!

GEO TV was established on 14th August 2002 and is the first South Asian
Urdu language channel to provide content comparable with world-class
television broadcasters. Geo is the fastest growing TV Channel in Pakistan
with ratings exceeding all satellite delivered TV channels in the market
and has the widest distribution on cable systems in Pakistan.

Vision Statement

GEO will be the voice of freedom from the Asian subcontinent. It will highlight the
issues of concern and the cultural richness of its people through information,
discussion and entertainment. GEO will propagate transparency of responsibility that
will ensure its position as the most credible and meaningful source of information,
through quality programming based on issues. GEO will provide entertainment
audiences can relate to, thereby creating viewer loyalty and response. GEO will forge
an alliance amongst its three stakeholders - viewers, advertisers and shareholders to
maximize viewer ownership. GEO will invest in human resources as it recognizes it to
be the foundation upon which the GEO future will be built. It is this very foundation
that will allow GEO to attain and sustain a leadership position, thus fulfilling the
promise associated with its creation.

Mission Statement
GEO informs and entertains while celebrating cultures and prompting
dialogue in the spirit of "live and let live".

Value Chain of Media Industry

5.1 Market Share of Geo

Geo Network remained market leader in Pakistan with 37%
relative share of all CnS viewership. Geo Leads in
entertainment, News & Sports genre with prominent margin.

Geo News is clearly the market leader

in terms of Revenue and Viewership.

Geo Network holds highest amount of business share among all

competing networks up to 34% but only 12% share in total air
time of the industry, this means Geo is comparatively
expensive but is very much justified by the GRPS (Gross Rating
Points) it returns.

Geo TV
Other Channels

6. Porters Five Forces Model

Value Chain of Media Industry

6.1 Sellers

Increasing number of buyers (channels) would raise the prices of quality content.
Absence of proper production houses would make quality content more difficult to
source.

6.2 Substitutes

With increasing options of channels and VOD content the ratings of broadcast TV will
come down.
Telecommunication sector / broadcasters will launch their content portals.
What position should we take with them: content provider to them or strategically align
with one.
Take up of these services would depend on
Buyers' willingness to substitute which might be very high in entertainment
genre. News & Sports not so much of an impact.
The costs of switching to substitutes this could be the single key factor to give
the boost to digital or VOD.
Our Strategy against piracy?

6.3 New Entrants

Which channels should we launch to pre-empt competition? Niche or Main Genres?

(Baby, Food, Movie, Archive )
Issuance of License by PEMRA to new Channels.

6.4 Buyers

Consolidation of Media Buying Houses which will increase bargaining power and have
downward pressure on rates.
How should we tackle growing clout of Media Buying Houses?
Should we start group backed media buying house?
Should we start group backed rating agency?

6.5 Distribution

When, what channels should we have subscription for?

Should we partner with someone and who?
Should we acquire cable head ends to secure our positions on limited capacities?

Value Chain of Media Industry

7. SWOT Analysis of Geo TV Network

Strengths

4 Channels News, Entertainment, Sports and Music Genre

Largest Satellite Channel in Pakistan
Hold highest amount of business share in the industry
Market leader in terms of Viewership
Pride of having the only Sports Channel in the country
Technologically advanced and have latest systems

Weaknesses

Music Channel Aag in loss

Low viewership of Aag Channel

Opportunities

Further developments in the technological advancements for streamlining systems and

bringing in improvements.
Provision of more broadcasting opportunities and introducing new channels.

Threats

New Channels coming up in the market and broadcasters will launch their content
portals.
Increasing competition affects the channels revenue and profit margins are shrinking.
Political System can affect the independency of media.
Absence of proper production houses would make quality content more difficult to
source.
Consolidation of Media Buying Houses will increase bargaining power and have
downward pressure on rates.

Value Chain of Media Industry

8. Value Chain Analysis

A key step towards building future capabilities is to improve internal efficiencies, which will
reduce operational expenditure and free precious working capital.

The typical broadcasting setup has the production department focusing on both, growing
revenues and reducing costs (i.e. changing the business and running the business). More often
than not, in such a scenario progress in one area is achieved at the expense of the other. For
instance, each new product launch comes with an even shorter time-to-market requirement,
and demands the alteration of existing systems and processes to support it. Over a period of
time, this leads to the formation of an inflexible matrix of systems, policies and procedures,
unable to undergo further changes.

Therefore the focus on innovation has to be separated from the drive to improve efficiency.
The question is how this can be achieved in the typical broadcast setup. Lets consider the high
level broadcast value chain, as shown in the figure below:

Concept Generalon
(Commimee
Structure, Research
& Surveys), MIS

Product
Development

ProducZon

Sales &
MarkeZng

DistribuZon

Consumer /
Viewers

Content acquisition/creation and planning is what determines the evolution of the
broadcasters business, and perhaps should not be overly constrained by efficiency concerns.
The delivery or play-out of content, owing to its criticality and the near-zero tolerance for
business disruption in broadcasting, is an area most organizations would be reluctant to
reassess or alter purely for efficiencys sake. Notwithstanding this challenge, relooking ingest
and editing/post-production processes could throw up multiple opportunities for improvement,
especially because a major proportion of operational costs and manual interventions are
typically associated with these two areas.

The focus of broadcast operations has to thus expand beyond simply being on-air 24x7, and
should consider the following:

Is there an opportunity to reduce the cost base or realize financial value through
improved performance in ingest and editing/post-production areas?
How efficient is the ingest setup, i.e. are mechanisms such as ingest-once, use multiple
times being leveraged?

Value Chain of Media Industry

Is there scope for improvement in existing operations through task automation, superior
organizational collaboration, and use of new tools and technologies?
Are performance indicators and measurement mechanisms defined and utilized for
major operational areas?
Which set of operations does the organization currently have a strategic mandate to
maintain and operate in-house and which could possibly be outsourced/co-sourced?

Answers to these questions could reveal hitherto unknown or unseen operational issues and
identify areas with considerable scope for performance improvements. When applied to the
entire broadcast value chain, this analysis could provide insights which would build a financial
case for initiating a transformation program with the potential to unlock value across core and
support operational areas.

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Value Chain of Media Industry

9. Core Functions of Product Development

The core cell that ensure that Geo remain the best.

Providing services to not only our internal clients, but also to external clients routed
through various division.

Starting from External communications and strategy to internal organizing, planning

and execution, PD is involved in all function to ensure that Geo delivers the following:
I watch Geo as it informs, entertains and provides variety to me and my family

Brand
Activation

Promo
Department

Content
Analysis

Product
Development

FPC &
Program
Planning

Brand
Creative

Marketing
Communic
ations

Brand Creative

Ensure Brand colors and positioning is reflected in all communications.

Fly into action and work with Communications, Marketing, and Creative, to create all
necessary collateral and promotional materials as soon as new software is ready.
Core functions relate to
! Brand Sanctity
! Brand Key

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Value Chain of Media Industry

! Over all look of the channel

! Program Promos
! Channel IDs and Corporate Promotions
! Music and titles
Handle conceptual creation and execution of creative packaging of
! Calendar Events,
! Program and Channel Promos,
! Animations for events, promos, launches, and special transmissions.
They are also a funnel between Production and Creative departments on briefs.


Brand Activation
The Brand Activation is one of the most active people in the department. In charge of
activating initiatives the channels takes, events, or content, this person is there to create
a synergy between what can be done in terms of brand relevance and content.
Constantly identify opportunities for brand interaction with viewers.
! Calendar events
! Public Promotions
! Brand Communications
! Create on-screen synergy and incorporate 360-degree involvement of available
media vehicles.

Content Analysis

Custodian of Concepts and Content.

Primarily divided into:
Pre: Concept development as per:
! Genre Guidelines
! FPC (Fixed Point Chart) Requirement (current / future)
! Content requisition briefs
! Promotion planning
! Post: Content that is on-air or has recently concluded needs the Archbishops
special attention, whether in evaluation or quality monitoring.
! On Air Content Analysis
! Content Evaluation
! Flavoring or special episodes for events or as necessary.
! Calendar Events
! Competition Analysis.
! Concept Deviation

FPC and Program Planning
An interesting taskmaster, this function necessitates a few different things:
Core Responsibility revolves around

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Value Chain of Media Industry

!
!
!
!
!

FPC (Fixed Point Chart Development, current and Next Quarter)

Program Evaluation
Competition Analysis
Media Planning (cue sheet)
Research (new trends / ideas)

Marketing Communication
One of the wiliest characters on Team PD, this character has to, by definition, be that
way.
Main point of contact between PD and Marketing. Ensuring interests of both Client as
well as channel. Key areas
! Program sponsorship
! Develop concepts for clients creating the FIT
! Evaluate branding and sponsorship of projects and featured content, and
deciding on viability.
The Fugitive will also occasionally work with Archbishops to develop opportunities for
branding and placement with Marketing representation.

Interdepartmental Communication
A very important part of what PD does is its carry out its inter-departmental
communications, or, the Matrix.
Communications are carried out with production departments including: News,
Entertainment, Infotainment, Special Projects, Events Unlimited, Creative, Technical,
and Communications. The major areas are:
! Production requirements from content developers
! Feedback on content, production, performance, and post-evaluation
! Analysis of program content, ratings, and research conducted
! From arrangement of to feedback onpreviews of content
! FPC changes and time slot allotment for shows
! Concepts developed by PD for production departments or vice versa
! Provide guidelines for events being done for GEO in terms of flavor, production
quality, target
! market, venue, and even performers
! Ensuring marketing representation at events, and raising flags if content that
should have it is
! missing due representation.
! Submitting technical requirements for special projects/events that we organize,
or help out with availability of the same if production departments need help.
! PD also interacts with certain external organizations, from production houses,
individuals producing content for GEO, and outsourced promotion agencies.

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Value Chain of Media Industry

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10. Competitive Landscape

Core Media
Competencies

Tier 1

Value Chain
Inbound/ Operations/
Outbound/
Marketing & Sales/ HR/
Tech & Infrastructure

Competitor
2

- Dedicated PD team now
in place.
- Coming soon to Africa
- Good contacts of
- A network of 9 Channels
marketing team

- Out dated technology,
- FM 106.2 mktg. Rights
cost efficient operations
- No media background

TV, Print, Radio

Tv, Radio

Competitor
3

- UK, US, Europe,
Canada, Middle East

- TV, Radio
Competitor
1

International Dist.

TV, Print
Competitor
4

- Latest technology
- Large Studio/virtual
- Public listed

- Access to quality
directors due to state-
owned channel link
- Low cost operations
- Beefed up Sales team
last year

Pak Mega Pack
- Canada

- GM programming for
each channel
- CEO's direct involvement
in prog and sales

- Media & advertising
magazine

- Only hybrid channel
- Infotainment more
stronger than
entertainment

Value Chain of Media Industry

Competitor
5

Tv, Radio

Competitor
6

- Complete Management
change
- Major Cost Cutting

Entering into TV, Print,

Radio
Competitor
7

- Pyramid as a source for

low cost productions

- No expertise in running
a media setup

- Weak HR

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Value Chain of Media Industry

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11. Conclusion
As the existing operating models, processes and systems struggle to keep pace with the varying
needs of the broadcasting business, change is the order of the day. Broadcasting companies need
to realign their business processes and business model to address this challenge so that when
faced with new content delivery methods and technology, they are equipped to react quickly and
effectively.

Central to this idea would be a target operating model that facilitates new ways of doing business
without hampering current operations and existing lines of broadcast. Organizational inertia and
internal resistance may need to be assessed and appropriately countered. For instance,
segregating work based on commoditized vs. specialist and the further selection of candidates
for outsourcing may create anxiety and fear among existing staff. Restructuring existing processes
around a new operating model may also require reshuffling existing departments, possibly
leading to loss of authority and changes to the reporting structures. Moreover, the
implementation of new roles and responsibilities will need to be supported by a structured
training approach and competency development program for the impacted staff. Appropriate
transformation approaches will therefore not only include the definition and prioritization of key
business outcomes, but also the identification and pre-emption of risks.

The challenges may seem numerous and multidimensional, but the time to act is now. Even
though there may not exist a one-size-fits-all solution, progress in the three key areas
mentioned above will establish the operational capabilities and flexibility needed to realize
growth and maintain operational excellence in the rapidly changing market conditions.