Serving 3.2bn homes in over 40 languages across 170 countries and based in the US, Viacom is one of the largest broadcasting companies in the world. The Economist Intelligence Unit spoke to Robert Bakish, president and chief executive of Viacom International Networks, about the entertainment and media industry in India, where Viacom has been operating through a joint venture since 2007.  

Sara Mosavi, contributing editor, The Economist Intelligence Unit: What makes India’s E&M industry an attractive investment opportunity?

Robert Bakish, president and chief executive, Viacom International Networks: India is a very important market for Viacom. It is the second most populous country in the world, and its population is growing at a relatively high rate (at 1.3% a year). It has a clearly expanding middle class, and significant GDP growth rates.

TV really dominates the E&M industry in India, and it is set to grow at 15% CAGR [compound annual growth rate] from 2013 to 2018. The penetration rate—the number of homes with a TV—is currently about 60%, so there is significant headroom for growth. There are a number of drivers for growth in TV. As India continues to digitise its distribution system, we expect subscription revenue—what a TV distribution platform like Sky TV in the UK would pay to carry TV channels—to grow. The advertising market is also huge: it is currently about US$2.2bn and is set to grow at 13% CAGR in the next five years.

Which factors are helping India to export its E&M content output?

First, there is a substantial and growing Indian expatriate or Indian-origin population, especially in key markets such as the US, the UK and the Middle East. In India, Viacom operates through a joint venture: Viacom18, which is 50% owned by Viacom and 50% by Reliance, an Indian conglomerate. Viacom18’s flagship brand is COLORS, which is distributed around the world as a 24-hour TV network. It’s about serving that Indian expat population; we distribute our Indian content in about 80 countries.

Second, technologies such as on-demand platforms are making it easier for content to travel, facilitating the export of Indian culture and content.

What has been Viacom’s preferred investment strategy in India?

Originally, we did greenfield investments: we launched MTV, Nickelodeon and VH1 as 100% owned and operated by Viacom. Starting in 2007 we decided to scale up, and we created Viacom18, which included those vertical networks as well as a charter to produce general entertainment. We increased investment in the market to bring that to life and have subsequently launched additional networks through that joint venture. We are also looking at investing in another joint venture in the regional entertainment space.

India continues to be a priority market for us, and we will continue to invest not only management time but also company resources into building our position in this market. Today we reach over 140m Indians every month, and we generate about US$300m in advertising revenue. In 2007, when we only had vertical networks, it was only about US$15m. So we’ve seen extraordinary growth for Viacom.

What are the key challenges you face in India?

We do business in about 170 countries, and they all share similar challenges. We have to adapt to both businesses and consumers in different cultures, which requires a fair degree of localisation of the content. Every market has slightly different legislation, which tends to evolve, so you have to keep track of it. Some markets have more audience fragmentation than others: in India, there are probably about 800 channels.

But the biggest challenge is complexity. We have a management team located in the country in which we operate, so they can keep a close eye on what is going on. It means we can adapt our strategy and execution to deal accordingly with opportunities and challenges that emerge.

What does having such an international operation mean for the content you distribute?

I believe in something called glocal content, which is part global, part local.

The global is covered by Viacom’s own significant production capability. We invest nearly US$3.5bn in entertainment content each year. Nickelodeon is an example of a very substantial property that we leverage all around the world, including household names such as SpongeBob SquarePants and Teenage Mutant Ninja Turtles, which typically air in the local language.

The local part is where we supplement with local programming. India is a very substantial market, and so it provides the opportunity to create significant local programming. Local is done as a mix of in-house and working with local production companies. We carefully evaluate production and related costs to make sure that it is an appropriate investment, but local programming is a very important part of this glocal model.

This interview is part of a series managed by The Economist Intelligence Unit for HSBC Commercial Banking. Visit HSBC Global Connections for more insight on international business.