Broadcasting Scenario Report

BROADCASTING SCENARIO REPORT Facility, Location and Operation format

BROADCASTING SCENARIO REPORT ...............................................................................1 ISLAMIC TELEVISION PROJECT COPYRIGHT2003 ..................................................................................................................................................1 INTRODUCTION...................................................................................................................2 A. OUT-SOURCED BROADCASTING OPERATIONS....................................................3 KEY BENEFITS ....................................................................................................................4 B. FULLY OWNED AND MANAGED BROADCASTING OPERATIONS.....................5 KEY BENEFITS.....................................................................................................................6 A. BROADCASTING FROM UK.........................................................................................7 B. BROADCASTING FROM DUBAI MEDIA CITY.........................................................8 A. ENCRYPTED BROADCASTING – SUBSCRIPTION CHANNEL..............................9 B. FREE TO AIR BROADCASTING – OPEN CHANNEL..............................................10 RECOMMENDATIONS......................................................................................................12 BROADCASTING OPERATIONS ....................................................................................12 BROADCASTING LOCATION..........................................................................................12 AVAILABILITY OF THE CHANNEL TO THE AUDIENCE.........................................12

Islamic Television Project Registration Number 4138904

Copyright2003

BROADCASTING SCENARIO REPORT Facility, Location and Operation format Introduction This scenario report will attempt to explore the advantages and disadvantages of the following scenarios with the aim to discover the best broadcasting model of operations for Channel ISLAM. The report will take into account the financial and actual implications of each and every course of action. The evaluation in this report will take place through the process of CPS (creative practical solutions). The Broadcasting scenarios are as follows: a. Out-sourced Broadcasting operations b. Fully owned and managed Broadcasting operations a. Broadcasting from UK b. Broadcasting from Dubai Media City a. Encrypted Broadcasting b. Free to Air Broadcasting Recommendations Each of the above scenarios involves implications for the Channel, from finance and logistics to branding. It also determines the long-term performance of the Channel in a fast moving, technologically advancing industry, where the customer’s demands and expectations are boundless. Also the customer perception and viewer-ship determines the level of success and financial performance of the channel. The aim of this scenario report is to consider the current methods of operations, production and transmission by a range of thriving channels, thereby endeavor to find the best fitting scenario model towards the success of Channel ISLAM. The study of this report should allow the development of a cohesive strategy. A strategy will enable the Channel to gain, maintain and sustain core competitive advantages.

Islamic Television Project Registration Number 4138904

Copyright2003

BROADCASTING SCENARIO REPORT Facility, Location and Operation format a. Out-sourced Broadcasting operations The model for out-sourced broadcasting and transmission activities enables Channel ISLAM to broadcast almost immediately, once the programme library is in place and a link is established with the playout and transmission provider. The core financial benefit of using this method of delivery is a short-term one, as the initial start-up cost gets minimized, and similarly the level of risks involved. There is also a technical advantage that could be achieved through this broadcasting structure; this is the very fact that the providers are the experts in the broadcasting field with highly equipped technical staff and expertise, with highend cutting edge equipments and backup. This enhances the levels of branding and marketing success and minimizes the chances of technical failures.

For channel distribution, ntl: provides a feed to the SDN and ntl: digital cable platforms at the ntl: Digital Media Center. In addition, ntl: uplinks the channel to Astra 2B satellite for DTH and further cable distribution. There are three potential broadcasting and transmission service providers, they are ntl:, BSKYB and also telecast. However, ntl: provides a full end-to-end service, which includes playout satellite distribution to Astra, distribution to ntl: digital and analogue cable networks and also to ITV Digital via the SDN multiplex. In comparison BSKYB provides only the satellite uplink. The cost for platform usage of ntl: is lower than using Sky’s. Additionally, using Sky as the playout center would mean that downlink to cable needs to be arranged and negotiated separately with either cable wireless or ntl. Although the price of Telecast is the lowest of the three, their services are not as reliable and have to involve third party to distribute through Astra 2B satellite.

Islamic Television Project Registration Number 4138904

Copyright2003

BROADCASTING SCENARIO REPORT Facility, Location and Operation format The obvious choice for the distribution of Channel ISLAM would be ntl:, for the benefits highlighted above. It makes logistics and distribution less complicated as both uplink and downlink are provided. However, Channel ISLAM would need to negotiate with Sky to be placed in the EPGM (Electronic Programme Graphic Menu). This is a menu system, which enables satellite viewers to locate the Channel and also access the daily programme schedules. This service is available from Sky on flat-rate purchase. It is possible to obtain studio, post-production, playout and transmission facilities from ntl:, who would also provide technical and operations personnel whilst Channel ISLAM retains full editorial and programme production control. Channel ISLAM will produce the programmes and ntl: will provide the playout, even if the programmes are live. Channel ISLAM sends the ‘clean feed’ to ntl:’s playout center, ntl: then run the channel to Channel ISLAM’s produced schedule and provide monitoring and technical back-up services. The channel is then distributed by ntl: fiber to various television platforms. Channels such as ITN News, BBC Knowledge and UK Gold use this service.

Key Benefits  Enables Channel ISLAM to broadcast almost immediately  Minimum Initial Startup cost. Focus The management of Channel ISLAM can focus on high quality production and content delivery, as the broadcasting and its technical activities are out-sourced.  Ready made studio and post production services A high quality and advanced technical equipment available for usage. This will increase and enhance the levels of standards and service.  Digital server based playout system A reliable and flexible platform to establish the Channel and enable it to grow.  24/7 Operations and Support ntl: have a track record customer service, which reflects that they understand output is critical to any channel, and offer 24/7 support maximizing the protection of the channel and service to its customers

Islamic Television Project Registration Number 4138904

Copyright2003

BROADCASTING SCENARIO REPORT Facility, Location and Operation format b. Fully owned and managed Broadcasting operations The out-sourced facility may have benefits, which seem to make it the obvious choice for the ideal broadcasting infrastructure. However, it may be noted that those benefits are only short-term. In order to establish Channel ISLAM as a channel with future scope, a fully owned and managed broadcasting strategy needs developed and adopted.

The option that we aim to study here is a single networked server and automation system with the flexibility to route any materials to any destination, and run multiple playouts simultaneously from a common storage pool. Most importantly, in order to fulfill Channel ISLAM’s short and long-term strategy, this system is scalable on demand. This system offers three important benefits; flexibility, reliability and simplicity that will enable Channel ISLAM to become one of the fastest growing broadcasting channels in the DTV industry.

Islamic Television Project Registration Number 4138904

Copyright2003

BROADCASTING SCENARIO REPORT Facility, Location and Operation format The broadcasting facility encompasses shared storage, automated content ingest, collaborative editing from a central server, automated newscast and live programme production. It also includes automated play-to-air plus commercial insertion capability. This digital component facility minimizes the physical handling of content, increases reliability, maintains efficient workflow and reduces operating costs. Above all, a prime advantage gained is a flexible and advanced infrastructure that remains at the cutting edge – from the first digital transmission onwards – with the flexibility to expand to multiple outputs from the outset. This capability allows Channel ISLAM to expand its market offering (a portfolio of services) as well as enter into new markets, such as from pan European to USA and then on to the Asian continent. The system illustrated above brings with it a broadcasting capacity of four (4) channels as a standard. The three (3) channel extra capacity could be outsourced to either corporate or production companies and to even other TV channels. This would allow Channel ISLAM to develop an additional stream of revenue, such that the facility could pay off the investments made in the system within a given time period. There are also substantial cost savings to be made from this infrastructure. For instance, this centralized system can serve all the broadcasting (play-out, uplink and down-stream broadcasting) requirements. This means that there will be no need to pay for out-sourced broadcasting to various providers, i.e. ntl: for UK, Sundance Digital for USA and so forth. When having adopted the out-sourced model of delivery, the long-term consequences are that as the Channel expands its broadcasting and operation breadth so do the costs, and there will be no economies of scale to be experienced in singular Channel broadcasting system. With a centralized channel distribution system as above, not only various economies of scale will be experienced at the cost fronts, but it also solves the problems of logistics, personnel and management.

Key Benefits  Centralised Operation & Broadcasting By having the operation and broadcasting centralized and accommodated in one location with a cohesive team working means high levels of efficiency and effectiveness (cont.)  Economies of Scale Although the initial investment required is substantial, the savings made on the costs over the years, additionally the extra revenues generated, not only pay back the investments made but also increases the payback. This is the most productive long-term strategy.  Low Risk The reliance on third party providers is minimized and therefore the levels of risks involved, i.e. failures and breakdown in logistics and operations. Finally, the investments made on the tangible asset will remain with the company in contrast to the outsourced broadcasting system.

Islamic Television Project Registration Number 4138904

Copyright2003

BROADCASTING SCENARIO REPORT Facility, Location and Operation format a. Broadcasting from UK Logistics – short-term: For immediate broadcasting launch, Channel ISLAM would require ntl:’s playout services to Astra, therefore the broadcasting operation would have to be coordinated from UK, as it is where ntl: is based. Every programme and commercial insertion has to be scheduled daily and given to the playout center within the lag time. The cueing of News, live programmes and other specialist broadcastings require the management of the broadcasting activities to be carried out in two segments, initially from the control center at Channel ISLAM and then on the playout facility where two internal Channel ISLAM coordinators will be stationed. This would ensure maximum efficiency and reduce risks and wastage of materials and time, therefore reducing costs whilst maximizing quality. Low initial costs: This is due to the simplicity of the operations and setup activity in comparison to the latter strategy (less wastage and time-consuming). By outsourcing the technical activities, Channel ISLAM will not need to recruit or provide training for specialist job roles; therefore avoid initial complications experienced in such projects, which usually result in technical failures due to lack of expertise and capability. It also reduces the risks factor as the delivery of the Channel is guaranteed by a specialist company, which is manned and equipped with the cutting edge of technology. For those jobs required in Channel ISLAM, such as the coordinators and managers, they are easier to recruit and train in the UK, as candidates for the TV industry are more readily available compared to Dubai. (For Dubai, we have recruit expertise from here and also send employees from Dubai to UK for training. This would result in extra costs in Human resources management.)

Language: Channel ISLAM will be in English, which makes UK based recruits having an obvious advantage over the Dubai professionals. Long-term setbacks: Being based in the UK for a long period does have business and financial set-backs, such as having to pay the ITC annual license loyalty fees, which is subject to revenue attained. The broadcasting licensing is also sensitive to lobby groups. The potential difficulty lies with especially those lobby groups that are inclined towards Islamophobia. This may result in restrictions on programming capabilities. High taxation: 25% corporate tax on all net profits and other taxes payable. Strength of the UK sterling may become problematic when providing services in the soft economy countries.

Islamic Television Project Registration Number 4138904

Copyright2003

BROADCASTING SCENARIO REPORT Facility, Location and Operation format b. Broadcasting from Dubai Media City Licensing: The laws and regulations in regards to broadcasting, and especially of Islamic content are very relaxed in Dubai. License applications are not subjected to strict conditions. Significantly, the Ministry of Communications does not subject the licensing to loyalty fees. This applies especially to channels operating from the Dubai Media City, as one of their marketing features. Duty-free trade in Dubai will help improve the cashflow of the company to a certain degree, but most importantly there are substantial savings to be made on corporation tax, which is lower than UK, any other EU country and even USA. Low operating costs: The operating costs, such as wages, property, bills & rates and so forth are considerably lower than those in UK. It is quoted in the Mintel report that the operating costs of an average company in UAE (United Arab Emirates) are around 35% or more lower than companies operating in the EU or USA. Long-term benefits: Because labour costs are higher in the UK, channel ISLAM can make substantial savings if it relocates its broadcasting facilities to Dubai. These savings can be invested in recruitment and training, which will increase the proficiency (skills, talent and ability) in the human assets of the company. This may also apply to other variable costs. This strategy enables a centralised global broadcasting system to be implemented, whilst avoiding conventional obstacles such as transmission zones, logistics of production, operations and broadcasting. Thus making the channel future proof. Business and working Visa virtually guaranteed for management and staff from UK. Economies of scale: By having one broadcasting and operations facility in DMC, whilst having production facilities allocated in designated countries of broadcast, makes the services of the channel truly global. Yet it provides a dedicated and tailor-made programming to the Muslim community of each country. This is the implementation of the “act local and think global” strategy. Limitation: This strategy is time consuming and it requires a substantial amount of time to implement the system efficiently. Some facilities, and especially the broadcasting facility will have a high set-up cost; however in comparison to UK, it will be significantly lower. Specialist staff would have to be recruited from UK and then shipped to Dubai. So may have to compensate them by making arrangements such as accommodation, visa and other.

Islamic Television Project Registration Number 4138904

Copyright2003

BROADCASTING SCENARIO REPORT Facility, Location and Operation format a. Encrypted Broadcasting – Subscription Channel Revenue: Subscription could become an established revenue stream for Channel ISLAM. The revenue generated from the sales of subscription would contribute towards the cost of sales, and the advertising sales would increase the profit margin contribution. This strategy will allow Channel ISLAM to maximize its sales potential. (please study financial report) Value for money: Free channels are usually reliant on the customers’ curiosity or their fortuitous interest in finding a channel of their preference. When the customers have paid for the services, they want value for their money, and therefore watch the channel. However, a strong marketing strategy will have to be applied to persuade and encourage the customers to buy their initial subscription. The significance of subscription on this point is that, the research carried out by BSKYB in 2001, indicates that customers are more likely to tune into channels that they have subscribed than to those that are freely available. Relationship with the viewer: There is a clear relationship build up between channel ISLAM and its viewers. The channel has already developed a sense of responsibility to meet the expectations of its subscribers, whereas it is expected that the viewers will develop a sense of associated ownership. The fact the viewers feel that they own something associated with the channel (the subscription), helps establish a strong customer loyalty. Viewer database: By making the channel subscription based, the company will benefit greatly from its customer information database. All the creditable information will help the channel create new programmes or modify existing ones, so that they can correspond with the educational, social and economic level of its viewers. The database will also be an important tool in locating the viewers and getting their feedback during future marketing research. In the meanwhile, advertisers will have the enticing opportunity to view a more detailed report of who the viewers are and what are their preferences of consumption. Limited availability, as subscription restricts the accessibility of the potential viewers to the channel. For that reason, it can be expected that the initial viewership will be significantly low. Additionally, greater investments would need to be made on advertising and promotions to generate interest and encourage the customers to subscribe. This also has direct implications of the advertising revenue, advertisers will either be reluctant to advertise on a platform that has a low viewership or demand greater discounts on the prices of the advertising packages.

Islamic Television Project Registration Number 4138904

Copyright2003

BROADCASTING SCENARIO REPORT Facility, Location and Operation format b. Free to Air Broadcasting – Open Channel High Viewership: The loss that will be made from forgoing the subscription revenue can be compensated by grand increases in the advertising revenue, as advertisers will be more eager to advertise on a platform that is open to a large number of viewers. Moreover, advertising trends from the TV industry and advertising agencies suggest that most advertisers are willing to pay a greater price for advertising on an open platform than one that has restricted its accessibility by subscription. This benefit provides the advertisers with value for their money. Community service: Channel ISLAM, unlike conventional channels, holds a greater level of social responsibility; one is to provide a complete media alternative to the Muslim population, and the other is to provide them with a voice of expression in all areas, including current affairs. With these notions embedded within the corporate aims and objectives of the channel, there are vast expectations from various stakeholders to make the channel available to the masses. This has deep future implications for the channel, without it meaning that the channel cannot be subscription based. However, only by making it available to the wider audience, the channel can entirely fulfill its community service promise and reach high popularity. Therefore great care needs to be taken when regarding the operation format of the channel. Greater availability: The open channel option encourages high audience participation, which is a vital factor for the success of a vast range of the channel’s programming. This will constitute in the acceptance of the channel by the Muslim and other communities. Competition: Channel ISLAM is the first and only orthodox (Sunni) Islamic television channel to be established in UK. A competitor who stands upon the same ideals with channel ISLAM and targets the same aims is likely to appear in the future. Channel ISLAM however, since it was found, has applied several corporate strategies in its operation in order to ensure that the channel remains the leader of Islamic broadcasting, even if competitors arise. However, a competitive channel does not have to necessarily stand upon the same principles, even if it calls itself ‘Muslim Television’. MTA (Muslim Television Ahmadiyya) was established in 1995 and has been broadcasting in UK ever since. The Ahmadiyya channel is a channel that does not represent the true values of Islam, but the notions of the Ahmadiyya sect, propagating what islamic scholars regard blasphemous. Thus they are categorized as a cult group that is outside the fold of Islam. The specific channel is free of subscription and available to all satellite and cable subscribers to watch. As mentioned before, channel ISLAM aims to provide a community service, but also to propagate the true message of Islam. The main argument of our stakeholders is that because MTA channel spreads misguidance through providing free broadcasting, it is important that channel ISLAM is also free, in order to expose mischief and promote the original message.

Islamic Television Project Registration Number 4138904

Copyright2003

BROADCASTING SCENARIO REPORT Facility, Location and Operation format Opportunities: Being a truly community channel, there will always be various opportunities towards raising further finance when the company wishes to do so for specific reasons, or due to loss of revenue. Potential avenues are revenue received from CI Interactive (Islamic Open University), or from the sales of channel ISLAM programmes and corporate merchandise. However, these revenue steams will take long time to realise, as they are consumer based and can be considered in many ways as additional sister operations aside channel ISLAM. Consequently, the channel would have to establish itself within the British Muslim community first and create a sense of belonging and loyalty among its customers. Additionally, CI Interactive project is an extra service provided by the channel, having the potential of becoming a portfolio channel by its own right. (Please read the CI Interactive report for further study)

Islamic Television Project Registration Number 4138904

Copyright2003

BROADCASTING SCENARIO REPORT Facility, Location and Operation format Recommendations Broadcasting operations For the initial year, Channel ISLAM should adopt out-sourced broadcasting operations, as this will allow the channel to broadcast immediately without further delays once the programmes library is produced and organised in a schedule. In the meantime, it will also allow the company to develop and establish a fully owned broadcasting operation. . The fully owned and managed broadcasting operations should be initialized after the second year of broadcasting onwards. During the first year of broadcasting, the channel shall develop its broadcasting infrastructure and establish the facility. This includes planning, purchases, and installation, recruitment and training, as well as test runs. Even though this strategy requires high investment and maintenance, it ensures the channel against critical risks and failures. In the meanwhile, it reflects financial payback and secures the long-term sustainability of the channel in the international arena. This strategy will not only reap great competitive advantages for the channel, but it will also make the channel future proof, paving the way for strong and stable growth during the channel’s five-year development strategy. Therefore even though the latter strategy is to be implemented for the long-term, it is the initial strategy that allows the channel to be optimum in its timing and gradual growth and development. By using this method of delivery, the difficulties faced during the learning curve will be minimized.

Broadcasting location For the short-term initial establishment of the channel, it is crucial that the channel and its broadcasting operation is based in and operates from UK. This will allow the company to develop a cohesive management and an organizational programme in order to establish the channel as part of the five-year development strategy. From the second year of operation, the channel would need to begin its relocation activities to Dubai Media City, thus acquisition and full implementation of the strategy. Therefore, the planning and organisational activities would have to be completed by the end of the first year. This gradual growth of activities and scope of the channel will ensure greater level of efficiency in the management of the project. This will also help stabilise the cashflow management, especially during the crucial first year of transmission.

Availability of the channel to the audience Making channel ISLAM free to view in the first year of broadcasting will enable a wide audience to view the channel and form an opinion about it. Provided that channel ISLAM reaches the quality of services that it has been designed for, audience viewer-ship and loyalty will steadily increase. Because an islamic channel is something that the muslim community has been awaiting for a long time, channel ISLAM’s launch will be conveyed throughout. This will possibly encourage the viewers who have neither satellite dish nor cable connection to purchase the receivers. Therefore in the long-term they will be more willing to pay a subscription fee. This is a stepped cost for the customer, as they will not

Islamic Television Project Registration Number 4138904

Copyright2003

BROADCASTING SCENARIO REPORT Facility, Location and Operation format have to make a substantial investment on both the digital TV receiver and the subscription in the same time. Market research also indicates that there is a customer expectation to view a channel for free for a certain time period, to gain an insight of its services before subscribing to it. This is due to the opportunity costs, as there are other subscription-based channels that offer specialist programming to cater for various tastes. This practice is a norm in the DTV industry. The free to view time period is also a marketing activity, as is creates a demand from the customers. As for every TV channel, its core-advertising tool is the channel itself. The Ramadan broadcasting strategy 2002 should be implemented for this purpose, although the channel will be free to view for the whole initial year. This will create a sense of anticipation and will highlight the importance of the services offered by channel ISLAM. The broadcasting hours will initially be eight (8) in UK and USA, and then they will be increased to 16 hours and finally to 24 hours. This is due to the library development of the programmes and the broadcasting and management infrastructure. In order to accommodate the benefits highlighted, as well as to reduce the obstacles, there is a need for a balanced approach to the subscription strategy. That balance is that, when making the channel subscription based, the pricing is such that it is regarded as a highly discounted subscription, significantly lower than the industry average. Subscription will be launched with the promotional strategy of the ‘exclusive subscription’ offer of £115.00 for three (3) years, which will be a limited offer to the first 10,000 subscribers. Regular subscription will also be available at the price of £55.00 per year (£4.60 per month). This will be an ongoing sale of subscription. Through this approach, a high degree of subscription uptake can be expected.

Islamic Television Project Registration Number 4138904

Copyright2003