Corporate: STAR Scripts New Music For Channel [v]

M&A
STAR Scripts New Music
For Channel [v]

As STAR looms large over Channel [V], the staff fear an end to its proud, funky culture.

By Brian Carvalho

It isn't unusual for any of Channel [V]'s 220-odd employees-almost all of them under 30-to walk into office in Day-Glo shorts and a ragged T-shirt with a rock icon's image emblazoned on it. So when, on August 16, star TV's India head honcho Peter Mukerjea met with the Channel [V] brass to discuss its integration into star's India network, there was an understandable apprehension at Channel [V]'s Lakdawala Bungalow HQ in Mumbai.

STAR TV's P.Mukerjea Mukerjea dwelt on how the channel's non-creative functions would be merged with the parent's functions. But at least one Channel [V] senior executive had a more important issue on his mind. ''I wonder if our dress code will have to change. Perhaps we might now have to wear ties on our crotches,'' he quipped to BT before the meeting with Mukerjea.

That's Channel [V]: irreverent and provocative. And with a give-a-damn attitude that starts at the top, with bossman Suresh Bala. It's also accompanied by fierce pride. Bala, for instance, who claims most people at Channel [V] are mission-driven, carries a Channel [V] branded bag whenever he travels, and even sports a [V] wristwatch.

It wasn't always this way...

Why [V] makes sense for STAR

ť Channel[V] has gained on MTV, and now boasts a marketshare around 38 per cent.
ť The portal Vindia.com registers 3 million page views, and is valued at Rs 140 crore
ť Channel[V] has a network of 200 branded outlets through which it hosts 200 events a year
ť Costs can be reduced by sharing distribution resources, and integrating staff functions
ť With yet another channel in its bouquet, STAR gets more bargaining muscle with advertisers

Indeed, if cultural fit is going to be the driver for a merger, the Star TV-Channel [V] integration isn't happening. But there are plenty of other reasons for Mukerjea to bring the youth channel into the star fold. That's why, over the past 13 months he's been busy mopping up the stakes of Sony Music, Turner Music and BMG Crescendo in Channel [V]. Along with EMI, which is still a shareholder, but, perhaps, not for long, each of these companies held 12.5 per cent in Channel [V], with News Corp holding the remaining 50 per cent. And Bala reported to the Hong Kong-based Channel [V] Networks' Managing Director Steve Smith.

That structure has changed. star TV India, which is owned by News Corp, now controls 87.5 per cent in Channel [V]. And if EMI bales out too, Rupert Murdoch's Indian operations will own 100 per cent of Channel [V]. ''Both star and the music companies felt that Channel [V]'s value would get enhanced if we took over,'' says Mukerjea, 45. Bala, 43, for his part, feels it was inevitable: ''It will be difficult for a stand-alone music channel to survive in the long term.''

Yet, star TV India's interest in Channel [V] can at best be termed recent. In the five-odd years that Channel [V] has been in India, star has at various times threatened to pull out if it didn't get its act together. Mukerjea dismisses such talk. But, curiously, earlier in the year, News Corp, via its Hong Kong operations, had applied for approval from the Foreign Investment Promotion Board to make Channel [V] a wholly-owned subsidiary. The portal vindia.com was also to be spun off into a 100 per cent subsidiary. star TV India then obviously wasn't in a hurry then to make Channel [V] a part of its Indian bouquet.

..but star wants Channel[V]

It is now. And that renewed interest could be attributed to the revival of this once-languishing channel. Former Channel [V] executives have a theory that star TV India deliberately played down the music broadcaster's performance, as it wanted the music companies to opt out.

What's clear now is that Channel [V] has never been in finer fettle. Since May, marketshare is up in the 38 per cent region, bringing it neck-and-neck with leader MTV. [V] is also the dominant channel in western and souhern India. Ad revenues have doubled in four months. claims Bala: ''We're 140 per cent over target and set to break even by year-end.''

The prospect of a turnaround is not the only reason for Mukerjea seeing value in Channel [V]. The portal, with 30,000 pages and three million page views per month, is estimated by analysts to have a valuation of at least Rs 140 crore. The channel has also branded 200 outlets in 19 cities-[V] places that host close to 200 [V]-events a year. ''Via TV, the Net and these outlets, we're reaching out to 50-60 per cent of our 11 million-strong target audience,'' says Bala. He adds: Channel [V] today is a brand that is aggregating viewers who relate to its persona.''

How Channel [V] wooed the eyeballs (back) is a fascinating story in itself. The channel was plumbing the depths six-to-eight months ago, with its marketshare reaching a low of 21-22 per cent.

That's when radical changes were made. Programmes were broken into three-to-five minute slots, as the top brass realised that audiences weren't willing to watch the channel via appointment, and that 25-30 minute programmes wouldn't catch on. At the same time, the programming was broken up into two subsets, one addressing the teens and tweens, and the other the young adult. And the music-whatever language or genre-was divided into three broad compartments: retro, hit, and new.

Clearly, getting Channel [V] into the star TV India bouquet also makes economic sense. Distribution resources can be shared and several overlapping functions can be integrated. Of course, it also means that some functions at Channel [V] could get redundant. But that might not be the only reason for an exodus-of-sorts at Channel [V], with Bala himself looking for ''other fish to fry'', as insiders reveal. For, those wishing to stay on will obviously need to be ready to wear their ties in the right place.

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