Media: The Star Vision [Pg. 2]

Contn
The Star Vision

Playing The Game, And Winning It Too

Reaching pole position wasn't easy for Star, but as Dutta points out, ''Staying there is going to be tougher.'' Adds Nair: ''The tendency of leaders is to stagnate once they feel their formula is successful.'' Pipes in L.S. Nayak, Executive Vice-President (Sales & Marketing): ''Now that we're on top, it's going to be 10 times more difficult.'' Clearly, the words of the Star top brass echo what CEO Mukerjea has been drilling into them of late: that Star cannot afford to maintain status quo. Targets are as high as ever, and Mukerjea wants Star India's revenues to grow by 30 per cent this year.

That's why, on the programming front, Nair is once again moving ahead. He did a game-show, the herd followed, he did daily programmes, the bandwagon followed, he did weepy soaps, the competitors latched on. But now he's leapfrogged into new genres: a thriller, a satire, and a talent show, to name a few. ''Each may not command as much viewership as the other, but we have to provide variety. We can't stick to existing formulae'' says Nair.

A Year ago, Zee and Sony ruled the roost in the top 10
Rank	Channel	Programme	Viewership	Date
1	Zee	Amaanat	6.7	8/6/2000
2	Sony	Henna	6.4	9/6/2000
3	Zee	Koshish	6.1	6/6/2000
4	Sony	Aahat	6.0	8/6/2000
5	Sony	CID	5.2	7/6/2000
6	Zee	Mehndi Tere Naam Ki	4.9	7/6/2000
7	Zee	Aashirwad	4.8	9/6/2000
8	Zee	X-Zone	4.5	8/6/2000
9	Sony	Saaya	4.1	5/6/2000
10	Sony	Boogie Woogie	3.9	8/6/2000
Note: Data is for the June 4-10 period

Star's rivals, meanwhile, have plenty up their sleeves. Sony Entertainment is seeking to beef up its bouquet by putting in a woman's channel, in which it will invest Rs 150 crore. The new channel will make Sony a five-channel network, as it currently has AXN, SET MAX, and CNBC India in its fold. And to spruce up content, it's looking for suitable content companies to invest in. Zee, for its part, is filling up a space in which Star doesn't have a presence-regional channels. After launching its Alpha range, Zee is flagging off Bharathi, its 24-hour Tamil channel, via its strategic alliance with Asianet. Industry executives point out that Star too has been contemplating a foray into the south via Vijay Channel, a subsidiary of UTV (in which Star has a stake). That makes sense as the south is a Rs 200-crore television market. For the time being, Star officials point out that they have enough consolidation to handle within the network, and the regional foray will happen later, if at all. ''The biggest threat to Star's dominance is the competitor's ability to come up with a big ticket programme,'' says G. Krishnan, CEO, Aaj Tak (part of the IndiaToday Group that owns this magazine). ''It may be tough for Zee to do it, but Sony could.'' Adds Sony's CEO Kunal Dasgupta, ''Sure Star has got its act together. But we won't let them rest in peace. We have a lot of stuff coming up. Watch out for November.''

... A year later, 9 out of the top 10 are from Star (and check out the viewership)
Rank	Channel	Programme	Viewership	Date
1	Star	Kyunki Saas bhi...	14.2	4/6/2001
2	Star	Kyunki Saas bhi...	13.8	5/6/2001
3	Star	Kyunki Saas bhi...	13.1	7/6/2001
4	Star	Kyunki Saas bhi...	13	6/6/2001
5	Star	Kyunki Saas bhi...	12.7	6/6/2001
6	Star	Kyunki Saas bhi...	12.5	5/6/2001
7	Star	Kyunki Saas bhi...	11.9	7/6/2001
8	Star	Kyunki Saas bhi...	11.8	4/6/2001
9	Sony	Heena	6.2	8/6/2001
10	Star	KBC	5.7	5/6/2001
Note: Data is for the June 3-9 period Source: A.C.Nielsen

Then, there's the issue of Star's relationship with NDTV-the content provider for Star News. The agreement between the two comes up for renewal in 2003, and Mukrejea is sure to try to rework it in a way advantageous to Star: analysts say it is biased towards NDTV with that company taking a disproportionate share of earnings and Star making the bulk of the investments. NDTV's plans to launch a channel of its own have also not gone down well with Star. Right now, Mukerjea is turning the heat on NDTV by demanding that its Hindi programming generate the same viewerships as Aaj Tak and Zee News.

What's new at Star is the strategy on the ad sales front. The objective is two-fold: one is of course to ensure that Star retains its top dog status; and, two, more significant, to allow the prosperity of the flagship to rub off on the six other channels in the bouquet. Recently, the ad sales team did a quick mapping of advertisers on Star to discover how many of them wouldn't mind advertising across the network: 70 per cent of the spenders didn't. So what this means is that Star is offering various packages by clubbing various channels. For instance, if you opt for Star Plus along with two other Star channels, the rate would be more attractive than going for Star Plus alone. ''By bundling the weak with the strong, we're providing advertisers with more opportunities for brand recall,'' says Dutta.

KUNAL DASGUPTA,
CEO, SONY INDIA

That's probably why S.Kumar's opted for this package: the Kasliwals' brief to Star was to make the Tamarind range of readymades the most recalled brand in 45 days. Amul, too, has kicked off a campaign across the network. ''The strategy to sell as a network is an excellent short-term one, as it blocks competition from the adspend. If advertisers decide to spend across the Star network, they won't have enough left over to spend on Zee and Sony,'' says Krishnan.

Such buying across the network also allows Star to provide better customer focus and optimise its resources. For instance, earlier there could be seven executives (from the seven channels) approaching a single advertiser with seven different deals. Now the advertiser has to deal with only one.

The growth of Star has also called for a bit of organisational restructuring. As of today, Star has five executive vice-presidents under Mukerjea: besides Dutta, Nayak, and Nair there's Jagdish Kumar, head of the digital platforms group in India, and Arun Mohan, head of distribution. Providing support is CFO R.S. Narayan, who also heads finance, MIS, taxation HR, administration, and post-production.

The Star top brass now like to call the Network ''One Loaded Gun,'' which is how the new rate card describes the new offerings. Will the network-selling concept work? ''The danger in trying to bundle all channels is that it may keep some advertisers away from the main Hindi channel. Given that 65 per cent of the ad market is in the Hindi segment, why would advertisers want to advertise on the niche channels,'' asks a competitor. But the good news for Star is that the phenomenal success of its game show and soaps puts in a position to rewrite existing rules-once again. The loaded gun could well be on target.

The Digital Gambit

They call it the digital platform group, which to many of us viewers of KBC or KSMKBT or KGGK may not mean much. But for Murdoch, there's plenty at stake here-so much that if all goes well it could make Star India's current operations look puny in comparison.

The digital platform group-managed by Altaf Ali Mohammed out of Dubai and his deputy Jagdish Kumar in Mumbai-has four prongs: cable digital services, via a 26-per cent holding in Hathway Cables; managing the investments of some $140 million in five dotcoms; the development of a television portal; and the direct-to-home (DTH) project. The cable services and DTH, once in operation, will enable Star to launch its interactive service-through which viewers can with a remote control camera angles, express their views on news programmes, and do some home shopping.

Despite the hurdles that Star has faced over the years, it is still committed to the DTH project. It's willing to invest as much as $500 million into the venture. The key costs here include the setting up of an earthstation and broadcasting facilities, as well as subsidising set-top boxes. Research has revealed that consumers won't be willing to pay more than Rs 8,000, just half of what a set-top box currently costs. But, as Jagdish Kumar, Executive Vice-President (Digital Platforms Group), points out: ''It's a long-gestation project. Cumulative breakeven will take seven-eight years by when we should have at least three million subscribers.'' Meantime, subsidies on set-top boxes could reduce, as the company manages to indigenise production.

To ensure that viewers will pay up, Star is planning various value-additions: Star Premier, an exclusive movie channel, will be launched, interactive facilities on news and sports channels will be provided, and customer service will be a key focus area.

It sounds incredible, and various hiccups could well ensure that all talk of interactivity remains a pipe dream. There's still the last-mile issue that has to be addressed. Hathway is pulling out all the stops to strike deals with cable operators, thereby allowing for a two-way digital rollout. Hathway has a 2.5 million household viewing base, and Star is seeking to digitally deliver to one million of them in five years.

Of course, interactive television will also be possible via DTH. But here it's regulatory issues that promise to delay Star's march. For one, policy allows for the Murdoch company to have just a 20 per cent stake in the company, which means that Star has to find strategic, financial, and technological partners which it is trying to.

Where Star has already committed big bucks is in five dotcoms. To extract maximum value out of that investment, it has shelved plans for a Star portal, and has instead decided to make indya.com its horizontal, with the other verticals (indiaproperties.com, bazee.com, explocity.com) fitting into it. ''All the five have sound business models, and the challenge now is to justify the investments,'' says R.S. Narayan, CFO, Star India. What's more, Star recently managed to hike its holding in indya.com from 33 per cent to 42 per cent not by pumping in more money but by transferring its own properties like vindia.com and Star KBC to the horizontal.

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