Estimates indicate that by the time the Amitabh Bachchan-hosted KBC2 ends its 85-week run, it would have raked in Rs 242 crore in revenues, with profit margins of 65 per cent

Perhaps the only thing that could cheese Peter Mukerjea off these days is the potholes on the narrow road that lead up to his company's headquarters in central Mumbai. Everything else, after all, is as smooth as soulful jazz for the CEO of Star India: His 15-channel bouquet has an estimated 25 per cent share of the Rs 6,000-crore television advertising market; a Hong Kong consultancy expects operating margins of the Star Group-which is Rupert Murdoch's News Corp.'s Asian operations, and which is being driven largely by India-to be a hefty 40 per cent for 2005-06; Star India's flagship channel Star Plus has all shows albeit one on the domestic Top 50 list; the one-year-young Star One has a realistic chance of emerging numero dos by the year-end (ahead of Sony and Zee, only behind Star Plus); and the sequel to Kaun Banega Crorepati, kbc2, could bring home revenues of $55 million (Rs 242 crore) once its 85-week run is done-that's one-tenth of Star TV Asia's projected revenues for 2005-06-with profit margins of 65 per cent to boot. But Mukerjea, rather than basking in the glory of yesterday's conquests or counting the days till the rosy projections show up, is thinking ahead, way ahead-his new hobbyhorse isn't riding on TV at all. "What excites me a lot nowadays is the huge potential of mobile phones... Our sister company Fox has introduced 'mobisodes'-small one-minute clips of TV serials that you can download on to your phone; they have done this for the serial '24'. I think this technology can dramatically change viewing habits and is a huge opportunity for us," says the CEO, excitedly.

That's Mukerjea-and Star India-for you: Invariably a step ahead, whether it's technology, or programming. Or, as kbc2's commercial success best indicates, single-minded hard-sell. Points out Ashutosh Srivastava, CEO, Group M India: "Star realised before anyone else the importance of marketing in television. Today, others might have caught on, but Star is already leagues ahead." That Star can still rope in the top advertisers at rates that are pretty much the highest in the industry (Rs 6 lakh for a 10-second slot on kbc2) is evident in the response to the Amitabh Bachchan-hosted show. Lead sponsor Airtel and associate sponsor Nokia are believed to be paying Rs 35 crore between them for the first 80-odd episodes. "Star is not the cheapest medium, but our clients are by now confident that it can deliver the goods," adds Srivastava. Concludes Piyush Pandey, National Creative Director, Ogilvy & Mather, who worked with Star's programming and marketing team on kbc2: "Star is definitely the best TV marketer in India."

"We have to consolidate our position in the Hindi market and improve our offering on Star Gold. Another unfinished business is improving Channel V" Peter Mukerjea CEO/Star TV

Pandey is, of course, impressed by the way Star succeeded in getting viewers hooked to kbc the first time round, from the first show itself, five years ago. That's pretty much the formula it's followed since then. It's worked and how: Nine of the top 10 biggest launches (in rating terms) have been from the Star stable (see First Day, Grand Show). So what is it that's contributed to Star India's success-sticky content or relentless selling? COO Sameer Nair, the programming honcho at Star, keeps you guessing when he paraphrases a statement of Peter Chernin, his counterpart at News Corp., Star TV's us-headquartered, Rupert Murdoch-owned parent company. "If content is king, then marketing is its crown prince," grins Nair.

The potent content-marketing combo was in ample display when Mukerjea and Nair flagged off Star One. At a time when rivals were perhaps patting themselves on their backs for successfully replicating the successful Star soap opera formula, Murdoch's men in India pulled off a coup by launching not just a new programming format but a new channel altogether. "It was genuinely very, very difficult. It is not the same as launching a couple of new shows on an established channel," shrugs Mukerjea. If Star One was launched as a flanking channel to widen the gap between Star Plus and the rest, that game plan is working like a charm-in fact, so well that Star One is hot on the heels of Zee TV in viewership ratings (see Star One's Big Leap Forward). The only channel in recent months to break into the top 10 cable and satellite programmes list (with The Great Indian Laughter Challenge) is Star One. Mukerjea's "top priority for 2006" is predictable: To cement Star One as India's #2 channel.

If that goal appears immensely doable, it would be because, as Ajay Vidyasagar, Chief Marketing Officer, Star India, points out, "marketing and programming go hand-in-hand". Whilst that may sound straight out of the textbooks, Star has honed the symbiotic relationship between the two to perfection over the past half a decade. When Star started out in 2000 with KBC, it was #3. "We could become the #1 channel in one month because we went out aggressively. Unlike our rivals, our marketing costs have increased exponentially over the years. This year with kbc2 we would have a huge marketing budget (estimated at Rs 15-20 crore, but since Star doesn't need to buy TV spots, this money was almost exclusively spent on print, outdoor and creatives)," says Nair.

Although Star has the most revenues, Sony (CEO Kunal Dasgupta seen here) and Zee are better off in terms of profitability

If Star is able to launch into such big-ticket blitzkriegs, it's simply because revenues are growing at a rapid clip. A study by Media Partners Asia of Hong Kong estimates that two-thirds of the Star Group's revenues of $444 million (Rs 1,953.6 crore) for the year ended June 2005 came from India (Star TV also has operations in Greater China and South-East Asia). The projected revenues for 2005-06 are $512 million (Rs 2,252.8 crore). On the profitability front, margins are expected to pole-vault to 40 per cent in the current year (with $205 million or Rs 902 crore of operating profits), which would make Star much more profitable than Zee and Sony's consolidated operations (this includes Zee's operations in the US, UK and the Middle-East, and Sony's channels in the us and UK). As of 2005, however, Star is not the most profitable channel amongst the big three, with the Sony and the Zee groups enjoying higher profit margins (see The Competition Lags...). The ongoing year may prove different for two reasons: One, the contribution of kbc2, and two, an expected breakeven of Star's Chinese operations.

Indian media observers, however, maintain that Star TV's grandiose numbers-at least the Indian contribution-are not comparable with those of domestic broadcasters, as the Murdoch company uses loopholes in the Indian tax structure to avoid paying taxes when routing its advertising remittances to the Hong Kong headquarters. Because the shows are relayed from Hong Kong, advertisers and clients are theoretically not advertising on an Indian channel. So, in effect, Star India is a Hong Kong-based operation, sourcing content from India and beaming it into local homes. The short point: Star doesn't make any moolah worth talking about in India, other than from distribution and fledgling businesses like mobile content. This system obviously suits Star well, as it avoids paying local taxes on revenues that are essentially generated in India but paid to Hong Kong. What's more, this arrangement also allows Star to bill its advertisers in dollars, a privilege local broadcasters obviously can't avail of. Even though the tax issue has been partially redressed in the last budget, foreign channels still repatriated an estimated Rs 2,500 crore last year. Plus, because Indian channels pay heavy taxes on capital equipment, channels that broadcast from lower-tax countries benefit. Their solution: Force channels that cater to India to uplink from India. Mukerjea for his part denies that Star is exploiting loopholes, and refuses to elaborate as, he says, the issue on tax matters is being taken up in court.

Dish-TV, co-promoted by Zee TV (CEO Subhash Chandra seen here) has 150,000 subscribers, and could pose a challenge to Star's DTH plans

It is not as if Star doesn't have an Achilles' heel of its own. Whilst it might enjoy eyeball share of two-thirds of mass-market Hindi channels, it registers virtually no presence south of the Vindhyas. Mukerjea admits Star India is weak in the South, but that region isn't his immediate priority, although he does aver he will "enter the regional market" some day. "We have to consolidate our position in the Hindi market; for example, we have to improve our offering on Star Gold. Another unfinished business is improving Channel V." Then, there's also the T-Sky Direct-To-Home (DTH) venture in which Star owns a 20 per cent stake (the Tatas own the rest) that Mukerjea expects to be up and running by the first half of 2006. To be sure, T-Sky might find the initial going tough because Dish-TV (co-promoted by Zee) already boasts 150,000 subscribers.

When Star TV walked into India 10 years ago, there were barely two million cable and satellite TV households. When KBC was launched in 2000, that figure had grown 10-fold, and the television ad-pie was around Rs 1,000-1,500 crore. Today, there are an estimated 65 million television households, and the television ad pie is all of Rs 6,000 crore. The potholes outside his Indian headquarters notwithstanding, Murdoch should be pleased.