SUBHASH CHANDRA CMD, Zee Telefilms With Rs 500-600 crore investment in DTH, Zee hopes to get 15 lakh subscribers by 2005	PETER MUKERJEA CEO, Star India Star is way of the pack but plans to grow bigger still by launching new channels and DTH	KUNAL DASGUPTA CEO, SET India Sony plans to counter Star One and Star Utsav through better programming schedule

This floor will house our cafeteria," says Peter Mukerjea with a quick sweep of his hand. We are on the top floor of Star TV Network's seven-storey corporate digs in Mumbai's Mahalaxmi, overlooking the neighbourhood's famous race course. It's easy to tell that Mukerjea, the 49-year-old CEO of Star's India operations, is excited about the swanky building, the top three floors of which are still under construction. Dressed in a business suit, he enthusiastically bounds up three floors from his fourth-floor office, hopping over puddles, loose bricks and small heaps of cement and gravel to show this writer around the new facility. "We'll have large glass windows so that everyone can get a good aerial view of the city from the canteen," says Mukerjea. The three floors should be ready to move in by the end of August.

Yet, it's unlikely that either Mukerjea or any of his team of more than a hundred managers who'll eventually occupy the building will have the leisure to take in the view or even catch some action on the tracks nearby. Not that it bothers anyone at Star. In the Great Satellite TV Derby, Mukerjea's Star is already the No. 1 jockey, with an estimated Rs 1,400 crore in revenues and 79 of the top 100 shows in the mass entertainment category (in the 25th week of this year). But far from keeping its head down and trotting along, Star wants to quicken its gallop. Its last year's revenues represented a 30 per cent jump over the previous, but now Mukerjea wants to bump it up another 25 per cent-never mind that advertising revenues in the industry is growing at between 7 and 10 per cent. Says Mukerjea: "Our parent is growing at 20 per cent in mature markets like the US, and they question us on the Indian market, since this is a happening place."

Star's saas-bahu weepies, while still going strong are likely to lose steam

Sure, TV advertising revenues are growing (from Rs 4,220 crore in 2003 to Rs 4,676 crore in 2004), but it's not all hunky-dory for Star. For one, there are only 24 hours in a day, and trying to squeeze in more ads in a show is likely to cheese off viewers. For another, Star's famed "saas-bahu" soaps have ruled the airwaves for four years now and could soon look jaded. Any attempt at hiking ad rates to boost revenues will almost certainly draw a howl of protest from advertisers. Says Anita Nayyar, Executive Director, North Operations, Starcomm India, a media-buying agency: "Since TV ratings have been consistent over the past year, channels have not been able to hike ad rates. And there is no reason why they should be able to hike rates in the near future.''

Star's Act Three

So, just how does Mukerjea plan to grow at 25 per cent this year and the year after that? "By expanding the pie," he deadpans. Translated, it means a slew of initiatives (See Star vs The Rest), representing its biggest push yet, 12 years after it first entered India and where for the first seven to eight years it played catch up with Zee. Fortunes reversed when in 2000 Star launched Amitabh Bachchan-starrer game show Kaun Banega Crorepati and its blockbuster K-serials. This time around, which some see as Star's Act Three, the Rupert Murdoch-owned network is hitting competition, including smaller players such as SAB TV and Sahara Manoranjan, where it hurts the most: ad revenues. The weapons in its armour: Star Utsav and Star One. The rate card for Star Utsav is very aggressive-Rs 1.2 lakh to Rs 1.5 lakh for 30 seconds, which is a tenth of what Star Plus charges. "This gives regional advertisers a platform to have a national presence," says Mukerjea. Although innocuously put, the strategy is really aimed at luring advertisers away from smaller national and regional TV channels.

Zeee hopes to almost double its channels on DTH, which is already operational

Similarly, Star One intends to take on SET Max and other English language channels. Meant for the "urbane, 2004-outlook in life" up-market audience, it will be markedly different from the saas-bahu dominated Star Plus. That's something Zee and Sony have been doing for sometime now. With serials like Jassi Jaissi Koi Nahi and Ye Meri Life Hai, Sony claims to have given serious competition to Star Plus. For example, it says that since the launch of its popular serial Jassi its share of viewership (in that time band) has gone up from 6 per cent to 14 per cent. Says Kunal Dasgupta, CEO of the estimated Rs 900-crore SET India: "Sure, Star will give us competition through Star One. But we will counter Star One and Star Utsav through our better programming schedule."

Sony is beefing up its programming by introducing new serials in prime time (8 pm to 11.30 pm) to take on Star Plus. In July, it will launch a serial for the viewers below 15 (Hum Do Hai Na) and another one meant for the 15-25 age group at 8.30 pm (that would take on Star Plus' popular serial, Kasautii Zindagii Kay). Reformatting of shows telecast on Fridays has increased Sony's marketshare from 25-27 per cent in January to 38-40 per cent today. ''We are almost doubling our viewership at prime time in every spot,'' says Sunil Lulla, Executive Vice President, SET. According to him, Sony will continue to focus on the prime time band. ''You need to win the bigger game,'' he says.

Unlike Sony, Zee, which has been dogged by a churn in its top management, is not concentrating only on the prime time band. Zee TV is trying to catch eyeballs through its talent show, India's Best, launched end of June this year. This show takes place in 20 cities and will be telecast over 10 weeks on Fridays and Saturdays. Similarly, it has strengthened the afternoon time band (12.30-3:00 pm) through its TV magazine concept of programming called "Zee Woman". In these three hours, Zee TV airs serials and programmes on beauty, fashion and household tips. A thriller, Tamanna House, has been introduced at 10 pm and new programmes in the post 10.30 pm time slot are to be introduced shortly. Besides, in August, Zee is launching programmes targetted at children-for instance, a children's comedy at 8 pm. "We have moved away from the saas-bahu formula. We are showing contemporary, experimental and progressive women in our serials," says Ashish Kaul, Group Vice President, Corporate Brand Development, Essel Group.

The DTH Rush

Today, almost two-thirds of Star India's revenues come from advertising and the rest from subscription. With the Telecom Regulatory Authority of India (TRAI) freezing cable TV rates, the revenue mix is unlikely to change, despite the two new channels. That's where its DTH gameplan comes in. Last year, it tied up with the Tatas to offer DTH services under a JV company called Space TV. The government's nod is awaited, although Star Group CEO Michelle Guthrie has already made two trips to India this year to meet I&B officials. Guthrie recently met the Union I&B Minister, Jaipal Reddy, in a bid to get the government to hike the FDI ceiling of 20 per cent in DTH. Zee, in contrast, is already up and running and claims to have cornered 1.3 lakh paid subscribers. (Prasar Bharti is also in the fray; its Ku band is to be launched shortly.)

Both intend to be aggressive in the area. Star, along with the Tatas, plans to invest Rs 1,600 crore in Space TV, while Zee is looking at between Rs 500 crore and Rs 600 crore. The Subhash Chandra-promoted outfit hopes to get 15 lakh subscribers by the end of FY 2005 versus Star's reported target of 1 million in the first year of operations and 10 million within seven years. ''With DTH, we are targeting the entire population of 80 million TV homes (in the long-term),'' says Mukerjea. Interestingly enough, the rivals are letting their head rule their heart. ''The distribution platform has to be neutral,'' says Kaul of Zee, which like Sony and Star is open to carrying each others content.

The launch of Jassi has turned around Sony's fortunes, and viewership has risen sharply

That's not at all surprising. A premium service will need to offer superior content to consumer otherwise it runs the risk of failure. Zee, for instance, has introduced a 24-hour comedy channel, Smile TV, and has tied up with five international channels-Platinum, Malibu, MCM, FTV, Euro Sports-for its DTH platform. That apart, it already has Star Sports and ESPN in its DTH bouquet and is close to signing a deal with Sony. By September this year, Zee hopes to increase the number of its DTH channels from 55 to 100.

Star, on its part, has proposed a tie-up with Disney, which is said to be bringing in three channels, two of which are aimed at teens and pre-schoolers. Star already has struck a deal with UTV to distribute its children's bilingual channel (in Hindi and Tamil) with original Indian content. Says Mukerjea: "If you look at the population skew in India, you'll find that 60 per cent of the population is under 30. As you go down further, the numbers get pretty significant." Little surprise, then, that Sony and Zee too want a piece of the children's pie. On July 5, Sony introduced Animax, a popular animation channel from Japan, and Zee is said to be in talks with an international children's channel to air on its DTH. Rivals had better watch out for Star, though. Rupert Murdoch's DTH service in the UK, BSkyB, acquired quite a reputation-not to mention thousands of subscribers-by doling out set-top boxes worth a billion dollars. Just the same, it's a big gamble that Star-although, under the prevailing rules, it is the Tatas who'll chip in with 80 per cent of the proposed Rs 1,600 crore investment-may play with DTH.

The weak areas of Star, according to Mukerjea, are news and distribution. Star is already working on improving and expanding its news channels, although displacing the current market leader Aaj Tak (owned by TV Today, a sister company of Business Today's publisher, the India Today Group) may take a whole lot more. The other weak area, Mukerjea says, is South India, which accounts for nearly 50 per cent of the total viewership. Star's Tamil channel, Star Vijay, has a measly 5 per cent share of the southern market. "If we want to grow, we can't be absent in the south. We are looking at all possibilities-a new channel, acquisitions, mergers-in order to increase our presence in South India," he notes. In around two to three month's time, his team will present a strategy for south India to the parent.

Even as Mukerjea launches new channels, cash cow Star Plus runs the risk of losing the all-important eyeballs. Its saas-bahu weepies, while still going strong, are likely to lose steam sooner than later, unless Star can come up with innovative content that keeps viewer interest alive in the soaps. Else, it may have to create a set of new serials-an option fraught with greater risks. Mukerjea, however, says that his serials can continue as long as they hold viewer interest. And that could also mean 10 years or more. "Look at the Eastenders of the UK. It's been on air since 1985," he says.

However, better serials and more engaging forms of television from rivals could short circuit Mukerjea's hopes of milking a clutch of TV sagas into mini-eternity. In an era of information and entertainment glut, the viewer's loyalty is as fickle as the fortunes of the horses that race in the tracks across Mukerjea's new office.