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BW Businessworld

How Star Plans To Get Its Mojo Back

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Controversy can be helpful. Sach Ka Saamna is a good example of that. Before the voyeuristic show was launched in mid-July, Star Plus, the flagship Hindi entertainment channel of the Star group in India, was on the backfoot. After nine years at the top in terms of gross rating points (GRPs) — which measures the cumulative weekly audience ratings — it had been upstaged for three consecutive weeks in July by Colors and Zee TV. The reality show, propelled by the controversy it generated from its very first episode, provided just the shot in the arm that Star Plus needed to muscle its way back to the No. 1 slot last week. "Sach Ka Saamna has worked for Star," acknowledges Rajesh Kamat, who heads rival entertainment channel Colors. "It has created the buzz factor for the channel."

Of course, the buzz came at a cost. The show, based on the international format of Moment of Truth, raised the hackles of conservative MPs who thought it was too explicit for the Indian milieu. Luckily for the Star India CEO, Uday Shankar, the Delhi High Court came to the rescue and dismissed a couple of PILs. The court order was substantive, preventing the central government from acting on the notice it had given the channel. "Our culture is not so fragile that it will be affected by one TV programme. Those who don't want to see it can switch off their TV sets or can watch any other channel," ruled Delhi High Court Chief Justice Ajit Shah.

Shankar flatly blames a competing entertainment channel's promoters for lobbying a group of MPs to create a ruckus in Parliament. "We have won the Sach Ka Saamna battle, but it is going to be trench combat from now on," he says.

The Pecking Order Changeth
Despite the respite provided by the new programme, Star's journalist-turned-CEO Uday Shankar can't rest just yet. The undisputed numero uno status enjoyed by flagship channel Star Plus for nearly a decade since July 2000, based on two long-running spells of Kaun Banega Crorepati (KBC) in 2000 and 2007, and a slew of family melodramas mass-produced by Ekta Kapoor's Balaji Telefilms, has ended. Hindi entertainment television in recent months has become a three-horse race with Colors and Zee TV challenging Star's leadership status.

Though each of these broadcasting networks have as many as 12 to 24 channels in their bouquets, the big stakes are for gaining dominance in the Hindi entertainment arena. This is because 60-65 per cent of the Rs 8,000 crore in advertising revenue accruing to television goes to this segment. For subscription revenue too, the networks package bouquets of channels with the Hindi entertainment channels priced the highest, and these drive the sale of the cheaper, niche channels.

THE DIRECT LINK: James Murdoch will now be in direct charge of Star's Asia and Europe operationsThe erosion of STAR's ‘default channel' status started with the launch of Colors in July last year by the Viacom-Network18 joint venture company Viacom18. With a couple of serials such as Balika Vadhu and Jai Shri Krishna and the star-studded reality show Khatron Ke Khiladi, Colors quickly began to eat into Star Plus's audiences. By mid-April this year, 38 weeks after launch, it had edged ahead to become No. 1.

Colors's success was crafted by its street smart CEO, Rajesh Kamat. He knew the broadcasting industry inside out from his long stint as head of international reality show producer Endemol. While setting up Colors, he first poached Zee's young head of programming, Ashwini Yardi, known for conceiving a string of hit shows. After that, he challenged the traditional format of the television soap — the endless saas-bahu saga — with a storyline featuring a child bride Balika Vadhu. His smart marketing and a strategy that he terms "differentiation" and "disruptive programming", dethroned Star Plus within a year. "We had identified the fatigue in Star Plus, and we deliberately went in the opposite direction," says Kamat.

Star had not kept abreast of changing audience tastes, and the long-running K-serials from Balaji Telefilms — Kyunki Saas Bhi Kabhi Bahu Thi and Kahani Ghar Ghar Ki — had exhausted themselves, but Star had failed to replace them with more contemporary shows. The writing was there on the wall. In 2007, a rejuvenated Zee TV with shows such as Saat Phere and Kasam Se and headed by marketing guru Pradeep Guha had come within inches of overtaking Star Plus. For a week it had notched a record GRP of 303, just four points short of Star. Zee executives say they had booked outdoor media and prepared for celebrations to announce becoming No. 1. But that was not to be. The wait ended in June this year, when Zee, 10 years after it was dethroned, once again emerged as No. 1 for a week.

Shorter, finite storyline was in demand, but Star Plus was "too scared" to pull off its long-running saas-bahu serials, agrees Nitin Vaidya, COO-National Channels of Zee Entertainment Enterprises (ZEEL). Conceding Vaidya's point, Keertan Adyanthaya, executive VP and GM for Star Plus says, "These serials were still getting high TRPs. The fear was: if we replaced these shows, would the new ones do as well?"

Leadership Crisis
Star was simultaneously hit by a leadership crisis in both its Hong Kong headquarters as well as in India. Its India operations was the scene of an intense power struggle in 2006 between incumbent CEO Peter Mukerjea and COO Sameer Nair for the top slot. Rupert Murdoch opted for a balancing act with portfolios being divided and both anointed ‘CEO'. This papered over the crisis for about a year but the charade could not go on forever. It had to be resolved.

By March 2007, both Mukerjea and Nair left the network to start their own ventures. Star's Hong Kong boss Michelle Guthrie was also another casualty. Murdoch brought in Paul Aiello as CEO in Hong Kong to lead the fire-fighting, but it was only four months later in May 2007 that Star India got its chief.

Hindi speaking market; TG CS 4+; Period: 28 June to 25 July Source: TAM Peoplemeter SystemUday Shankar, who started his career as a print journalist and then went on to head various Hindi news networks including Aaj Tak and Star News (Star News is a part of MCCS, a joint venture between Rupert Murdoch's News Corp and the ABP Group, the publishers of Businessworld).

Did being a journalist help his career graph? "It gave me a comprehensive view, a view of Middle India that say a Peter Mukerjea or a Kunal Dasgupta cannot have," Shankar had told BW at the time of his appointment. Shankar's appointment took time and Star had allowed competition to grow. But then it was perhaps this middle India that Murdoch went in search of to give a local flavour to his foreign-owned network.

By then audiences had grown and become more fragmented with the increasing number of channels. The migration from Star Plus was to the plethora of regional language networks. Moreover, the channel had a weak marketing base in small towns, which was exploited by competitors, Shankar explains. The network's new creative team, put together by Shankar, was on the horns of a dilemma. "We realised the Hindi entertainment space was polarised. Who were we catering to was the question," says creative head for non-fiction programming Anupama Mandloi.

So which way did Star Plus finally decide to go? "In a fragmented market, we decided to lean towards rural India," says creative head, Vivek Behl, who had learnt a thing or two earlier as part of Zee TV's ‘rustic' programming team two years ago. "For fiction, the focus is Middle India; but then non-fiction gives us the buzz in urban centers," adds Mandloi.

Corporate Push
Getting the network back on the tracks has been a slow and tortuous grind. The disentanglement with Balaji Telefilms began in August 2008, but the content company went to court to extend the two saas-bahu serials. By November Star managed to enforce its right to call it quits. Then, almost the entire leadership team in Star quit in 2007 along with either Peter Mukerjea and Sameer Nair, depending on who they were aligned with.

After months of churn and uncertainty, Star has a new team in place. Keertan Adyanthaya, business head of Star Plus came in from MTV. Old Sony Music hand Vijay Singh joined as president and later took over the film vertical Fox-Star Studios. Two creative heads were appointed — Vivek Behl for fiction and Anupama Mandloi for non-fiction programming. Sanjay Gupta came in as the network's new COO.

For Rupert Murdoch and News Corporation, India is the jewel of its Asia operations. Though figures from the company are not available, the HK-based research firm Media Partners Asia estimates the India revenues to be over Rs 2,200 crore a year, making Star the second largest media company in India after Bennet, Coleman & Co, the publishers of The Times of India. India also accounts for as much as 70-75 per cent of Star's Asia operations, which spans as many as 53 countries. Therefore, when annual net profits for India fell over 60 per cent from Rs 425 crore or so for the July 2007-June 2008 period to Rs 175 crore for the year ending June 2009, senior people in News Corp were worried.

Star's India performance though is still better than News Corp's and Star Asia's latest results. News Corp made an overall fourth quarter (April to June 2009) loss of $203 million as compared to a year-ago figure of $1.1 billion in profits. Revenue fell 10.7 per cent to $7.67 billion. For the full year ended 30 June, operating profit was around 30 per cent lower at $3.6 billion. Significantly, ad revenues from overall broadcasting operations, that includes Fox TV stations, Fox Broadcasting Company and Star Asia, fell 27 per cent for the quarter and 21 per cent for the whole year.

In India, Star was hit both by the slowdown as well as by virtue of Star Plus losing No. 1 status. Advertisers became more choosy and invested across all channels, cherry-picking the best programmes on the basis of GRPs or eyeballs they delivered. Though Star Plus has not changed its rate card, it has been forced to give advertisers an increasing number of compensatory free spots on the channel. Uday Shankar acknowledges that growth in ad revenue was for "the first time down to a single digit". There was also concern that despite vigorous subscription collections, the ratio of 70:30 in favour of advertising had not changed. "Internationally, it is the reverse in favour of subscription," he says.

Figures are Gross Rating Points; Hindi speaking market; TG: CS 4+ Source: TAM Peoplemeter SystemIn comparison, Zee Entertainment's revenues for the April-June 2009 quarter were down 12 per cent to Rs 476 crore while net profit slipped 43 per cent to Rs 91 crore. Annual revenue was Rs 2,177 for FY2009, but significantly Zee's subscription revenues, accounting for around 50 per cent of the total, have been more robust than Star's.

More worrisome for Star is the rapid growth of Colors and holding company Viacom18. "With revenues of Rs 155 crore for the first quarter this year, our operational loss is down to just Rs 18 crore. I hope to break even as early as the third quarter this year," Viacom18's CEO Kamat told BW.

It is therefore not surprising that India is at the centre of the recent mid-July corporate realignment at Star. James Murdoch, Rupert's son and earlier head of UK DTH operator B Sky B, has now been elevated as chairman, News Corp-Asia and Europe. This means, Star sources confirm, Star India and Uday Shankar would now work independently reporting directly to James Murdoch instead of kowtowing to Hong Kong and Paul Aiello. Cost-saving is the underlying principle as the move aims to consolidate overlapping operations that will reduce the number of jobs in Hong Kong (Star's Hong Kong COO Laureen Ong has already left). It is also a signal that India is important enough to come under the direct leadership of the Murdochs.

James Murdoch knows India well and was the boss in Hong Kong in the 2000-03 period when Star rocketed to become India's No. 1 broadcaster. On his trips to India, he fell in love with the ‘Ambassador' and once told this writer that "the car has character, and was worth preserving". He was also known to shoot from his hip, and attacked cable operators at a Ficci jamboree in Mumbai calling them "thieves" out to "loot" the broadcasters.
"It is an unshackling move as there will be nobody now between Murdoch and Uday Shankar," a former senior executive from Star says on the James Murdoch appointment.

The ‘decoupling' strategy from Hong Kong includes shifting the uplinking operations of the satellite channels from Hong Kong to India. Ad sales for Star India's international channels in the US and other markets, earlier handled by Hong Kong, will also now be handled out of India. "We are expecting this to make our operations both cheaper and more efficient," an insider says.

Strategy For Revival
The Indian operations too have been reshaped to sharpen the network's creative edge and conserve cash. Replacing the old, traditional structure of appointing heads for each of the channels, Uday Shankar has opted for three overarching silos of command. While Vivek Behl is the creative head of all fiction content across Star's channels, Anupama Mandloi has been put in charge of non-fiction programming. This, Shankar says, is to keep closer tabs on key programming across channels. A third unit — a team of creative executives known as the ‘Idea Lab' — is committed to "strenuous concept development" for new shows across the entire network and works as the content engine for Star.

Innovation is obviously the key in a fragmented market where the life of each television programme is getting progressively shorter. "Our code for programmes is Tests, One-Dayers and T20s, and most of the shows now fit into the T20 category," joked Adhyanthaya.

Giving an example of consumer research, Behl says entertainment television's top ranking show Yeh Rishta Kya Kehlata Hai was born from audience research. "The story of the girl Akshara who like every Indian girl faces the prospect of an arranged marriage unfolds through the daily episodes. There is no big story, and we had problems of marketing the serial; but it has caught on," Behl says.

"Audiences have moved away from negative programming, away from scheming characters and connivance pacts, vamps and crooks," says Shankar.

Star's  programming team also decided to carry the battle to the enemy camp by pushing successful shows like Bidaai, currently at No. 2, as one-hour episodes instead of the normal half-hour schedule. This disrupted Zee TV and Colors's half-hour episodes and forced other channels to adopt one-hour programmes.

The new creative strategy has ended the reign of expensive content companies such as Balaji Telefilms, Cinevista and BAG Films that used to rule Star Plus's programming earlier. Instead, a whole tribe of relatively untested, young producers have been taken on board. For instance, Bidaai is produced by newcomer Rajan Sahi's content house Director's Kut.

SEAT OF SUCCESS: The first two seasons of Kaun Banega Crorepati made Star the leader in the GEC space"We found that big names like Balaji and Sagar Productions were not willing to unlearn some of their outdated notions. Our new directors, on the other hand, come with no attitude; and they have the killer instinct," says Shankar. "Ending some of these legacy shows has helped our bottom lines grow, even though our topline has not moved much."

Meanwhile, Star Plus also took the bold decision to introduce a public service arbitration programme on a GEC at a time when many new channels were moving away from serious public interest programming. The Kiran Bedi show Aap Ki Kacheri paid off as well.

Who Will Be The Winner?
Which way will the ‘trench combat' now move? After 6-7 years of domination, Zee TV was dethroned in mid-2000 by KBC and a rejuvenated Star Plus. Its ascendency continued unbroken from 2000 till April this year, an unusual 10-year reign. Will there be a new winner who will rule the air waves for the next few years?

Probably not. Star has a comprehensive battle strategy, but Colors and Zee TV have by now also mastered the art of good programming and aggressive marketing to ensure they continue to be in the running. Instead of a clear No. 1, it is more than likely the baton will keep changing hands as each channel innovates and introduces new programming.

Says Ravi Kiran, CEO of media planning group Starcom MediaVest: "The days of supreme domination by one or other player are over. Zee's pre-2000 reign was in an era when no one else knew the business; Star Plus's long domination was an aberration. We are now finally seeing the maturing of the GEC market. When other things are equal between channels, marketing will be the key."

Click here to view enlarged imageKamat of Colors sees Star Plus employing the same tactics he used to dethrone his rival. Star Plus has pitched a serious reality show — Aap Ke Kacheri — against Colors' Balika Vadhu, and Sach Ka Saamna against Na Aana Is Des Laado. "This is differentiation and disruption being used against us," he quips. Speaking on who would be the winner, Kamat says it would be a three-way play between Star, Zee and Colors for the next six months with the gap between them not exceeding 50 GRPs at any time. However, beyond that, the situation could get more complex. "Don't rule out NDTV Imagine and even Sony. Both have showings of 120 GRPs or more, and it could become a five-horse race."

But in the crunching of numbers, what many  media pundits fail to see is the breadth and depth of Star and its associate companies, and their capacity to burn cash to stay in the forefront. Over the years, the Murdoch empire in India has quietly expanded through a stream of acquisitions and joint ventures that provide synergy to the main broadcasting business.

The DTH venture TataSky in which News Corp holds 20 per cent is second to Zee's Dish TV, but growing at a faster pace and in the more value-added markets. Similarly, Star is a 22.2 per cent partner in the one of the largest cable networks, Hathway Cable & Datacom. It is also 50 per cent owner of a cable distribution JV Star-DEN with Raghav Behl's Digital Entertainment Network (DEN), and has an 81:19 per cent JV with south-based Jupiter Entertainment Ventures.

Rupert Murdoch has been personally driving the India operations. Not known to travel often to Asia, the media baron made two visits to India in three years — one in March 2005 to push through the Tata Sky DTH venture, and the second, more recent one in August 2008. Both trips were to spur the diversification of Star into multiple media verticals. In 2007, Murdoch was attempting to clear the roadblocks for DTH. In August 2008, he put the finishing touches to an investment of Rs 500 crore to acquire Kerala-based broadcaster Asianet that added as many as six south India channels to the bouquet.

"Today, our south channels account for 11-12 per cent of revenues," says Shankar. On the film production and distribution front, Star-Fox Studios has just pipped competitors such as UTV, Warner Brothers and Eros International to grab the world distribution rights of Karan Johar's blockbuster-in-production My Name is Khan for Rs 80 crore.

"The mandate for James Murdoch for India is to spend and to stay ahead," says a former employee of Star India. Colors and Zee are making sure that he has to spend plenty to stay ahead.