The Hindu Business Line : Star on the ascendant

This March, when Star India, the biggest broadcaster in the country, decided to restructure itself by having two CEOs to represent its businesses, it indicated the big plans News Corp, its parent company, had for the Indian market. While broadcasting will remain its core business, the media company intends getting `future ready' to dabble in areas related to media and beyond.

As Peter Mukerjea, Chief Executive, Star India, explains, "The restructuring is an internal effort to bring about more focus in the area of new business opportunities. While we did have these businesses on our radar, they were put on the backburner since we were concentrating on our day-to-day activities."

Exploring new options of stretching the Star brand to new media such as Internet, mobile TV and entertainment, outdoor advertising, publishing and even retail, its parent company News Corp's focus on India has heightened since Rupert Murdoch, its Chairman, came visiting last year.

Mukerjea's role has been redefined in terms of focussing on new growth areas. His job would entail exploring `new touchpoints' with new and existing consumers. "What we at Star need to do is to create new touchpoints for consumers who are connected to us through television and expand those into new areas. Most of our businesses in other parts of the world have already diversified into areas such as publishing and movies. While it has barely been a couple of months since we restructured our operations, we have to build a team to strategise and analyse the Indian market and see the gaps in the market."

Recently, Star strengthened its presence in the mobile entertainment space to enhance its Star 7827, an interactive wireless communication platform. The Star 7827 brand with its new baseline, `It's all out there,' will expand its services from television-focused interactivity to entertainment specially created and aggregated for the mobile screen.

Sameer Nair, CEO of Star Entertainment, India, says, "Star 7827 will be one of the key focus areas and is expected to contribute significantly to our revenues over the next 3-5 years. Our proven programming and marketing abilities should ensure that we become one of the key players in this space. The purpose is to build this market with an eye on the future."

Adds Viren Popli, Senior Vice-President of Star Interactive, Star India, "We do realise that revenue sharing today is skewed in favour of the mobile operators. But we intend expanding and forging many relationships and having many partners as we go along."

The trend of advertisers slowing down TV spending has, however, not affected the media company. As Mukerjea says: "Advertising in this market will continue to grow and the projections are suggestive of an economy gathering momentum. The percentage of money spent on advertising and its percentage of GDP will continue to rise. Besides, advertisers are also looking at new media in a larger way. We as a company in the media business have to be in these new areas and capture these opportunities as they come along. In fact, we believe our growth in ad revenues will always be greater than the market growth rates. Being a market leader, it is our role to drive these rates forward without necessarily losing sight of other opportunities."

With intentions of creating sub-sets in its revenue model, Star expects to generate sizeable revenues from its non-broadcasting activities in the future. "We should be looking at getting between 25 and 30 per cent of our current advertising base from the new activities that we are not already present in," states Mukerjea. Market estimates peg Star India's advertising revenues last year at Rs 1,300 crore.

Meanwhile, Star is also looking at ramping up operations in the Internet space. While it continues to own indya.com, it is eyeing other Internet sites. As Mukerjea says, "There is no reason why Star cannot create an Internet property which can have consumer connectivity. After all, we already have a television platform which can be used effectively for building the brand." Waiting to exploit the potential of the Internet further, Star is open to merging, buying out or even starting the business from scratch, if need be.

Star is also leveraging its brand in other areas such as talent management. Also, its re-entry into the radio medium is imminent.

Elaborating, Mukerjea says, "Talent management is an opportunity and we are studying this market quite closely. As we already have a platform, we have talent that we can sign up but we will not be restricted to our channels. We are open to doing business with anyone. The business will be treated as an independent profit centre by the company." Star is open to signing up talent from different fields including sports.

Mukerjea adds, "There are three levels of people that we are looking at. There are people who are already there with big names, people who are breaking through and around the corner and then there are the newcomers." Tapping into talent from all walks of life, the media company is planning to cater to singers, writers, sportsmen and actors and cover all aspects of celebrity management.

"At present, the business is limited but there is an opportunity in this market. We have an understanding of this business and intend getting involved in the entire spectrum of the talent management business," says Mukerjea, who has already seen the response from the popular talent based shows such as the Laughter Challenge show and the VJ Hunt on Channel V.

Using the credentials of the Star brand, the company is also offering an opportunity for advertisers looking at product endorsement from the celebrity management contract. "Since the company already has good credentials, we are open to providing an opportunity to advertisers seeking product endorsements," says Mukerjea.

Star is also planning a comeback in the radio space. After partnering Radio City as a content supplier and taking care of its ad sales in the past, the media major is hoping to tap into this medium once again. Claims Mukerjea, "Our withdrawal from Radio City is history now. Today we believe there is an opportunity in radio. At that point of time the government was not allowing foreign direct investment but now, thankfully, the law has changed." While there is a possibility of Star going back to Radio City with the 20 per cent FDI limit that has been allowed, the company is open to evaluating new opportunity. "The landscape looks right and we will certainly be going back to it," states Mukerjea, who is hoping the 20 per cent FDI limit in radio will be enhanced. Out of Home (OOH), retailing and publishing are other extensions of the business Star has in mind. Emulating the Fox sports café model in the international markets, Star is expected to get into coffee retailing, much along the lines of Barista and Café Coffee Day. In publishing, it is mulling over the possibility of launching a magazine based on its popular channels such as Star Plus while in the outdoor business in spite of its unorganised nature, Star senses an opportunity for growth.

Besides, it is also beefing up its L&M (licensing and merchandising) activities in future. Ajay Vidyasagar, Executive Vice-President (Marketing), Star India, says, "In the past few months, we have released audio and videos from our popular shows such as Nach Baliye and Remix. There are plans to conduct our L&M business in a more dramatic manner since we have the intellectual property rights which can get manifested in different forms."

But the way forward in the broadcasting business for Star would be its DTH venture where it has already forged a joint venture with Tata Sky with a 20 per cent stake. With the cap on cable distribution revenues, DTH would bring in the numbers it is looking for. Mukerjea, who is also on the board of the Tata Sky DTH Joint Venture company, believes it is possible for both cable and DTH to co-exist in the Indian market. "In every market, both cable and DTH have existed together. It is not as if one has to grow at the expense of the other and this will become apparent as the service launches," says he.

Rajesh Jain, National Industry Director for Information, Communication & Entertainment, KPMG, says, "It is possible to have successful cross-media properties. But it is also a function of the competitive environment, the degree of commitment and the ability to harness the technology and new media applications. Besides DTH should see a jump in subscription revenues. While Star is still far ahead in the game in its broadcasting business, Zee is also getting its act together with its programming. In Star's case it was KBC which was the anchor show, which brought about a discontinuity in its programming. Such shifts in programming do happen worldwide and India is no different a market.''

Broadcasting will continue to remain the core of Star's operations. Introducing a flanking channel (Star One) has reduced its dependence on its flagship channel, Star Plus. Besides, there are plans to beef up its offerings in the regional space and to introduce more regional language news channels in the future. Predicting the future of Star in India, Mukerjea says, "I think we should continue to be the leader in the marketplace. Today, as we focus on our core business, we believe in simultaneously expanding into new areas and becoming ready for the future." As a new Star rises in India, it remains to be seen whether the media brand can replicate the success of its broadcasting business in its new ventures.