Star India, the broadcast major that established a leadership position on the back of Hindi entertainment channel Star Plus, has leverage today in more markets than ever.
The company's 2008 purchase of South Indian broadcaster Asianet Communications (a US$350 million investment that at the time ranked as Star India's biggest bet to date) was followed by organic launches in the Bengali and Marathi markets in East and West India.
Meanwhile a new channel brand, called OK, has started catering to smaller cities in the Hindi belt with entertainment and movie channels - a move that allowing branded Star offerings - including Star Plus - to focus on the major metros.
According to estimates from Media Partners Asia, publisher of Asia Media Journal, margins for the business today, excluding the recent acquisition of sports, are a healthy 30%.
Five years ago, when current CEO Uday Shankar first took over, margins were just 16%.
Nonetheless, despite successfully repositioning Star, Shankar remains cautious.
Production and talent costs are growing faster than revenues, as business models have yet to catch up with the demand for new kinds of content, as millions of homes migrate to digital TV.
At the same time, the challenge that Shankar first encountered as CEO – keeping up with audience tastes – is as pertinent as ever.
Mixed track record While the characters and storylines on general entertainment channel (GEC) Life OK are clicking with smaller towns, Star’s track record is more uneven in larger metros.
“We have once in a while dropped the ball on the big city audiences, where the world is changing far more rapidly than our programs reflect,” Shankar says.
Major urban centers such as Delhi and Mumbai are the first to switch to digital signals, making room for a more diverse range of channels and revenue models.
Scope for broadcasters to take advantage of these changes is limited however, at least until cable operators – accustomed to delivering a single service at a single price – start adjusting to the digital world with segmented offerings based on direct customer relationships.
It’s a critical step that most systems have yet to take.
Shankar isn’t banking on a speedy transformation, putting in place a bridging strategy at Star by morphing former music offering Channel V into a third, youth-oriented Hindi GEC.
Similar thinking lies behind the positioning of Fox and Star World, English channels likely to appeal to early adopters.
“We’re just trying to position ourselves for the digital world, where we can offer more segmented content,” Shankar notes.
Shankar is doing what he can to innovate within the current system by bringing on board fresh talent and looking for new stories to tell.
Capturing star talent Content readiness and relevance remain critical. In order to bolster the appeal of Star channel brands in the big cities, he has started engaging big-name Bollywood actors and directors to work for Star Plus, while securing exclusive multi-year satellite rights from stars such as Salman Khan and Ajay Devgn for movie channel Star Gold.
The reach and clout of Star Plus, which still accounts for around 45% of company revenues, allows Shankar to provide weighty financial support, vowing he will do whatever it takes to protect its lead.
Nonetheless, he also believes that new talent can help raise the game across the portfolio.
“I don’t think conceptually that’s limited to Star Plus,” Shankar notes.
“We see the same quality of content rolling over to Life OK and, hopefully, eventually to Channel V.
"We are already doing that in other markets. In Bengal, the high quality Bengali film talent is working with us. In Kerala, the Malayalam talent is working with us.
"The economics will determine how much it will play out in each market.”
Source: Asiamediajournal.com
