After many years of success, Star India lost its way with lacklustre ratings, declining profits and talent flight. Now, its hit show Satyamev Jayate signals a comeback. How did it happen?
Star India’s latest show, Satyamev Jayate, was a bold gamble. A show, helmed by a super star, yes, but one that trafficked in all of the painful warts within the Indian society that you would have imagined no one wanted to see. Then, there was the considerable price tag—an estimated Rs 4 crore an episode against Rs 35 lakh-Rs 2 crore for a regular, star-hosted non-fiction show.
The stakes were high, and the company put all its muscle behind not just sculpting the format but also ensuring maximum impact. It leveraged the power of its network, playing it across channels and languages and getting Doordarshan homes in. It also chose the moribund Sunday morning slot. Most of this worked. More than 100 million people watched the first episode. This went up to over 370 million by the fourth.
Regaining its lustre
Rise and fall... and rise
Star is no stranger to runaway success. It entered India in 1991 and was soon acquired by NewsCorp. Till 2000, it struggled. After its break-up with Zee, Star blasted its way into the Hindi market with Kaun Banega Crorepati. This was followed by hits like Kyunki...Saas Bhi Kabhi Bahu Thi..., among others. For more than six years, it had a vise-like grip on audiences that Zee, Sony or others were unable to shake.
However, it became so dependent on its flagship Star Plus, and on Balaji Telefilms, which supplied its biggest hits, that the company stopped thinking. There was no investment in growing regional or international markets and complacency crept in. A bright, successful team had nothing to do and NewsCorp did not care. This is when politicking between the India and Hong Kong offices started. By the time the dust settled, Star’s ratings had slipped, it had lost its top team and operating profits were headed for a free fall (see chart).
How did it transform from a sad, ‘I lost my way,’ leader in 2007 to the one that seems to be making all the right calls? It has taken five years, but CEO Uday Shankar and his team have turned around a company that looked sidelined in the Rs 33,000-crore Indian broadcasting industry sweepstakes. “No matter when I leave, Star will not be in the same situation again,” vows Shankar.
Captain, my captain
Hiring Shankar may have looked like a gamble at that time. “Uday (Shankar) was a total outsider. He came as a clean slate and that was a good thing. Around the same time, James (Murdoch) took direct charge, and competition was in bad shape,” analyses a senior investment banker. James is News Corporation Chairman Rupert Murdoch’s son and chief of its European and Asian operations. Star India is a fully-owned subsidiary of NewsCorp. It brings in a bulk of the Asia revenues and over two per cent of the NewsCorp’s $34-billion global revenues, making it larger than global rivals such as Sony, Turner, Walt Disney or Viacom in India.
Peter Chernin, the former COO of NewsCorp, zeroed in on Shankar to head Star India when the latter, a TV journalist who had set up Aaj Tak, was CEO of MCCS, a Star News venture with ABP at the time. Shankar says when he walked into Star in 2007, the first challenge was convincing people that, “we had lost the plot and that we could regain it.”
This began by shaking existing beliefs. “Within India and overseas there was an irrational belief that we couldn’t exist without Balaji,” he says. Star sold off its 26 per cent stake in Balaji and effectively snapped ties with it. The organisational transition from the old to the new had begun.
Star then started doing things it had neglected for a long time.
The winning formula
The first thing it did was to invest in the regional business. To speed things up, it snapped up a majority stake in Asianet Communications in 2008. It owned Asianet and Asianet Plus (Malayalam), Suvarna (Kannada) and Sitara (Telugu). These have been rebranded. It forayed into Marathi and Bangla and started investing in its Tamil channel, Star Vijay. The results are evident. From five per cent, the share of regional languages has gone to 27 per cent of STAR’s (total) revenues. More importantly, the regional business now brings in 26 per cent of STAR’s operating profits. Zee, STAR’s closest rival, gets roughly 30 per cent of its total (advertising) revenues from regional channels. But, remember, Zee has been at it for over a decade now.
Secondly, Star started simplifying its structure and getting out of partnerships that weren’t taking it anywhere. It has or had stakes in or joint ventures (JVs) with Balaji, Hathway Cable, MCCS (Star News), ESPN and Tatas. Many are over now. “We got into the JVs, not because we wanted to be a financial investor in the business, but because we wanted to partner in building a business. However, if because of the partner’s point of view or because of regulation, we cannot do that, it is better to exit,” says Shankar. For instance in MCCS, regulation stopped Star from increasing its stake over 26 per cent or getting more involved in the editorial. “Besides attending board meetings there was nothing we could do,” says Shankar.
The last—and arguably the most important—part of the transformation was changing its approach to programming in the mature Hindi market. “Star understood the big city viewer very well. But, as cable & satellite (C&S) went deeper, the understanding of that viewer had to improve,” says Shankar. The world of Indian C&S had segmented and most broadcasters had not caught on. So, in 2010 came the Rishta wahi soch nayi campaign, with several new shows aimed at capturing audiences in markets other than the top ten cities. Much of this worked, albeit slowly, in bringing Star back in the reckoning.
What’s next for Star? “The next ramp-up will happen post digitisation,” says Shankar. That is when pay revenues should rise from the 30-odd per cent to half of the top line or more. Gupta is focused on getting more from advertising. “Media is like telecom in terms of pace of change but has not monetised itself well,” he says. Gupta reckons the industry makes very little per minute of programming compared to what any industry does for a unit of product. To get more from existing programming means getting advertisers to buy on better metrics, controlling ad inventory and time. Also, it means getting a new set of advertisers in. The print industry has 10,000-12,000 advertisers while TV has just 1,500-2,000, says Gupta. So, there is a lot of headroom for growth.
The good times, it seems, will continue.