Reforms push won't bring in foreign capital into news business: Uday Shankar

Interview with CEO, STAR India

Uday Shankar has been known for his frank views on the media & entertainment business. The 54-year-old former journalist, who took over as CEO of STAR India from Peter Mukherjea in 2006, speaks to Viveat Susan Pinto about the recent reforms push in the sector and whether STAR intends to respond to this. Edited excerpts:

Reforms in India over the years have done little to change the dynamics of the news business. However, some recent announcements by the government seek to make a difference. Are you happy with it?

The government should be complimented for having the courage to touch the news business. Whenever any reform in the domestic media sector happened, it was designed in such a way that it left the news segment largely untouched. To that extent, this government has done a remarkable job of at least touching news. Having said that, I would like to add that the current reforms push will not do what the government has in mind, if they wish to bring foreign capital into the news business here. The government has increased the FDI (foreign direct investment) limit from 26 per cent to 49 per cent, but the real issue is about one Indian entity owning 51 per cent in a TV news venture. Until they do something about it, the venture will become illiquid. Because there is no scope for doing an IPO (initial public offering) or getting another investor on board. The Indian investor cannot go below 51 per cent nor can the foreign investor go above 49 per cent. I'm not sure how comfortable foreign or even Indian investors would be to an arrangement like this.

Do you see this changing in the future?

Media is the only sector where there has been regression, not progression, when it comes to reforms. Television news was fully open to FDI; it was capped at 26 per cent earlier. There have been cross-media caps that have prevented meaningful investment in the sector. For the first time, this government has attempted to untie a few knots. Cent per cent FDI is now permitted in almost every distribution format - direct-to-home, cable, headend-in-the-sky, multi-system operators. There is, of course, 49 per cent FDI in news. If there is anybody who can sort out the legacy issues that have plagued the (media) business, I would think it is this government.

James Murdoch, CEO of 21st Century Fox, recently said the Indian business (STAR India) would achieve $1 billion in operating income by 2020. It shows the confidence he has in the Indian business, but is that also putting pressure on you?

While it is generous of him to say that, expectations do go up and so does responsibility. The pressure to innovate and even disrupt programming is growing on us. This is a responsibility that comes with leadership. However, we get impatient sometimes internally. If someone else does an ordinary show, it is fine. But if STAR does a show, which is even somewhat ordinary, the disappointments are higher. It is sobering as well as flattering.

The Broadcast Audience Research Council recently began reporting viewership data for rural markets. Will you re-strategise when it comes to rural markets now that viewership data is available for those markets?

It is early days. I don't believe in rushing into the first tide. The model of rural content delivery is very different from urban content delivery. Broadcasters will now have to take a decision on whether they want to play in the pay TV business or free-to-air business. All that BARC has done is put the spotlight on that choice very sharply.

MAA TV, which you acquired last year, has been integrated into STAR. Are you contemplating acquisitions in digital?

MAA fitted well with the STAR culture, which is why we chose to acquire it; we have finally completed the integration. On digital, we are making investments in our in-house property HotStar. Apart from the drama, sports and movies that are available on our channels and make their way to HotStar , we are also creating original content for the digital platform. We are also tying up with external partners like HBO, whose original content will be available on HotStar and the STAR English channels. On digital, our focus will be on building our content pipeline. The game will increasingly shift there.

How is STAR gearing up for the implementation of the third phase of digital addressable cable systems? Do you think the deadline of December 31, 2015 will be extended?

The ball is in the court of the cable and multi-system operators. They have to gear up, not us. Every indication I get from the government is the deadline will not be extended.