Star may take 4 yrs to get into right orbit

Rupert Murdoch-promoted Star Group will take at least four years to cross the $120-million-mark in operating income that it commanded till 2006. Star lost its prime position due to a sustained dip in income from its Indian and Asian operations.

Star's operating income dropped almost 30 per cent year-on-year to $91 million for the financial year ended June 2007. In India, the Star Group operates 14 channels, with Star Plus being the leading entertainment channel. It is in the process of launching a regional language channel soon.

According to the latest report prepared by Media Partners Asia (MPA), an independent international media research agency, Star's operating income will be $122 million in June 2011, implying an eight per cent compounded annual growth rate (CAGR) from FY07.

"We expect Star to achieve greater momentum from June 2008 onward with increased leverage from the launch of new TV channels and new programmes on existing properties, expense reduction in programming, and growth in subscription revenues in India and Asia," Vivek Couto, executive director, Media Partners Asia, told Business Standard from Hong Kong.

According to MPA's latest report, Star group's current issues largely revolve around India, Star's leading market in revenues and profit terms.

A senior executive of Star India declined to comment on the findings of the report.

The main issues include restructuring and recovery from the erosion of its winning franchise such as the K-soaps, produced by Balaji Telefilms. Star also has to watch out for competition from arch rival Zee TV, the MPA report said.

But, according to industry experts, Star India's main concerns have been rising content costs, erosion of advertising revenues, and fragmentation of audiences with the launch of multiple channels. In the next 3-6 months, at least five entertainment channels will become operational from UTV, NDTV, INX Media, Viacom-TV 18 alliance and other media companies.

"These will impact the viewership of Star's daily family soaps," an industry source said.

The MPA report said that during its most recent June quarter, Star generated about $30 million in operating income, down by over 30 per cent year-on-year as advertising and subscription revenue growth was offset by higher programming costs.

In India, the increased advertising revenues came from Star Plus' Kaun Banega Crorepati-III anchored by actor Shah Rukh Khan, while its subscription revenue growth was primarily driven by an increase in direct-to-home (DTH) subscribers. Star's 20 per cent-owned DTH platform TataSky passed the one-million customer mark in July this year, 11 months after its commercial launch.

Star Group Chairman Rupert Murdoch recently said that Star would look to invest and launch additional TV channels in India.