What does TV broadcast major Star’s shift of operations from Hong Kong to India suggest? What does it mean now that the Star India CEO Uday Shankar will report directly to James Murdoch, the head of Europe and Asia for parent News Corporation, instead of reporting to the regional boss in Hong Kong? In the answers to these questions lie the story of the growth of Indian media.
Here are the three quick answers. One, the shift is a very definite indicator that the New York-based $30 billion News Corporation will either go slow on China or just give up on it at some point. Two, it shows how critical democracy is when it comes to running a media company. Three, it means that James Murdoch is finally taking charge of the market, for the second time.
When Star, a subsidiary of the Rupert Murdoch-controlled News Corporation, entered India in 1991, it was to beam some channels from a decrepit Chinese satellite ASIASAT1. At that time, it was the only satellite beaming into India and China, markets full of promise.
For a long time, Star did not make it. A disastrous agreement with its then joint-venture partner Zee barred it from doing Hindi programming. Finally, in 1999, Star and Zee broke up. Luckily, Star hit the jackpot with its very first big Hindi show in 2000. The licensed version of Who Wants To be a Millionaire (Kaun Banega Crorepati) went on to be the biggest hit on TV. Star then used the opportunity to roadblock prime time for almost six years.
From about Rs 440 crore in revenues in 2000, Star India has now grown into a Rs 2,200 crore company. It brings in just under 80 per cent of News Corp’s Asian revenues and almost all of its profits from the region. China and Taiwan, among other countries, bring in the remaining 20 per cent.
Yet, for many years, Star had to fight to get its respect in the News Corp system. The head office was always Hong Kong and the boss was the CEO sitting there. The Chinese market was simply too important for New Corp to shift base.
None of this mattered as long as James Murdoch headed the Asian operations. Rupert’s younger son had a great equation with then India CEO Peter Mukerjea (he still has, apparently). Being the owner’s son, therefore, he had none of the insecurities that a professional CEO sitting in the non-performing market could have. So Mukerjea could get the freedom to do his job and the credit, if he did it well.
James left for England to head BSkyB in 2003. Over the next three years, several things happened. The new Star Asia CEO and Mukerjea, had issues with each other. Star India managers were getting restless. Most of them needed to be moved up, but there was no growth coming for them from within News Corp.
Even as Star’s top team started falling apart, Zee surged back on the rating charts. By the time James was appointed head of Europe and Asia in 2008, Star had lost a lot of its sheen. (The Heir Returns, July 15, 2008)
Can James make a difference? He is very clued in to the India market. It was the one where he first tasted success as a 27-year old. The Indian broadcasting market in 2009, however, is different from 2000. It is three times bigger and ten times more competitive. So both James and Shankar have their job cut out.
However, what the changes in Star’s Asia business say about the Indian media market is the good news. News Corp has now spent more than 17 years trying to gain a foothold in China. But the going has been tough, tough and tough.
It is not just about being allowed to distribute its channels in China. There are restrictions on programming. So while companies are allowed to put money into media infrastructure (multiplexes, cable systems, DTH), they face restrictions when it comes to what they show. This makes it difficult to monetise the distribution assets. India, on the other hand, is (largely) a free market for media products. In the last couple of years, several big media CEOs have gone on record on the difficulty of doing business in China. Nice to know then that with all its imperfections, there is at least one business where India is better than China.
The writer is a media consultant. vanitakohli@hotmail.com.
