In the last three years, STAR India has seen its revenue double and profit more than double. It now steps into the next level of growth with reinforced content, marketing, distribution and strategies to build social equity, finds Noor Fathima Warsia
CIRCA 2007:STAR India was standing at a crossroad. Its senior management had quit, its flagship channel was struggling and newspaper headlines revolved around how STAR was losing its sheen. Around then, STAR India took some key decisions. The company embarked on a quest of what would help it retain its lost glory and become a media company to reckon with. The charge to fulfil this quest was given to Uday Shankar, who given his journalistic background, knew television, content and viewer but had never even made a 24-second entertainment film, let alone run a network of 24-hour entertainment channels. But this was the man tasked to be STAR India’s CEO. His mandate: Take STAR to its next level of growth in India. In other words, design STAR 2.0.
CUT TO 2012:“Advertising revenues at STAR India were in-line with the prior year, as strong local currency advertising revenue growth was offset by the impact of the weakening Indian Rupee”: In a nutshell, this statement by Rupert Murdoch in the News Corporation earnings release for the quarter ended December 31, 2011, summed up the performance of STAR India in a year that many had termed as ‘tough’ for the Indian media industry. But for Shankar, such a mention is no longer new in a News Corp global business review. In the company’s Annual Report 2010, Murdoch stated “STAR India saw particularly robust advertising growth and we continue to develop market-leading capabilities in that important and burgeoning region”.
In the last three years, STAR India’s revenue has doubled and profit has more than doubled. The company’s revenue today is pegged in the vicinity of Rs 4,500 crore, making it one of the largest, if not the largest, media companies in India.
STAR India has already stepped into its next growth level.
A SPECTACULAR GROWTH GRAPH
The year 2011 in particular had carried forward the growth legacy of the company to bring it to this position. STAR Plus held on to its numero uno spot amongst Hindi general entertainment channels. STAR Gold’s repositioning not only catapulted it to number one position in its category but challenged several norms of the Hindi movies genre. Channel [V] finally succeeded where others failed and proved that if the right content was served, music channels could be more than just bold reality shows on TV. Before closing the year, STAR India re-launched STAR One as Life OK and established once again that it was not one to shy from experiments and take risks. “Risks are inherent, when you are looking to innovate,” Shankar tells IMPACT, reflecting on STAR’s journey in the last few years.
‘Innovate’ may just be the keyword in the STAR India story, specifically in the last five years.
Not that STAR India has not experienced absolute leadership in the past -- STAR’s glory was at its peak for a good portion of the early 2000s and for nine years, STAR Plus, the crown jewel of the network, was ruling the charts, by very large and later, smaller margins. The Network faced many challenges but the most pronounced one surfaced in 2007, when it was witnessing a change in its leadership. After two of STAR’s top leaders exited the company, News Corp handpicked Shankar, then CEO of its news JV, Media & Content Communication Service that runs STAR News, to take on the reigns of STAR India. If Shankar didn’t hear it already, newspapers and friends from the industry informed him that he was walking into what many were referring to as the ‘sinking ship’.
STORY BEHIND THE STAR WALLS
By about 2007, from an unbeatable force, STAR had become a company struggling to move forward. It was facing the problem of large senior exits and in some cases, exits of entire departments. The race with competitor Zee TV had intensified and it was a matter of one good episode or one good movie rating that Zee could have overtaken STAR Plus’ number one position. While building back a team and the company itself was priority on the 2007 agenda, the immediate challenge for STAR’s new leadership was maintaining STAR Plus’ position. STAR was able to achieve this, even though the difference was of a few rating points. But there was new competition brewing on the side. By 2008, the Hindi general entertainment space grew from five to 10 players. STAR was very aware of the impact this would have on content, ad sales pricing due to increase in inventory and a more intensified fight for viewer’s attention.
STAR Plus hence continued to be a prime focus area for the network.
For the longest time, to the outside world, there was no clarity on what was transpiring at STAR India. As soon as Shankar had taken over, STAR India’s structure, especially of the content team, underwent a massive change. STAR Plus was the first channel to dissolve the position of a single Content Head. Instead, Shankar created a content leadership team, heading it himself to begin with. While part of the reason for this was the 2007 exodus, the other part was Shankar’s own training and approach, given his editorial background in a news channel. But irrespective of how convinced he was for it in a news set-up, in an entertainment company, the move was seen as a big risk.
With three content heads and a general manager, STAR Plus was suddenly working under a top heavy structure. Eyebrows were raised, but that didn’t matter to STAR. The journey of overhauling STAR Plus’ primetime content had already begun but the landmark moves were to come in 2008.
ENDING THE OLD, BEGINNING THE NEW
By 2008, as the industry was reeling under the pressures of slowdown, STAR had charted out a broad two-point agenda for it to consolidate and grow further in India. “Consolidation meant us going deeper in Hindi and reasserting our leadership there. Growth would come by expanding, so regional was clearly the way to go,” informs Shankar.
To strengthen further in Hindi, STAR India took a big step and ended its longstanding relation with Balaji Telefilms, where a News Corp company held 25.99 % stake. This was soon to be followed by STAR India closing curtains on all primetime Balaji shows that included ‘Kyunki Saas Bhi Kabhi Bahu Thi’, ‘Kasautii Zindagii Kay’ and ‘Kahaani Ghar Ghar Kii’.
And to bring fruition to its regional expansion plans, the Network launched Bengali channel STAR Jalsha and Marathi channel STAR Pravah the same year. While the strategy there was to build from scratch, for the south market, the strategy was to acquire inorganic growth. STAR India bought a majority stake in Jupiter Entertainment that ran the Asianet channels and instantly gave STAR a national footprint. In late 2008, STAR Jupiter still needed to crack three of the four South markets – Kerala, Karnataka, Andhra Pradesh and Tamil Nadu, but the move helped STAR to skip the launch stage, and directly get on to consolidation.
STAR had a busy 2008 but it was 2009 when the company’s patience was truly tested.
INDEPENDENCE, WITH A BITTER PILL
The big highlight of 2009 should have been the fact that News Corp had finally realised the flaws of letting a market as sizeable as India report into a regional office. STAR’s reporting into Hong Kong was ceased and Shankar was to report directly to James Murdoch, who was once again looking at the News Corp’s broadcast businesses. “That was a big milestone,” recalls Shankar, “Making India independent meant us being much more nimble in taking key decisions to grow the business here.”
But the big highlight turned out to be STAR Plus losing its leadership position after nine years to a nine-month old channel, Colors. Unlike the damage control that was done with Zee TV, all of Shankar’s men couldn’t stop Colors from becoming a clear number one for a significant period in 2009 and 2010. STAR’s leadership position was shaken, and the message going home loud and clear was that STAR India’s image, if not performance, was dependent on one channel alone.
A COMPANY IN TRANSITION
STAR’s two-pronged play had begun. The company was continuing its focus on the Hindi offering but the company line was: ‘We are not a single channel but a network’. Unfortunately for STAR, the dependence on STAR Plus was such that the statement, while completely true, was not convincing enough. The changes in STAR’s structure continued amidst all this. STAR India had appointed one more COO, Sanjay Gupta, leading to a dual COO structure in 2009. Revenue was once again divided into distribution and sales. Distribution was parked under a joint venture with DEN and the complete charge of Sales was given to old STAR hand Kevin Vaz.
The year 2009 became an investment year. The closure of the Balaji relation, given the premium that STAR was paying for those shows, immediately made a positive impact in STAR’s books, despite the market conditions. STAR survived the year but more importantly, the job of creating content that was going to take STAR Plus back to its dominating number one position, had begun. The channel had made enough mistakes as well -- shows like The Perfect Bride never took off. Others such as ‘Aap Ki Kachehri’ had a great beginning but found it difficult to scale up. And properties like ‘Sach Ka Samna’ were experiments that gave STAR a great talking point, but did not necessarily convert to numbers.
Shankar says, “When we were coming under fire in some of the markets, we told our people to go and play their game, to go and experiment. My message was that if we tried thoughtfully and failed, it was fine. The problem would be if we did not try at all. Today we are doing some highly differentiated things due to the changes that came in then.”
STAR PLUS RENEWED
A decentralized content team, speed in closing and executing decisions and growth in both horizontal and vertical directions brought a madness to STAR that only an insider could comprehend. But increasingly, the method to the madness started to become apparent to the outside world as well. Shankar’s decision to bring in Gupta began to show results. Even though the pressure on STAR Plus had intensified, the company was working within a structure that allowed STAR to challenge the popular belief that ‘people watch shows, not channels’.
By June 2010, STAR Plus had added more slots than any of its competitors and was battling out on a slot-by-slot basis to attain overall leadership. The channel chose that point in time to announce its comprehensive repositioning, ‘Rishta Wahi, Soch Nayi’. The new position came with a new look and an aggressive marketing plan. Unlike various other relaunches at the time, STAR Plus had the numbers to show that the repositioning was successful. Three hundred GRPs became a lot more frequent for STAR Plus in its new avatar. “We used challenges as an opportunity to refresh. That is the learning that came from STAR Plus. The comprehensive repositioning of STAR Plus may not have been done in this manner if Colors had not challenged us as it had,” admits Shankar.
STAR Plus is the only channel to have content from 6 pm to 11.30 pm. The objective for the channel’s team is to work towards leadership in each of these slots. The channel’s decision not to prolong storylines beyond their natural course, even in case of high-delivering shows like ‘Bidaai’, and quickly wind down shows that delivered below par, helped it regain its leadership slot.
RING FENCING THE HINDI OFFER
Much as the decline in STAR Plus meant decline for STAR India, the comeback of the channel was perceived as the comeback of the network. But STAR had not forgotten the lessons of darker times. “The next unfinished business was STAR Gold, which had not been in a formidable leadership position in a long time,” says Shankar. In 2011, STAR invested in STAR Gold’s rebranding. Two important disruptors here were to drop inventory by 33% and to premier as many big ticket films on STAR Gold as possible. Shankar says, “So far it has been a good strategy. You will see a lot of big ticket launches on STAR Gold, but it is difficult to say whether all movies will be premiered only on Gold.” The channel delivered some of the highest numbers in the year with movies such as ‘Singham’ (8+ TVR), ‘Bodyguard’ (13 TVR) and even Ra.One (7 TVR) giving the channel more GRPs than some of the first-tier Hindi GECs.
The biggest risk, however, was the relaunch of STAR One. For starters, the network did not bring in the STAR brand name for the channel and renamed it Life OK. “The name itself suggests a position and philosophy,” explains Shankar, “The STAR brand name is a phenomenal advantage, but we had the courage to go and offer something without that advantage. We wanted to create a counter offering, and from the initial response, it has turned out to be a good idea. It is early days to talk about Life OK’s performance but as a concept, it is very different.”
Life OK experimented not only with its positioning but also its programming and advertising. There are shorter programming formats to accommodate three shows in an hour, which run seven days a week. The channel has the shortest ad breaks but this is for the launch stage. STAR India is expected to announce an ad sales strategy for the channel later this year, and Shankar states that it would be as disruptive as everything else about the channel.
INNOVATION IN AD SALES
STAR India’s innovation in ad sales became limited to its decision to ration ad inventories. Not only STAR Gold, but the music and youth channel, Channel [V], and the English movie channels also saw inventory control. Some other channels have also followed this. In April 2011, STAR India even announced an ad rate hike of 20% at an average across its channels. The big question is whether this is sustainable.
“We have consistently reduced ad inventory across the network in the last few years. Too much advertising is like a steroid shot. It is powerful in the short term but detrimental in the long run. It reduces viewership, annoys viewers and creates oversupply of inventory, which is an encouragement for cheap buying, so it is bad for the business. The broadcasters, under pressure from agencies and advertisers, have been very short-sighted while allowing this to happen. The worst is that it dents your social equity with the viewer, because the viewer comes to you for content. I am personally in favour of creating an optimal mix of advertising and content,” observes Shankar.
Despite all conversations on the subject, STAR India has not yet done anything striking on branded content. Even now, the best form seen is product placement or mention of a product here and there in a show. Shankar says, “Branded content is an interesting idea but brand heads and marketers have to get realistic. I have seen too often that we discuss a brand idea and just because an advertiser is paying for it, their expectations become unrealistic. The idea is to push the communication and impact the consumer, and who better to do that than us? If we are good enough to create an impactful 25 minutes of content, why don’t you listen to us, when you have to create 15 seconds of content? We are very clear that we will not do branded content at the cost of compromising viewer experience. A few crore rupees is not worth it. If the branding seamlessly merges with the content, only then will we do it, and advertisers are not ready for that yet.”
DIVERSITY IN LEADERSHIP, SETTING OF TRENDS
For Shankar, 2011 was an important year. He says, “I don’t like to view any performance in annual terms, but we are happy because we have seen continued growth in the last three years, and we would like to believe our leadership today is a lot more broad-based than it ever was. We have achieved the target of becoming STAR 2.0, where we have built a very robust leadership, not limited to Hindi. It is diverse – be it Hindi, regional, English or our youth channels – all are in leadership positions in their respective spaces. We have managed to reduce our dependence on one flagship channel, and this has not happened by weakening that channel, which continues to be very strong. Other channels have become stronger, and hence the dependence on one channel has gone down.”
The year also saw STAR India take some unprecedented moves. The distribution JV with arch rival Zee Entertainment Enterprises Limited (ZEEL) was one such step. The JV experience, which Shankar describes as “remarkably smooth” despite the usual initial glitches, will come to the test when the digitization agenda rolls out. Shankar, however, is more conservative in thinking how digitization will help the channel. “For the next one year, digitization is limited to four metros, where one was already digital and two were halfway to it. So only half of each city has to be digitized. I don’t think there would be much change on that in the short term, but in the medium to long term, yes - under declaration and revenue leakages would be plugged. But how that will pan out is difficult for anyone to predict right now. I don’t think any broadcaster is immediately making a revenue upside strategy from digital.”
Another area that STAR has invested in is technology. Apart from high-definition (HD), STAR India has also invested significantly in its digital presence. From bringing STAR Plus online to taking the content on mobile handsets and tablets, STAR is allowing the viewer to consume its content on the move. Shankar says, “The way we see it, there is content and there is the consumer. We must ensure that we are available in every way that the viewer today is consuming television content. It is sometimes frustrating that our measurement system cannot gauge the incremental viewership from digital platforms, but things will change when initiatives like the Broadcast Audience Research Council (BARC) come in place.”
INVESTMENT INTO THE NEXT GENERATION
To complete its leadership in Hindi, Life OK is prime on the company’s 2012 agenda. “How many channels are really trying to create a channel philosophy? STAR Plus has done it by its new position and tagline that articulates that position, but in the case of Life OK, the channel name itself is the channel philosophy. We understand the risk we have taken with this channel, and our efforts in 2012 would be directed to make Life OK a strong offering too,” states Shankar.
Ever since the relaunch, Life OK numbers have doubled from 30 odd GRPs to 80-100 GRPs. It still remains to be seen whether Life OK can sustain these numbers when advertising on the channel opens up fully and whether it will have a bouquet of shows doing well.
Channel [V] has done well for the network too. Shankar sees this as an area to focus on because the channel connects with the young audience. “Youth is an important target audience and they consume media in many ways. We should have a deeper relation with the youth and Channel [V] is the right way to do that,” he says. Channel [V] has opened its strategy and reduced music. It started doing dramas around campus stories, and has also gone out of the screen to hold events such as IndiaFest. It has also created cafes called V Spot. Shankar elaborates, “The idea is to mingle with the life of the youth of this country in a far more diverse and tangible manner. But I think Channel [V] is still below its potential. Our focus for 2012 is to reinvent this category. Right now, it is too small to be worth playing in.”
In the South, the Kannada market is likely to see more attention since STAR’s intention is to bring its performance to leadership position in that space. Shankar is optimistic about the South this year as he believes that the market has seen some correction already. He says, “Our Malayalam channel is doing very well, and it exited 2011 much stronger than it had entered. Vijay has done its best performance till date. The work in progress continues to be our Kannada channel Suvarna, where we would like to be in a clear leadership position, and hopefully that will happen this year.”
Another key area of focus for 2012 is English Entertainment. The FX channels are expected to be taken to the analogue medium, and have more digital presence as well. Shankar says, “NatGeo is doing very well right now. It has beaten one of its older competitors. I am bullish on English because I believe that when a demography graduates, it triggers a desire in the constituents for English content. The STAR network has a lot to offer. We will have to create a multi-tiered English content delivery system.”
CONTENT, CONSUMER & COMPETITION
At the centre of STAR’s belief system is the fact that every media company has a social obligation towards consumers. Whether it is content, marketing, advertising or distribution, for STAR India, its social equity will be important in 2012 as well. STAR has even been at the forefront of leading industry initiatives like self-regulation and enhancing the viewing experience. Shankar explains, “We have a social contract with the viewers, and we must be very careful that we are able to deliver and build on that trust and deepen the channel and viewer bond.”
And on the other end of the conversation is competition. But STAR India believes that this is one challenge they expect. Shankar summarizes, “When you have such a widespread portfolio, in such a hyper-competitive market and the nature of the business is dependent on a remote control, anything can happen. Our vulnerability to ambushes or disruption in one market or one segment is much less than before because we are prepared that we would be challenged in some part of the business or the other very regularly and that is the way it should be. It is always these challenges due to which we emerge stronger.”
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