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Hindustan Unilever blacks out STAR: Who will blink first?

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Hindustan Unilever blacks out STAR: Who will blink first?

Hindustan Unilever Ltd (HUL) and STAR India may have done many good industry initiatives together – whether it was the in-programme product placement of Lux in ‘Kahiin Tho Hoga’ or advertiser funded programming (AFP) in Rin Mera Star Super Star -- but in negotiations, the two partners are really cutting a rough deal for each other.

HUL has blacked out all ads from all channels of STAR India beginning March 1, 2007. Not a single RO (release order) has been sent to STAR. Official comments from either player were not available at the time of filing the story. But sources close to the development inform that HUL is looking for rates that STAR India is just not willing to offer.

Some of the points against STAR that HUL is picking on are the drop in the STAR channels’ connectivity in the CAS (conditional access system) areas, the overall drop in performance of STAR India and the fact that there are more options available to an advertiser today.

STAR, on the other hand, is clear that with costs escalating in almost every input of the broadcaster’s operations, a reduction in the rate is not acceptable.

The situation has led to deep discussions between the two players and again, if sources are to be believed, these are positive discussions so far.

In the meanwhile, STAR India is bereft of Unilever ads -- the fact that STAR is the single largest consumer of Unilever’s ad spends (at Rs 1200 crore annually, of which STAR easily commands Rs 160 to 200 crore) does imply that this is not good news for STAR.

HUL, too, cannot be too happy, given the fact that STAR India is the largest television network in the country today. However, there is still time to see how the discussions between the two go forward.

Rahul Welde, GM, Media Services, HUL, had made an interesting comment in a previous interview on February 28, 2007, in regard to CAS and the FMCG major’s plan of action. “Several broadcasters have already engaged with us. Where the dilution is large, we are making appropriate corrections,” he had said.

The development means good news for players like Zee Entertainment Enterprise Ltd (ZEEL). When asked on the STAR-HUL debacle, Joy Chakraborthy, EVP, Sales, said, “There would be something that only Levers and STAR India would be aware of, but as a person from the same industry I think the Lever blackout is highlighted because they are the largest spenders. Any other advertiser could’ve walked out from STAR and it wouldn’t be so noticeable.”

Speaking on whether this has had any impact on ZEEL, Chakraborthy said, “Levers is a very big client for us and we have always given them our biggest properties. In fact, you would see them as sponsors on Zee Cine Awards in Malaysia. We have a very good relation going and their spends on Zee and exposure level across all other channels in the Network, has only been increasing since January 2007.”

Despite the battle of attrition underneath, it is business as usual for both HUL and STAR. But the industry is keenly watching how these two titans resolve the issue.


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