STAR 2.0: A STAR is Reborn – Part 1
In the last 3 years, STAR India’s revenue has doubled & profit more than doubled. It now eyes next level of growth. CEO Uday Shankar on the growth plans
“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.
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 exchange4media, 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 long-standing 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 decentralised 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.
The concluding part of this report will be published on February 27, 2012For more updates, be socially connected with us on
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