Star Group may clock $ 100 million+ profit in 2005

NEW DELHI: The Rupert Murdoch-controlled Star Group, News Corps pan-Asian venture, is expected to clock a profit of over $ 100 million for financial year (FY) ending June 2005, riding strongly on the Indian operations.

Basing its observations on a 2 February financial results conference call, featuring Murdoch, Hong Kong-based Media Partners Asia has quoted News Corp as saying that profit at Star will be well over $100 million for FY 2005.

The revenues, according to News management, would be largely driven by the strength of programming operations in India, which include market leader Star Plus, new free-to-air and pay channels and the addition of the Disney kids channels to the Star distribution bouquet.

Star more than doubled consolidated operating income to an estimated $29 million despite initial cost associated with launching a new general entertainment channel in India (Star One) last year and continued losses in China.

During the conference call, quoted by MPA, News stated that Star revenues grew by six per cent during the December 2004 quarter, which MPA estimates to total $133 million. This has been driven largely by advertising gains (mainly associated with Star Plus in India) and subscription revenue growth that is attributable to the launch of Star Chinese Movies in South-East Asia.

MPA estimates that Star could deliver at least $109 million in operating income for FY 2005, driven largely by India, though it is also expected that Xing Kong would break even in China.

We forecast revenue growth of 16 per cent through FY 2005 with advertising growth in India expected to reach between 20 30 per cent. Other contributors will include Taiwan, China and South East Asia,MPA said in a recent report.

With a joint venture with the Tatas for a DTH platform yet to get Indian government clearances, MPA does not expect the Space TV venture to commercially launch services until Q4 2005.

For Q2 FY 2005 (quarter ending December 2004), News Corp reported on 2 February an increase in operating income by 24 per cent year-on-year to $954 million, driven by its filmed entertainment and cable network (income of $227 million, up 46 per cent Y/Y) divisions. Growth at the TV division was soft at $153 million, bolstered only by record earnings at News� Asian

subsidiary, Star Group.

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