'NRS numbers have clearly separated the men from the boys' : Peter Mukerjea - Star India CEO

Size, the makers of Godzilla would vouch, definitely matters at the box-office. And Star India is getting bigger by the day. In terms of annual turnover (industry buzz says it should be between Rs 15-25 billion), manpower employment and activities, Rupert Murdoch's Indian operations have outstripped any other media company in the country after having invested in the business here for over a decade.

But big growth has also meant bigger problems. Anything that the company does --- or doesn't do --- is viewed through a magnifying glass. So much so that at the time of a controversy regarding foreign investment in TV news ventures a couple of years back, some of the big domestic media companies rallied together to form a group that could have been easily called the "anti-Star platform".

A DTH proposal, in which Star is a minority partner with 20 per cent stake, took over 18 months to get a green signal from the government just because of Star's involvement.

Still, Star India CEO Peter Mukerjea would like to say that it hasn't been a bad run for the company in India. Rather, it has been eventful with its ups and down. More ups than downs, as industry observers would say. No wonder, when asked on a lighter note whether it's better to be a regional satrap than being one of the many in the parent company News Corp, Mukerjea jocularly shot back; it's better being a regional satrap. More so when you're the satrap of a region that is a money spinning venture for News Corp in Asia.

In this wide-ranging interview with's Anjan Mitra, Prathim Mukerjea, more popularly known as Peter Mukerjea, holds forth on a range of industry and Star related issues, including whether in recent times Star India's performance has been below par (an allegation that is not ours, but that of the competition).


The National Readership Survey (NRS) data shows that Indian C&S homes now total 60 million. What's your take on the numbers?

The new numbers were long overdue as the old figure of 40-odd million C&S homes always puzzled me. On the one hand you had CETMA (apex body of electronics goods manufacturers) saying over 9 million colour TV sets had been sold last year and on the other side, you had the figure of 42-45 million C&S homes. Now India is not a market where old TV sets are tossed out. So, where were these TV sets going? Certainly these sets must be getting recycled into non-urban markets, while at the same time, many Indian homes are becoming multiple TV homes. Keeping all these figures in mind, the latest NRS data shows that the market is moving.

Would you say that the NRS data is a true reflection of the Indian market scenario?

I would say the 60 million figure is still conservative.

What makes you think that NRS may have missed out on some cable homes?

My belief is based on the feedback that we have been getting for Kaun Banega Crorepati's second run (KBC2 as the Indian version of Who Wants To Be A Millionaire is popularly known as) from the time we launched the promos.

There's a co-relation. There is a surge in calls (for participation) immediately after the promos of KBC go on air. Till now, we have received millions of calls and an analysis of the calls tells us that a large portion of them were being made from places that have cable TV, but have not got reflected in the NRS survey.

My estimate is that the number of cable homes is more towards 65 million. However, the growth is important as for the first time the number of cable homes have crossed the 50 per cent mark of the total TV homes in the country.

Do these figures have a lesson for the industry and Star India in particular?

Of course. The numbers, in fact, highlight quite a few issues. Foremost, it pitchforks the rampant under-declaration (of cable homes serviced by cable operators) into sharp relief. It indicates that broadcasters are not getting paid what is actually due to them.

At the moment in India, Star is getting paid for roughly one-sixth homes of the total number of cable homes. That also means that our distribution team has got some work to do.

From another point of view, the NRS figure is a vindication of our

belief that we are the market leaders and deserve a lot more credit than what was being given to us. More meaningful for us is the fact that we are at the top of the heap compared to the competition.

So are you debunking Sony's claims that Star's on a slide now as programme ratings skid?

I don't want to get into the naming game, but talk about ratings slipping, etc, is actually a misnomer. If Star, for example, even has 25 per cent of the 60 million market, the ball game becomes entirely different. Star is in a different league altogether and the latest NRS figures testify to that. To my mind, the boys have got separated from the men.

'My estimate is that the number of cable homes is more towards 65 million'

A quick thought. A sizeable market share of an expanding market certainly means more opportunities. Would that mean a hike in advertising rates is on the cards at Star?

I would think on those lines, but nothing has been finalized yet.

Look, the number of TV households is growing, so are the C&S homes. That means more people are watching television. It is but natural that the expanded universe gets reflected in the rate cards.

When is the hike coming and how much is it likely to be?

Soon. I can't give exact figures, but the hike would keep into account the rise in inflation and the increased number of C&S homes. You have to understand that we firmly believed more people were watching television, but the figures weren't supporting our claims in the past. Now, the new data supports our claims clearly indicating the advertisers gained more mileage vis-?-vis what they paid for in the past. So a hike in ad rates should be a natural fallout.

The growth opportunities will lead us to be more client and category focused. We'll have to see not only the affordability factor, but also ensure weaving strategies to suit the needs of brands. The exercise is not to only to get the clients' money, but see that they too get value that is tailored for their needs and products. From Star's point of view, we need to deliver the best value.

To me it seems that Star is setting out to wipe out competition altogether by trying to become a one-stop shop for all the needs of advertisers. Am I correct in assuming so?

At Star what we want to do is provide so much of varied value to the advertisers that it might amount to almost saying `there's no need for you to go anywhere else.' With so many channels mushrooming all over, it doesn't make sense, for example, for a media buying house to try being on all the channels.

Rather, the client can cherry-pick and use the vehicle that delivers the value plus results. And, at Star, we believe we have that. A channel suited for almost every type of product.

Star India has very recently effected a restructuring in its ad sales team. What is the rationale behind this initiative?

The ad sales restructuring is driven by our focus on client service and building growth category for our business.

How do you view the current scenario as far as Star India is concerned?

The way I see it is that the Hindi general entertainment space has been critical to our business and will remain so in future too. A bulk of Star India's revenues come from shows aired between Mondays and Thursdays. We'll have to see how we can expand this to include the weekends in our scheme of things.

People are watching us between Mondays and Thursdays, but how do we convince them to stick with us over the weekends too? KBC, airing on Fridays, Saturdays and Sundays, is an attempt at expanding the weekend viewership. The aim is not only to keep the viewer with Star through the week, but increase the viwership figures through compelling content on weekends.

Apart from the weekends, has Star identified other areas for sprucing?

Yes. We have identified certain areas with an aim to do better and it's an ongoing requirement of ours in our quest to get better growth. Growth that is in excess of the average market growth of between 10-15 per cent (all media).

In this regard, we have zeroed down on target client areas. Star will be focusing anew with renewed vigour on sectors like FMCG, soft drinks, auto, financial services and retail. These are high growth areas and Star would like to corner the maximum of their media spend.

'At Star, we'll have to explore how this 'mobisode' theme could be exploited for revenue'

Apart from advertising, what are the other areas being tapped by Star for fuelling growth?

Growth has to come from a combination of areas and revenue streams. Advertising revenue is certainly there, but we are now looking at substantially increasing our subscription revenue too. Then there is this emerging segment of mobile phones.

Latest figures indicate the number of mobile phone users in the country has swelled. We will have to find out ways to exploit this section of the population and see what we can do from the programming point of view to monetize cell users. Our sister concern Fox is already doing that by designing one-minute episodes of popular shows for cell users' benefit.

At Star, we'll have to explore how this 'mobisode' theme could be exploited for revenue. Probably, we'll make one-minute mobisodes of the most popular serial of Star Plus. Definitely there is an opportunity.

In-programme placement of products is another area that we are looking at aggressively. It has happened in movies in a big way, but on television, it is still treated quite casually.

Tell me, can you survive only on strategies, minus one for programming?

No, we cannot. Our strong point has always been compelling content. We will continue to invest in a variety of content, while innovating all the time. Our programming budget for 2006 (new financial year beginning 1 July) will form a major part of the overall investment.

Quite a few broadcasters are waking up to the importance of the sizable South Indian market. Why is it that Star has taken only half-hearted jabs at that market?

I agree we have not invested in the South market in a big way till now. That's because of eager and aggressive competition. The South market, actually, can be broken into four markets as each of the four languages of Tamil, Telugu, Kannada and Malayalam are separate markets in their own right. It's also a fact that the bulk of action and revenue lies in the Tamil language market and we do have a presence through Vijay TV there.

However, there's no denying that lot of work needs to be done (by Star). The competitive forces are unique down South.

'Negotiations (with Dish TV) are in a fairly advanced stage and the deal might be concluded very soon'

What do you mean by competition is 'unique' in South India?

Well, I mean that the existing player(s) is strong and enjoys a near-monopolistic advantage as far as distribution is concerned. If Star has to invade the South, then such challenges will have to be overcome. Then there are issues like DTH and broadband. Should one take one of those routes to go South or not?

We haven't yet decided how to go about it, but there are some thoughts on the South side foray too that may take some time to crystallize.

Is Star satisfied being a minority player in the news business in India, while the resident shareholder flexes its muscle in an expanding business area?

If you are hinting that there is friction with the majority Indian partner, I would have to disappoint you. Still, not only us, but all news channels are facing similar problems. Increasing foreign investment limits in news ventures will only help in bring in more cash, knowledge and talent, which will result in better output too.

How's the news joint venture with the ABP Group doing and would we see more expansion soon?

It's doing pretty well. The recently launched Bengali channel (Star

Ananda) has managed to become the No. 1 channel in its genre and in Hindi the effort is to keep innovating.

The Hindi news channel segment is fragmented and that's why we have been witnessing so much churn there. In no other market are there so many channels operating in one language. Take any other developed market like the US or the UK or Australia and you would not find news channels in every nook and corner. For the first time, the C&S penetration has crossed the 50 per cent mark (compared to all TV homes) and that signifies growth and opportunities also for the news segment.

But it's also time for news broadcasters to stop poaching (of personnel). The business is expanding, but getting people from other (news) channels is increasing a company's cost too. The trend is not good for the industry.

So a shakeout is inevitable. When do you see that happening?

Consolidation in the news business would start happening and I feel in a couple of years' time there would be a shakeout.

What are the revenue options for Star outside DTH and cable?

What is our core competency? Our core area is to make compelling content and distribute it to as many people as possible. So, for the next year or two, the focus would continue to be that and we'd have to see how best we can monetize our content.

Of course, we are looking at providing content to mobile users in a segment where the service is getting more feature oriented. We are in dialogue with some telecom companies for this to explore how we can develop a subscription model for content on mobile phones as there is a fair degree of optimism on the innovations that could be deployed.

The wireless division is there and has grown its business by about 200 per cent in 2005 compared to 2004, though I must admit the base is small.

Though Star has diluted its involvement in the radio business in recent times, is it open to stage a comeback once the regulations become more liberal?

If foreign direct investment is allowed by the government, we'd certainly be interested in getting back. Still, until a clear direction comes from the government, it would be hard to speculate on our future plans.

However, I feel it's time the media sector too is treated in a way similar to other sectors like infotech and tourism where tax sops and liberal regulatory regime is a norm rather than an exception. A few years ago, people in India were talking about convergence, but now we are living in a converged era and media offers great opportunities through converged products.

Now that Space TV (a joint venture between the Tatas and Star) has got the government go-ahead for a DTH service, how do you see the DTH market behaving in India?

My take on DTH is that it's not a technology, but another form of delivery. DTH is more about better services and offering choices to

consumers than anything else.

From a broadcaster's point of view, Star would like to make its

offerings of channels available on all the DTH platforms in India. However, having said that, I must also point out that there are certain issues like piracy that Star would look at before making available its channels to a DTH platform operator.

How far are the recent media reports that Star is all set to make available its channels to Dish TV's DTH platform, which is partially owned by Zee Telefilms, correct?

Actually, the negotiations are in a fairly advanced stage and the deal might be concluded very soon.

But haven't we been hearing of this for over a year now?

We have been exchanging letters and notes agreed, but now the dialogue is picking pace. Any moment we should arrive at commercial terms agreeable to both the parties.

I also think that at this point of time, it's better to look at agreements on an annual basis so that the economics (of DTH) could be ascertained by both the parties concerned. The issue of the subscriber base could, I think, be then addressed in a better fashion.

On what lines would a commercial agreement with a DTH service provider be worked out?

It's difficult to say at this point of time what would be the contours of the agreement. What I can say is that it would be based on what's charged to the cable service providers.

Is there a possibility that Star agrees to come onto the Dish TV platform before Space TV gets going early 2006?

I would not like to comment on or give a time frame for the launch of services of Space TV as it's for the majority partners, the Tatas, to decide. But I see no reason why a deal with Dish TV cannot be worked out (before Space TV goes on air with its services). We are very close to a deal.

Do you foresee cable operators, especially smaller ones, getting wiped out with the arrival of more DTH players in India?

You cannot take away the fact that the cable operators have helped grow this business, but now a time has come when the cable operators need to instinctively offer services based on conditional access or an addressable system. I would say an addressable system would help cable operators to do better packaging of their offerings and help them in keeping their services going when DTH finally arrives. It's time for them to step on the gas pedal.

After having said that, I would add that addressability is inevitable, though making it mandatory is not necessary.

'Consolidation in the news business would start happening and I feel in a couple of years' time there would be a shakeout'

There's lot of corporate restructuring happening at Star India in recent times. New people are joining, while old ones are being moved around. Does it signify radical changes in the way the company operates here?

Movement is an ongoing feature and there's nothing dramatic in them. Such things happen in any business. In these days of core competence, people tend to work in the area of their respective competencies and it's difficult to push an ad sales guy into distribution. So what do you do? You have to hire from outside.

Let me rephrase. Do the changes at the corporate level being witnessed at Star India signify that the headquarters in Hong Kong is gaining an upper hand and calling the shots in the Indian operations?

Star as a company is fortunate to have expertise and talent located internationally. Whether it be programming, multi-channel distribution, or DTH, Star can always rely on global expertise that is on offer. That's one way of looking at things.

The other way of looking at things is that as the Indian operation grows, the need to manage it also grows. We have been growing over the years, but over the last few years the pace of growth has increased. In such a scenario, it's but natural to get help from our sister concerns around the globe. The power to leverage international expertise gives Star a competitive advantage vis-?-vis competition.

Tell me, how many of our competitors in India can get international inputs? They cannot because internationally they have nothing much to fall back upon. I would say that if any broadcaster has international links and backups, besides Star, up to an extent it's MTV in India.

How would you defend the fact that for every decision, an okay from HK is needed?

HK is Star's head office and that's where my boss is. I continue to get all approvals from Michelle (Guthrie) and this is in no way different to the way we have always operated.

As I said, with the business growing here, we are trying to leverage our manpower assets situated in other parts of the globe. Sony and Zee, for example, don't have anything to fall back upon. Just because we are bigger compared to others, everything that happens in our organization gets that much more amplified.

How do you see the industry shaping up in two years time in India?

The industry is poised to grow at a healthy pace and a little bit of help from the government would make it a ferocious pace. India, for example, has got an opportunity to become a regional hub for the media (industry), but for that a more liberalized regulatory regime is needed.

FDI norms should be further relaxed, some element of tax breaks also are needed as a concern for the media infrastructure is non-existent here. If you take the sops that are extended by Singapore, for instance, for setting up an uplink base there, you'd be amazed. India needs to take a leaf from such success stories.

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