The Murdoch-Modi rendezvous
Star India CEO Uday Shankar was accompanying his boss and 21st Century Fox co-COO James Murdoch to meet Prime Minister Narendra Modi. The duo also met the Minister for Finance, Corporate Affairs and Information & Broadcasting Arun Jaitley.
Though no air leaked out of the room, we can freely speculate on the regulatory issues that bother Star as it seeks to grow faster and across verticals in India. Murdoch would want Modi and Jaitley to remove those bumps in the road.
Unlike China where his father Rupert Murdoch hit the wall, India has left the doors wide open for foreign entertainment broadcasters to grow in whichever way they want. They are free to launch television channels, buy whatever they choose from the marketplace, and own 100 per cent.
Star has adopted the acquisition route to grow in various phases of its history in India. Fox snapped up Asianet Communications in 2008, and has, more recently, agreed to swallow Maa Television Network to conquer the southern-language television broadcasting space.
Star has talked of a Rs 20,000 crore (Rs 200 billion) sports investment purse....
Spending big dollars on acquisitions, programming and organic expansion, Star has emerged as a market leader in multiple television genres. This has led James Murdoch to say that he expects the Indian business to eventually report an operating profit of $1 billion a year.
So what is it that irritates James Murdoch when his media empire has hit the sweet spot in India? It is the subscription side of the business that he wants to be fixed. TRAI still regulates the pricing of television channels at the wholesale level that broadcasters offer to the MSOs and the DTH. Broadcasters want a free market to determine the pricing of the channels.
But the disruption in the market has not happened yet and the report card on consumer billing and packaging continues to be dismal.
Unlocking subscription value is critical to Star’s march to profitability in the sports business. The popularity of the network’s primetime shows has ensured that the entertainment broadcasting business is highly profitable.
One way of doing this is by seeing growth in monthly fees per subscriber.
By taking up the distribution of its entertainment and sports channels, Star insisted on cost-per-subscriber (CPS) deals in DAS markets. While in the case of Hathway Cable & Datacom it asked for Rs 31 CPS. in the case of smaller MSOs, the ambition was to take it north of Rs 40 per subscriber.
Another disturbing trend that has crimped subscription revenue growth is the slow progress made on packaging and consumer billing.
Star has attempted to break this inertia by offering its channels to the MSOs only on RIO basis, with the hope that it would force cable operators to introduce packaging at the consumer level, even if it meant the network’s penetration among the pay TV households would fall.
The logic as it plays out is that RIO would force cable TV networks to introduce packaging, and then the premium Star channels would sit on pricier tiers. In other words, monthly cable TV or DTH bills would have to increase.
Star’s plan is not just to get more from traditional pay TV but also to create alternatives that would drive digital content consumption in India. The company has launched starsports.com and hotstar.com, both of which seem to be growing fast
Star’s strategy is to build a highly scalable model for its digital platforms. With the broadband population growing and connectivity becoming better, Star’s two digital properties can become big revenue earners.
Outside entertainment broadcasting, foreign media companies have faced restrictions. The government has capped FDI in the areas of DTH, cable, news and FM radio. James Murdoch will surely want the new government to allow foreign companies to cross these ‘red lines’, particularly in DTH where Star runs an existing business. Star holds an effective 30 per cent stake in DTH company Tata Sky. The intention is to become a majority owner.
Print media is an area where News Corp, 21st Century Fox’s sister company, would like to step in if foreign media companies are allowed majority ownership. The Murdoch-controlled company has already shown interest in building digital assets. Last month, News Corp acquired VCCircle Network,
Star can only do CPS agreements with the distribution platform operators (DPOs), including DTH and MSOs. As per TRAI’s recommendations, the broadcaster shall be permitted to ‘control’ only one DPO in a relevant market. What this means is that Star, by virtue of its equity in Tata Sky, cannot have a ‘controlling’ interest in another DPO.
James Murdoch will want the government to accept only one aspect of TRAI’s recommendations on cross-media restrictions.
Read more at: The Murdoch-Modi rendezvous | TelevisionPost.com
Star India CEO Uday Shankar was accompanying his boss and 21st Century Fox co-COO James Murdoch to meet Prime Minister Narendra Modi. The duo also met the Minister for Finance, Corporate Affairs and Information & Broadcasting Arun Jaitley.
Though no air leaked out of the room, we can freely speculate on the regulatory issues that bother Star as it seeks to grow faster and across verticals in India. Murdoch would want Modi and Jaitley to remove those bumps in the road.
Unlike China where his father Rupert Murdoch hit the wall, India has left the doors wide open for foreign entertainment broadcasters to grow in whichever way they want. They are free to launch television channels, buy whatever they choose from the marketplace, and own 100 per cent.
Star has adopted the acquisition route to grow in various phases of its history in India. Fox snapped up Asianet Communications in 2008, and has, more recently, agreed to swallow Maa Television Network to conquer the southern-language television broadcasting space.
Star has talked of a Rs 20,000 crore (Rs 200 billion) sports investment purse....
Spending big dollars on acquisitions, programming and organic expansion, Star has emerged as a market leader in multiple television genres. This has led James Murdoch to say that he expects the Indian business to eventually report an operating profit of $1 billion a year.
So what is it that irritates James Murdoch when his media empire has hit the sweet spot in India? It is the subscription side of the business that he wants to be fixed. TRAI still regulates the pricing of television channels at the wholesale level that broadcasters offer to the MSOs and the DTH. Broadcasters want a free market to determine the pricing of the channels.
But the disruption in the market has not happened yet and the report card on consumer billing and packaging continues to be dismal.
Unlocking subscription value is critical to Star’s march to profitability in the sports business. The popularity of the network’s primetime shows has ensured that the entertainment broadcasting business is highly profitable.
One way of doing this is by seeing growth in monthly fees per subscriber.
By taking up the distribution of its entertainment and sports channels, Star insisted on cost-per-subscriber (CPS) deals in DAS markets. While in the case of Hathway Cable & Datacom it asked for Rs 31 CPS. in the case of smaller MSOs, the ambition was to take it north of Rs 40 per subscriber.
Another disturbing trend that has crimped subscription revenue growth is the slow progress made on packaging and consumer billing.
Star has attempted to break this inertia by offering its channels to the MSOs only on RIO basis, with the hope that it would force cable operators to introduce packaging at the consumer level, even if it meant the network’s penetration among the pay TV households would fall.
The logic as it plays out is that RIO would force cable TV networks to introduce packaging, and then the premium Star channels would sit on pricier tiers. In other words, monthly cable TV or DTH bills would have to increase.
Star’s plan is not just to get more from traditional pay TV but also to create alternatives that would drive digital content consumption in India. The company has launched starsports.com and hotstar.com, both of which seem to be growing fast
Star’s strategy is to build a highly scalable model for its digital platforms. With the broadband population growing and connectivity becoming better, Star’s two digital properties can become big revenue earners.
Outside entertainment broadcasting, foreign media companies have faced restrictions. The government has capped FDI in the areas of DTH, cable, news and FM radio. James Murdoch will surely want the new government to allow foreign companies to cross these ‘red lines’, particularly in DTH where Star runs an existing business. Star holds an effective 30 per cent stake in DTH company Tata Sky. The intention is to become a majority owner.
Print media is an area where News Corp, 21st Century Fox’s sister company, would like to step in if foreign media companies are allowed majority ownership. The Murdoch-controlled company has already shown interest in building digital assets. Last month, News Corp acquired VCCircle Network,
Star can only do CPS agreements with the distribution platform operators (DPOs), including DTH and MSOs. As per TRAI’s recommendations, the broadcaster shall be permitted to ‘control’ only one DPO in a relevant market. What this means is that Star, by virtue of its equity in Tata Sky, cannot have a ‘controlling’ interest in another DPO.
James Murdoch will want the government to accept only one aspect of TRAI’s recommendations on cross-media restrictions.
Read more at: The Murdoch-Modi rendezvous | TelevisionPost.com
