From an unprecedented investment in sports to creating premier content while maintaining the lead in mass entertainment, STAR India’s CEO Uday Shankar has redefined ‘big bets’ in the business, says Noor Fathima Warsia
STAR India’s journey in what the company has dubbed its ‘2.0’ avatar has been a story of rise and rise. After securing leadership position as the top general entertainment player that includes not only Hindi but also regional entertainment, STAR India made some strategic shifts in the genres it was present in.
According to the company’s CEO Uday Shankar, the network’s multi-pronged investment in creating a wide berth of senior talent and approaching content with a differentiated view has allowed it to define new trends and set the agenda for the industry. The year 2013, however, marks a year of strategic shifts for the company, where if all goes the way STAR has planned, its impact on India will go beyond television, entertainment and the media business itself. That, however, is an important ‘if’.
OF GENRES WHERE STAR CAN ‘PARTICIPATE’
The year 2012 marked the exit of STAR India from the news genre completely. STAR’s biggest reason, as per Shankar, was that the company was a minority stakeholder, where it was unable to bring about a meaningful presence. “We had views on the news quality but we were in no position to bring a change, so the least we could do was to not participate,” comments Shankar. “There is a fundamental reinvention required in the news genre right now, because otherwise the path it is headed on, leads only to self-destruction.”
The complete exit from the news genre did not raise as many eyebrows as STAR’s decision to bid for, and acquire, BCCI’s (Board of Cricket Control in India) media rights, panning television, Internet and mobile, for an impressive Rs 3,800 crore. The deal includes domestic cricket as well, apart from rights for global territories for a period of six years, ending March 2018. While the decision marked STAR’s serious interest in the sports genre, it was the buyout of ESPN’s stake in the ESPN Star Sports joint venture in India that can be credited with its official entry into the genre. STAR continued to keep the industry wondering with the steps that followed right up to the November 2013 announcement of an investment to the tune of Rs 20,000 crore, over the next five years, in sports.
For STAR, this was yet another indication of its parent company News Corp’s commitment to the market. As they say, huge investments come with heavier risks.
SPORTS IN INDIA: BIG BET, BIGGER PROBLEMS
A large section of the industry is still calculating how STAR India will recover the Rs 3,800 crore that it needs to cough up for the BCCI rights, and it is evident that advertising revenues alone would not be able to achieve this. While cricket is big in India, the viewership (as per TAM Media Research) of domestic cricket and Test matches is far lower than that of shorter formats or one-day internationals.
The distribution scenario in India does not allow for any subscription revenues worth talking about. Combine these with an overflow of advertising inventory in broadcast and a diminishing return on cricket properties, and we have only some of the factors that STAR is up against. The devaluing Indian rupee came as an unforeseen challenge that has had an adverse impact on sports properties. By the time the Indian currency was weakening, STAR India’s focus on sports too had broadened from just cricket to football, hockey, badminton and other sports — implying some comparatively expensive buys. In 2013, STAR had already invested heavily in promoting local leagues, Hockey India League and Indian Badminton League.
One of the ambitious initiatives was Indian Super League. STAR India and IMG-Reliance had entered into a multimillion dollar deal to become equity partners in this joint venture for the next 10 years, where STAR reportedly had one-third stake, and had acquired broadcast and sponsorship rights for the league. Even as the tournament was slated to kick off in January 2014, last month it had to be deferred due to scheduling conflicts with the I-League and non-availability of the stadium in Goa due to delay in the Lusofonia Games.
Shankar remains unfazed through all this. “Sports content is dollar denominated. Naturally, the fall in rupee value has an unfavourable effect. But we did not buy cricket or other sports property rights, or get into the business with short-term plans,” he states. STAR India also went ahead and bought the title sponsorship of BCCI games for 2013-14 for Rs 2 crore, which was seen as a very good deal, at base price.
For Shankar, the sports opportunity in India is huge. “There is immense scope to improve and grow the sports offer. We have been reasonably successful in entertainment, be it Hindi, English or regional. Over the years, we have acquired some understanding of content consumption in this country. We can leverage these insights and build a sports business.”
AN ELABORATE PUSH
The guiding principle of STAR India’s strategy for revamping its sports channels is not very different from its approach to the Hindi GEC, Star Plus. Step 1 was to rescue the content proposition, step 2 was scaling and step 3 was an image overhaul with a large marketing push. The difference is that now STAR has developed the premise of bringing sports first. “Historically, India has been about academic achievement. Sports has often been relegated to second place. We are encouraging people to imagine a world where sports comes first. We believe sports is more than watching TV, and having the right outlets closes the loop.
We wanted to give a platform, where even the local champions are celebrated as we think that will encourage more people to pursue their dreams. Star Sports is built on the insight that there is demand for that kind of content, but no platform has made any honest attempt at offering a channel of quality,” adds Sanjay Gupta, COO, STAR India.
STAR India not only acquired a host of marquee properties across different sporting events but it also looked to leverage language as an option to attract more viewers. Step 2 involved the channel overhaul. On November 6, 2013, STAR India dropped the ESPN brand name from its channels and created a sports bouquet under the brand Star Sports. The offering comprises six TV channels: Star Sports 1, Star Sports 2, Star Sports 3, Star Sports 4, Star Sports HD1 and Star Sports HD2, and a digital platform starsports.com. Of these, Star Sports 3 is a Hindi language channel and STAR has plans to venture into other languages as well. “There is enough cricket in India to not limit it on any one channel and there is also an appetite for other sports. We want to address this need and offer the best of these properties. The network will showcase over 5,000 hours of premium live sports content and a slew of game changing shows and formats,” explains Gupta. STAR packed a punch with a mass campaign ‘Believe’, including full-page cover ads in leading dailies with MS Dhoni as the face of the campaign.
On the digital side, while the portal starsports.com is planned as a real-time, visually driven platform that will operate on subscription for premium content, Gupta admits that STAR is still “figuring out” what the apt digital play should be. The digital dilemma for sports is not very different from that of the network itself.
STAYING THE COURSE...
Digital is a business that STAR is still building. The company cites Indian demography, market dynamics and digital content consumption habits as some of the reasons to invest in building a robust digital proposition. STAR still sees digital to be in “very early days”. “In this company, we don’t do anything where we don’t see returns. It does not have to happen right now — we are in the build phase but when it happens, the returns would be very attractive,” notes Shankar.
While STAR is still fine-tuning its digital strategy, Shankar is reasonably pleased with the manner in which the network’s English content has shaped up. He says, “I think I have already delivered on the promise we had made on English content, more so with Star World Premier HD. This is probably the most innovative and disruptive English content initiative anywhere in the world. What we are offering to our Star World Premier HD consumers in India, would be available only if you subscribed to all the big networks. We cherry-picked this and we bring it to our viewers on the same day.
We believe our viewers are entitled to this kind of premium content. It is also one of the most decisive interventions we have made in piracy. Piracy happens not only because people are not willing to pay but also because there is no platform to access such content. Star World Premier HD has had a vertical take-off and has seen an unprecedented reception.”
Even as some quarters of the industry do believe that STAR India slowed down in its regional push, Shankar points out that with general entertainment and movie channels in key languages, he is happy with the performance of STAR’s regional play.
“Most of our channels are either in leadership positions or in leadership consideration set. We are constantly looking to up the game and I think we have been on track,” he remarks.
...AND PUSHING FORWARD
There is no denying that STAR India set out an aggressive pace of growth for itself with some tough targets. Given its reporting to News Corp in foreign currency, the drop in rupee value added pressure in delivering on projected targets. Shankar says the network is still holding its own. “There is challenge, but we have developed a very strong discipline of execution. I have a team that does not look at the external environment to justify what it cannot do. It considers the environment to come back and plan how it can deliver on our objectives. The rupee and the economy are challenges, but we have a robust entertainment business that gives us the cushion,” states Shankar.
He points out that STAR’s future is about its people - what STAR has achieved could not be attained by any one or a few. “We were able to do it due to our depth of talent. When people talk about the success of Star, they fail to recognize this. Overnight, we took up a sports business, but did not recruit anyone from outside as we had very high quality talent within to run the business. We have very strong bench strength and great teams – and that is our true power.”