Uday Shankar, chief executive officer, Star India talks to Anuradha SenGupta of CNBC-TV18 about the upcoming show 'Satyameva Jayate' that will go live from 6 May 2012. After ‘Kaun Banega Crorepati’, this is STAR’s second biggest launch with Hindi film actor, Aamir Khan, the perfectionist, who will be making his first ever debut on small screen. He also talks about the newly acquired cricket right to broadcast cricket till 2018 and its exit from joint venture with Ananda Bazaar Group.
Below is the edited transcript of his interview to CNBC-TV18. Also watch the accompanying videos.
Q: Is it an inflexion point for Star India because there are so many announcements at different levels that we are seeing?
A: It was an overall business strategy. There were different set of challenges five-six years ago, where the core Hindi business and the flagship channel was coming under pressure which we wanted to fix. We worked on the growth aspiration which was long over due.
We extended our footprints in regional entertainment in Bengali, Marathi and South Indian languages which complimented the Hindi entertainment in a big way. The next step was to strengthen our portfolio and it’s been part of that.
Q: The show 'Satyameva Jayate' is not a programming bet, or getting a few more GRPs. Is it about Star India’s reach and scale?
A: Correct. 'Satyameva Jayate' is one of the biggest leaps that we would have taken in last many years. With this show we are trying to establish a very eclectic, contemporary definition of what entertainment content can be. We should be seen as a default house for traditional stuff like drama, singing and dancing. The society needs to be reflected adequately and you need to capture that through your creativity and that’s what 'Satyameva Jayate' is set to do.
Q: Has it been difficult to sell 'Satyameva Jayate' because although it marks Aamir Khan’s debut on TV and that is a very big deal, on the other hand we still don’t know what the show is about. Aamir has requested his brands endorsers to stay away from advertising on this show and to even stop using his commercials while the show is on for 13 weeks. Has this project been a difficult one to sell to advertisers?
A: Yes, it was a challenge because you took away the most ready people willing to advertise and associate with the show. I was impressed and completely overwhelmed by Aamir’s commitment because he also lost a huge commercial opportunity as he had suspended all his endorsements. One needs to reciprocate the action.
What also made it difficult to sell was the fact that we were not providing information about the show to the people, not sending out show reels and when we started selling the show we were not even giving away the name, time slot and a whole lot of things but it shows how much people faith Aamir and how much people trust Star’s ability to do something different that people were willing to spend the money.
Q: To get the corporates and advertisers interested and excited besides Aamir Khan, is it correct to say that you have pulled in the entire Star India Network and a simulcast across nine channels to almost create a programme block?
A: Absolutely not. This show lends itself in a very seamlessly to across regions, platforms and channels. When we shared the information about the show the government and Doordarshan were excited and said the wanted a show like this to be aired on DD. This show displays the commitment and faith in our self in trying out different genres of creativity
Q: What are the ratings you are looking for?
A: If the ratings are great it will make me very happy. I am already really very happy to do something like this with Aamir on board, have the attention of the entire nation and support from the corporates is enough reasons for satisfaction. I won’t be worried about the ratings. Good ratings are always welcome and if the show does not do well then then also we will be happy that we had the courage to go out and put out money where our mouths are.
Q: Would CNS 4+8 be okay rating? Is 8 strong?
A: Yes, very good.
Q: Anything below 8 is not strong?
A: No, below 8 is also strong too. Ratings have been under pressure for everyone. The reason I am not commenting on ratings, because this is not an easy show as it addresses issues that are really though and forces people to think. The reason we have put this show across many channels because the first thing that we are looking at is wide reach of the show.
Q: Was it a difficult decision to say that all Star Entertainment channels would show this programme come 11 o'clock Sunday?
A: Correct, It’s wasn’t an easy decision. We have encouraged or pushed the viewers to make a trade-off with their regular choice, but we felt that the nature of this show is so compelling that it’s worthwhile going and doing that.
Q: Sleepless nights till 6 May?
A: As a program, yes, it giving me sleepless nights. But, we take big bets, launch new channels, commit lot of money on cricket and many things and these are enough reasons to get sleepless nights.
Q: You just purchased cricket right for Rs 4,000 crore up to 2018 at Rs 40 crore per match, where is this money coming from? With IPL Season 5 delivering lower ratings then where are you betting big?
A: IPL is delivering lower ratings than IPL itself, so there is no reason to believe that it’s an absolute disaster. You can’t compare the BCCI International Tournament with IPL. IPL is very engaging, has great constituency, but it is club cricket. Whereas, this one is international cricket, cricket doesn’t get bigger than this except when the World Cup happens.
Q: The values that the BCCI is seeking from cricket and that broadcasters like you are paying for it for those rights is where the problem is? Those values seem to be sky-high. We saw a Nimbus who you are replacing now as the broadcaster not being able to make its payments for whatever reasons?
A: I don’t know why Nimbus couldn’t make its payments. Sports rights globally are seeing enormous inflation year-on-year, its not BCCI tournaments the only ones.
Its not that we went and committed outrageous sum, there was another broadcaster which came pretty close to our valuations. The inherent power of cricket in this country gives the confidence that there is value to be recovered. We believe that Indian cricket story will get stronger. The reach of cricket is defined by the limitations of analog cable capacity.
Once digitisation happens, year-on-year we are seeing 8-10 million new cable and satellite homes coming in both because of DTH, taking TV to rural areas and now with digitisation of cable. The reach of cricket is only going to get bigger and bigger. The other thing on which I personally have bet very big is the fact that cricket has moved away from being a big city and big town’s phenomena to upcountry and rural areas phenomena. Large numbers of cricketers are coming from these parts.
Q: You are pretty confident that you will be able to keep the pricing power when it comes to cricket given the kind of investments that you make?
A: That’s the only way we will be able to pay back the licence fees.
Q: What are you going to say to people who will say that this is a sure sign that Star India will provide sports on its own and ESPN will go its own way?
A: While we did acquire the rights, it was very clearly understood by both ESPN and Star that the rights will be exploited along with ESPN Star Sports - the JV. Even the upcoming tournaments like the ones with New Zealand and England are going to be telecast on ESPN Star Sports channels including Star Cricket.
Q: Is this partnership intact for the year?
A: Yes, this partnership is intact for the time being.
Q: When you say time being you mean May 2012, all of 2102 or beyond that?
A: We have given a commitment to BCCI as well that the rights will be exploited in collaboration with ESPN Star Sports.
Q: You have had partnership with ABP for nine years since 2003. What has changed in the regulatory environment and what are the new hurdles or challenges or what has not lived up to expectations in the CNS environment?
A: No hurdles or challenges, but the circumstances in which this JV was created. Star used to run its own news channel and FDI restrictions were brought in almost overnight we were forced to seek a JV partnership which we did and we had to whittled down to 26% which we did. We always expected that there was would be alignment of FDI norms but that did not happen. And we waited, it was a good brand, it was a good partnership, we had excellent relation with ABP group.
I have worked for MCCS myself. Everything was fine but at 26%, with no editorial involvement and no other role, we got reduced to almost financial investors. And, we are not in the business of making financial investments. This was a core investment, and if we can participate in the strategy, it makes sense. Otherwise, it doesn't make sense at all.
Q: You all exited Hathway also?
A: Correct. I believe that we should be involved in building businesses together. If for whatever reasons we are not participating in that process then it doesn’t really make sense for us, our business today has expanded a great deal. We have our own management challenges and if we are not adding value to our partners then why should we be in the business at all.
Q: You are still invested in Balaji?
A: We are still invested in Balaji but we are very open to exit there as well.
Q: Last year, you announced that Star handle the ad sales for all NDTV’s three news channels and again their the conjecture is that who knows when Star wants to get back into the news business provided that NDTV is looking to partner Star again that this might be its option for getting back in the news business?
A: That’s purely a conjecture. We have a great relation with NDTV and Prannoy Roy for more than a decade and that when NDTV wanted some help and partnership in doing their ads we were very happy to lend a hand. But, there is nothing beyond that because again if it’s restricted to 26% then why would we get out of a company where we have 26% and get into another company with 26% stake, does it make sense.
Q: You feel that there is nothing on the horizon, on the environment that makes you feel positive that you will see regulatory changes because you all have stayed invested for a while hoping that this will happen?
A: Absolutely, and we are losing hope because regulatory changes that have been far more urgent haven’t happen and I am not sure whether given the current environment a change in the ownership of news would be that high a priority.
Q: Do you see TRAI recommendations as a serious concern for pay channels and the pay TV business in India?
A: There is need to regulate advertising and the broadcasters generally agree.
But you have to understand why there has been this unbridled ballooning of inventory. This has happened because India is the only country where television is driven almost entirely by advertising revenue. Television content, especially news content like news, music, movies etc are always run by subscription revenue and that is where I find if appalling that the TRAI has decided to come out with this kind of restriction without cleaning up the mess in subscription.
Inventory is a problem because the broadcasters are not getting any significant money from subscription and the TRAI has been entrusted with the task of cleaning up the mess in cable. Instead of cleaning up that mess, it has come out with restrictions which are totally outrageous. We also believe that the TRAI is over stepping its brief, they are not empowered to look at this. Minister of Information and Broadcasting is the right agency and the broadcasters are already engaging with the ministry to define the limits of advertising on satellite channels.
Q: What is the mood at Newscorp, because ever since last year when News of the World was shut down in UK and the spotlight was put on the way Rupert Murdoch has built this empire, the allegations of collusion between politicians, government and the media in this case Rupert Murdoch media Company, Newscorp?
A: I am not the right person to talk about the mood at Newscorp. I can tell you the mood at Star India which you can see we remain very committed to our broadcasting and content businesses, we remain very committed to India. We have set up an example as value-based transparent corporate entities in this country and we remain committed to that. We have been increasing our investments in this country, the latest example being investment in cricket. We are very excited about the opportunities for Newscorp and STAR in this country and my job is to make sure that I deliver on that.
Q: While whatever is happening in this space that I just outlined doesn’t impact your viewers, people who consume the entertainment that you bring them, it does impact influencers, decision makers, government, policy makers. Has what has been happening impacted Star’s equity in this country?
A: Newscorp is a global company; it has businesses in many parts of the world. And the newspapers in England have no relationship with the broadcasting business in India. I don’t think that has an impact.
Q: Is Star India going full steam ahead?
A: Star India is going full steam ahead the best of its ability and we believe that this is a country where television content and broadcasting has just completed the first lap of its journey, the second lap has just began, the track should become better with digitisation and the reach will be so much more.