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Thursday, Jun 10, 2004

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Star India to broadbase advertising revenues — New strategy being put in place to step up growth rate

Nithya Subramanian

Mr Peter Mukerjea, CEO, Star India

New Delhi , June 9

RUPERT Murdoch-owned Star India is planning to beat the broadcasting industry's average growth rate by de-risking its business model and broadbasing its advertising revenues. And as part of that strategy, the company will, for the first time, work towards sewing up 60-70 per cent of its advertising inventory right at the beginning of the year besides launching new channels to cater to different advertisers.

Speaking to Business Line, Mr Peter Mukerjea, CEO, Star India, said, "Internationally broadcasters sell 60-70 per cent of their advertising right at the beginning of the year. This is a more efficient business model and ensures a steady revenue flow right at the start. But such a strategy would require broadcasters to have their programme schedules, new shows and blockbuster movies in order early during the year. We at Star are trying to work on this."

He added that currently advertising contributes 65 per cent of the revenues generated while the rest comes from subscription. Star India is also broadbasing the advertising revenues by launching several new channels. The recently launched Star Utsav caters to advertisers who cannot afford to be on Star Plus while the proposed - Star One - targeting the upper income group, will be relevant to advertisers selling high-end products. The Star head also felt that the existing ad rates for Star Plus, which is about Rs 3.5 lakh for a 30-seconder during prime time, is not very high and there is scope for further increase.

"We are also looking at the southern market which accounts for 48 per cent of the total market. We have to decide whether we go in for acquisitions or launch brand new channels," Mr Mukerjea added. A kids channel will also be added to the bouquet, which could either be UTV's Hungama TV or the Disney channels.

On the subscription front, the broadcaster has decided to enter into three-year contracts with the cable industry. "This will ensure that there are no frequent blackouts and a steady revenue flow," Mr Mukerjea said. The broadcaster is looking at a third revenue stream using wireless technology. It has appointed Mr Sumantra Dutta, who is currently COO of Radio City, to head this initiative.

"We think that SMS has large potential and we will use interactivity in a big way through contests, opinion polls and other concepts that will keep the viewer engaged," he said. The programming front is also likely to witness some new launches including the Indian Superstar, India's Greatest Singer and some others.

During the current financial year ending on June 30, 2004, the revenues of Star India have grown by 30 per cent.

While the company was unwilling to divulge the numbers, during the last financial year, the Star Group, which includes India and China, realised its first full-year operating profit of $8 million on revenues of $292 million.

According to the third quarter financial statement of NewsCorp, Star's operating profits doubled on subscription and advertising gains made in India, while revenues grew by 12 per cent.

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