1 February 2007

STAR’S EXODUS AT THE TOP
By Anusha Subramanian
Business Today
Living Media India Ltd

In the past fortnight, the high-profile executives who quit the STAR TV Group include: a) Michelle Guthrie, CEO, STAR Group (Asia), b) Peter Mukerjea, CEO, STAR India (Corporate & Strategies), c) Sameer Nair, CEO, STAR Entertainment & d) All of the above.

This isn’t a question that Shah Rukh Khan is likely to volley at wannabe millionaires on Kaun Banega Crorepati (KBC) III, but you wouldn’t need to be thrown a lifeline to get the answer. At the time of writing last fortnight, Guthrie, who had taken over from James Murdoch (son of Rupert Murdoch, Head of News Corp., of which the STAR Group is a part), had put in her papers, with February 28 being her last day at the Hong Kong-headquartered broadcaster. She isn’t the only one headed for the door. Mukerjea, whose exit has been speculated for a couple of months now, is also on his way out, one version being that he had tendered his resignation in mid-December. Completing the picture of intrigue is the third exit, of Sameer Nair, a former Chief Operating Officer (COO), who was elevated to the post of CEO of STAR India’s broadcasting operations last March.

When three CEOs reach for the exit button around the same time, you don’t have to be a cynic to conclude that all’s not well. In India, even speculation of Mukerjea’s and Nair’s exit, days before the high-stakes launch of KBC III, was enough for industry watchers to ponder the fate of the country’s premier broadcaster. That it may be under pressure-both financially and in terms of share of viewership (see After Years of Reigning Supreme...)-makes the timing of the exits even more dramatic. (As BT went to press, a STAR TV spokesperson dismissed talk of the CEOs’ exits as speculation, even as he let on that an official announcement was on the cards).

Vijay Singh, head of Tetley’s operations in emerging markets, is tipped to join STAR India as the new CEO. But the going won’t be easy for Singh, not just because of his relative lack of experience in the Indian broadcasting sector, but also because Nair is said to be keen to take along with him key STAR TV personnel. Nair is believed to be pondering an offer from NDTV founder Prannoy Roy, who has plans of launching an entertainment channel. Mukerjea, goes the rumour mill, will start up an entertainment venture either for a huge domestic conglomerate, or with venture capital.

At Tetley UK, Singh’s designation is Group Commercial Director (Developing Markets), based out of London. Prior to Tetley, Singh was CEO of Sony Music, which he set up from scratch. A product of the Tata Administrative Service, he had earlier worked for Tata Tea and was associated with the launch of Kanan Devan tea in south India. He then moved to Tata Chemicals, where he was involved with the launch of Tata Salt. His last assignment with the Tata Group was as Marketing Controller at Titan Industries.

Singh may be just one of the candidates lined up. Paul Ailleo, who has succeeded Guthrie as CEO of STAR Group Asia, could also be moved to India as a stop-gap to ride over the current crisis. A crisis it certainly is, what with STAR hardly boasting a second line of management worth talking about. But why exactly are STAR’s head honchos leaving, one by one? Let’s start with Guthrie, who prior to taking over was legal counsel at the company. Guthrie’s resignation may have plenty to do with STAR Asia’s performance in the region, which apparently hasn’t been up to scratch, particularly in countries like China and Indonesia.

From the Indian operations’ point of view, Guthrie, point out insiders, didn’t exactly hit it off with the local top brass. One reason for this could well be that Mukerjea, at one point, was said to be in the running for the Asia CEO slot. Guthrie’s management style was also said to be highly-centralised, with the Indian management having to seek approvals for seemingly mundane matters; for instance, even seminars organised by the Indian arm needed Hong Kong’s nod. That Guthrie is said to have recently set aggressive growth targets of 40 per cent would have also raised the hackles of the local honchos. Unsurprisingly, the Indian brass was keen to work out a reporting relationship directly with the parent company in New York. After all, the thinking back home is that if the local operations are contributing over 30-40 per cent to STAR Asia’s operations, it certainly needs to get a bigger say in strategy and decision-making.

The decision of the Hong Kong headquarters-led by Guthrie and President & coo Steve Askew (who at the time of writing was on a long leave, ostensibly recovering from a badly fractured arm)-to recast the Indian operations last March, also doesn’t seem to have played out smoothly. Two posts of CEO were created, with Mukerjea as head of corporate and Nair as head of broadcasting. Nair, who would, pre-recast, report to Mukerjea, now reported to Askew. The move, it was felt at that time, was made to keep back Nair, who appeared set to accept an offer from a rival media house. Coincidentally or otherwise, STAR India’s performance-till date spectacular-soon started showing signs of flagging. According to television viewership monitoring agency, tam, STAR Plus’ relative share in the cable and satellite homes in the Hindi-speaking markets (age four-plus) has dropped from 49 per cent in 2005 to 44 per cent between July and September 2006. The relative channel share further dipped to 41 per cent between the quarter October 2006 and December 2006. During the same period, Zee TV moved up from 13 per cent to 22 per cent, a share it has held on to till December. For the first week of 2007, STAR Plus’ relative share has further dropped to 39 per cent. As against this, the channel shares of both Zee and Sony have moved up.

But observers warn that too much shouldn’t be read into these numbers. “These are cyclical trends. While, yes, Zee is bridging the gap in terms of viewership, STAR does not have to worry as it is still way ahead. STAR India is also now working towards being a full-fledged integrated media company. They have also realised that being a mere broadcaster will not work for too long,” says Vivek Couto, Executive Director, Media Partners Asia, a Hong Kong-based media research firm.

Advertising industry sources say that even the advertising rates that STAR’s flagship channel’s primetime serials command are off peak rates by 20-30 per cent. For instance, a 10-second spot on STAR Plus’ highest-rated shows such as Kyunki Saas Bhi Kabhi Bahu Thi and Kahani Ghar Ghar Ki cost Rs 2.5 lakh till about a year ago. Today, the rate has dipped to about Rs 1.5 to Rs 1.8 lakh. However, the rate card shows that soaps such as KGGK and KSBKBT command Rs 2.38 lakh and Rs 2.72 lakh, respectively, for 10 seconds. Says a senior media analyst with a Global Four consultancy firm: “It is precarious time for STAR on three counts. First, Zee TV is coming close in terms of viewership ratings, secondly, stakes are riding high on KBC III and lastly, with the ICC World Cup in March-April 2007, big advertisers are all committed to cricket.”

STAR TV officials counter that STAR Plus has locked in Rs 130 crore of sponsorship for 52 episodes of KBC III. “We have got 14 fixed sponsors and six brands, which will be integrated into KBC itself. Soon, all spots will be sold for the 52-episode run, which will end on April 22,” says Paritosh Joshi, President (Advertising Sales & Distribution), STAR TV. Joshi explains that STAR Plus is selling 12 minutes of inventory for each episode of KBC of which 11 minutes have been already sold to the sponsors. "We have actually sold out till the end of February. So, that leaves us with one month of March and three weeks of April, which should not be a difficult task, as the programme would have already gathered its TRPs and would have established itself," Joshi adds. Media analysts feel that if KBC III pulls through successfully, STAR India would have all but sailed through the current crisis. But without Nair and Mukerjea-who, in that order, were responsible for turning around STAR India’s fortunes with the first run of KBC-that may be one of the biggest ifs in the history of Indian cable and satellite television.