June 24 2008

Leading broadcaster Star India is set to rake in Rs 1,500 crore in advertising revenue for 2007-08 (July 2007-June 2008), a jump of 22-25 per cent over the last year. The major gains for the company wil come from Star Vijay, Star Plus, Star Movies and Star One channels.

This is significant because Star India could only manage a 6-8 per cent growth in its advertising revenue for 2006-07 over 2005-06.

According to sources, the Rs 1,500-crore advertising revenue for Star India consists of the contribution of its eight channels (Star Plus, Star One, Star Movies, Star World, Star Gold, Star Vijay, Star Utsav and Channel V). Overall, Star Plus continued to be the major revenue driver for Star India as it is expected to generate 66 per cent or over Rs 900 crore of advertising revenue for the group, sources said.

Among the growth channels, Star Vijay, the Tamil general entertainment channel from Star’s stable, registered over 40 per cent growth in advertising revenue to clock Rs 60-62 crore this year. Contribution from Star Movies and Star Gold stood in access of Rs 100 crore each, while Star One contributed over Rs 200 crore in advertising revenue, sources said.

Apart from Star India that has been grossing in excess of Rs 1,000-crore advertising revenue for the past four years, Subhash Chandra-promoted Zee Entertainment Enterprises was the first broadcaster to cross this mark this year. Zee Entertainment’s net advertising revenue for 2007-08 (April-March period) stood at Rs 930 crore, according to its results declared last week.

By virtue of market share too, Zee TV is the second ranked entertainment channel after Star Plus.

For pay broadcasters like Star India, Zee Entertainment and others, there are only two streams of revenue – advertising and subscription. “In the case of Star India, its advertising revenue has always been more than the subscription revenue and therefore a 20-plus per cent growth in ad revenue for 2007-08 is crucial,” an industry source familiar with the development said.

When contacted, Uday Shankar, chief executive, Star India, said he was very pleased with the performance of Star. “A number of our channels have done very well during the year. We have gained both in market share as well as in revenue and I can mention that Star Vijay, Star Plus, Star One and the two English channels – Star World and Star Movies – collectievly have done very well for us.”

On the way forward for Star India, Shankar said launching regional language channels will remain the top priority, while the group will continue to explore other interest areas like the Home Shopping channel foray, movie production, and several other avenues. “We will launch regional language entertainment channels for sure and we will also continue to explore other areas of interest.”

The Rupert Murdoch-owned Star TV Group has come under pressure because of its operations in China and India. According to a recent analysis by Media Partners Asia, an international media research agency, the Star Group’s margins have been under pressure for some time due to an erosion of its earnings in India, its largest market in Asia, due to the higher content costs and competition from rivals such as Zee TV.