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August 29 2007
Star may take 4 years to get into right orbit
Ashish Sinha
Business Standard
(c) 2007 Business Standard Ltd. All rights reserved.
Rupert Murdoch-promoted Star Group will take at least four financial years to cross the $120-million-mark operating income that it commanded till 2006. Star lost its position due to a sustained dip in income from its India and other Asian operations.
Star's operating income dropped almost 30 per cent year-on-year to $91 million for the financial year ended June 2007. In India, Star Group operates 14 television channels, with Star Plus the leading entertainment channel, and is in the process of launching a regional language channel soon.
According to the latest report prepared by Media Partners Asia (MPA), an independent international media research agency, Star's operating income will be $122 million in June 2011, implying an eight per cent compounded annual growth rate (CAGR) from financial year 2007.
"We expect Star to achieve greater momentum from June 2008 onward with increased leverage from the launch new TV channels and new programs on existing properties, some expense reduction in programming, and material growth in subscription revenue in India and Asia," Vivek Couto, executive director, Media Partners Asia, told Business Standard from Hong Kong.
According to MPA's latest report, Star group's current issues largely revolve around India, Star's leading market in revenue and profit terms.
When contacted, a senior executive in Star India declined to comment on the findings of the MPA report.
The main issues include restructuring and recovery from the erosion of its winning franchise such as the K-soaps, produced by Balaji Films. Star also has to watch out for competition from arch rival Zee TV, the MPA report said.
But, according to industry experts, Star India's main concerns have been increasing content costs, erosion of advertising revenues, and fragmentation of audiences, with the launch of multiple new television channels. In the next 3-6 months, at least five entertainment channels will become operational from UTV, NDTV, Inx Media, Viacom-TV 18 alliance and other media companies.
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