Guthrie exit may alter Star equation in India

Michelle Guthrie, chief executive officer at Star's Hong Kong office, that controls Rupert Murdoch's media operations in India, has resigned from the company. The announcement was made by Star in Hong Kong today.

Paul Aiello, president of Star, will succeed Guthrie. Aiello, 42, joined Star about six months ago from Morgan Stanley where he was looking after telecom, media and technology group in the Asia Pacific region.

Rupert Murdoch, chairman and chief executive, News Corporation, said, "Michelle has overseen an important stage of growth at Star, as it fortified its position as Asia's leading media company."

Guthrie said she's had an "incredible six years at Star". She had replaced Rupert Murdoch's younger son James Murdoch as the CEO in November 2003.

The management changes at the Hong Kong office is expected to have repercussions in India as well. Industry experts presage a spate of resignations in India too.

Star's India CEO Sameer Nair is learnt to have put in his papers. Asked if he was leaving, Nair said: "There's nothing yet. I am busy. Shooting for KBC3 begins on January 15." Star's president (ad sales) Paritosh Joshi, however, said changes in Hong Kong will not affect day-to-day operations in India.

India is the most significant business for Star's Asia operations and contributes nearly Rs 800 crore to Hong Kong's kitty.

However, in the last one year, India operations have been under the scanner as Star's flagship channel Star Plus' performance has been less than scintillating.

According to television viewership monitoring agency, TAM, Star Plus' relative share in the cable and satellite homes in the Hindi-speaking markets (age 4 plus) has dropped from 49 per cent in 2005 to 44 per cent in 2006.

During the same period, Zee TV has moved up from 13 per cent to 20 per cent, while Sony saw a drop from 15 per cent to 12 per cent.

Advertising industry sources say that even the advertising rates that the channel's prime time serials now command are lower by about 20 to 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 1.8 lakh.

"Between 2002 and 2005, Star was growing at 20 to 30 per cent a year. However, last year (2006) the growth rate dropped to about 18 per cent," said an executive at the media agency Starcom.

Joshi counters: "Our ad revenues have grown by 20 per cent. The inventory is finite so how would we grow if the rates were dropping?"

More recently, questions are being raised about Star's advertising deals for KBC3 as well. To be fair, the company has sealed sponsorship deals and some spot deals of about Rs 110 crore for 52 episodes.