| The enraged businessman is said to have joined the campaign against Star's news channel. Star's image managers had to fly down to the company's headquarters in North India with documents to prove that the law firm had nothing to do with Rupert Murdoch's empire. |
| That incident is but one of many that probably illustrate the anger that Star arouses in India. In the last one year, the Murdoch-owned Star India has created a huge number of enemies. |
| Rival broadcasters quietly hate it, as do cable operators and multi-system operators (MSOs) who have gone to court several times against Star. Print media companies too have been lobbying with the government to scuttle most of its projects in India. |
| The Rs 1,200 company has made more enemies in less than a year than the friends it made during the last 12 years of its operations in India. |
| Says a producer who's worked closely with Star for several years: "Star has become an arrogant company. Its arrogance shows in its dealing with MSOs, its producers and even the government." |
| Adds a former Star India executive: "While there are no holier-than-thou organisations, Star brazenly flouted rules." |
| Such criticism of Star is harsh and unfair. But it too symbolises the antipathy that Star arouses "� an antipathy that on occasion extends to the government. |
| Earlier this year, the government changed its media policy and introduced a 26 per cent cap on foreign equity in news channels uplinked out of India. |
| Since the policy change happened just before Star was to launch its own news channel (after its break up with NDTV), it had to apply afresh for uplinking from India. |
| But it requested an extension of the deadline for it to submit is uplinking application several times. Information and broadcasting (I&B) ministry officials claim that they eventually wanted to bar Star from uplinking. |
| Star finally filed an application in the name of Media Content & Communications Services (MCCS) after roping in advertising agency promoter Suhel Seth as a 30 per cent shareholder and dividing the rest of the equity among individuals like former film star Jeentendra Kapoor, editor Vir Sanghvi, lawyer Raian Karanjawala and Maya Alagh, wife of former Britannia managing director Sunil Alagh. |
| Another 25 per cent stake was divided between Adiko Investment and HMK Investment. |
| "It was not difficult to see that it was a dummy company where everything would have been controlled by Star," says Zee group vice chairman Jawahar Goel. |
| A senior I&B official also says that Star was only paying "lip service" to the rules. "When pinned down there was evidence of a guilty conscious. Actually, it showed no finesse and eventually tied itself in knots," he adds. |
| However, in August this year, the government changed its guidelines once again and eventually said that a single Indian company must hold at least a 50 per cent stake in a news channel that wants to uplink from India. |
| The mad scramble to find a majority partner finally ended in a partnership with Aveek Sarkar, chief editor of the Kolkata based ABP Ltd. |
| Referring to the Star News episode, a senior government officer says: "Nobody is denying that Star tried circumventing the rules, but the government is equally to blame. First it was indulgent and allowed 100 per cent foreign equity in news channels. Then suddenly it tightened the noose. Obviously there would have been problems," he says. |
| Today, the Star News application is still pending with the I&B ministry but may be cleared soon, with the home ministry having given its nod. |
| Star India declined to respond to emailed questions Ice World sent it. But sources close to Star say that the company has always conformed to government rules and regulations as and when they were applicable. |
| "As you can see, the guidelines kept changing and we continued to comply with them, though it is not difficult to see why everybody lobbied against our news channel," he says. |
| Around that time, Indian media companies Living Media (publishers of "India Today,"), Bennett Coleman & Co (which publishes "The Times of India"), Zee and Sahara informally joined hands to form the Indian Media Group to lobby against Star. |
| In a sideshow to the whole affair, one of these companies may have joined the Indian Media Group because it felt let down by Star. It had been in advanced negotiations with Star on Star buying its successful news channel, according to a source. |
| The source says that the deal was being discussed just before Star launched its own news channel. Finally, Star preferred to launch its own news channel to paying the nearly Rs 500 crore that the company demanded for its news channel business. |
| Yet the real reason for the antipathy among Indian print media companies is that they fear Murdoch's financial muscle. What if he eventually forays into the print media here? |
| Cable operators and MSOs too have Star high up on their hate list. Says Delhi-based independent cable operator Vikki Chaudhary: "Star always arm twists cable operators and MSOs. It piggybacks on the popularity of ESPN-Star Sports and Star Plus and leads the price hikes in the cable industry." |
| Cable operators and MSOs accuse Star of periodically demanding increases in rates or in the number of subscribers they declare and of switching off signals if they don't comply. |
| "Then it leaves Hathway to do the dirty work. Hathway starts enrolling the cable operators who have been switched off," Chaudhary claims. The head of an MSO says that this helps Star strengthen its own distribution network since it has a 26 per cent stake in Hathway. |
| Others too raise the same accusation. A note prepared by the Hindujas, who own In Cablenet in Mumbai, points out that just before the India-Australia cricket series ESPN-Star Sports hiked the channel rate from Rs 32 to Rs 39.50 per subscriber. |
| "A cable operator who would declare a higher subscriber base can retain the old price of Rs 32 per subscriber... The move is to bring the cable TV operators at the mercy of the broadcasters. This is not only aimed at cable operators but also to make business more difficult for MSOs like Incablenet and others," the note says. |
| However, Star has its own reasons to mark up the price of its bouquet time and again. |
| "Cable operators under-declare subscriber numbers in a big way. What do you expect Star to do when it knows that a particular operator has 100 connections and he's paying only for 10," asks a source close to Star India. |
| "Either we reach a compromise with the operator where he starts paying for another 20 connections or we jack up the price to take care of the loss in revenue from under-declaration," say the source. |
| Besides, he says that Star invested in Hathway to escape being blanked out by rivals channels who are also in the cable business. "At least, this way we are sure of being seen in our key markets," he adds. |
| MSOs also accuse Star of having derailed the conditional access system (CAS), implying that Star didn't want CAS because its true subscription base would have been revealed. CAS was supposed to have been rolled out by July this year but was postponed till December. |
| MSOs like Siticable, In Cablenet and RPG had already sunk several crores into setting up CAS infrastructure and ordering set top boxes. |
| Says an I&B official: "Star took advantage of the fact that opinion on CAS was divided and that it could be an unpopular measure." Thanks to a Delhi High Court order, CAS is back on track. But the six-month delay has put the plans of several MSOs out of gear. |
| Zee too is less than enthusiastic about Star. Zee, which has launched a header-in-the sky (HITS) platform, fears that Star will soon acquire a licence to operate direct-to-home (DTH) services in India "� and some experts think that DTH has the potential to eventually garner half the cable and TV market in India once subscription rates drop. |
| Zee acquired a DTH licence via ASC Enterprises a couple of months back. |
| "We hear that Star may soon get a licence to run DTH operations in the country. It got a letter of intent from the government anyway," says Zee's Jawahar Goel. |
| Zee has reason to fear Star's Rs 1,600 crore DTH venture which is much bigger than its own Rs 500 crore project. |
| Besides, the Star group's new head in Hong Kong, Michelle Guthrie, who has replaced James Murdoch, apparently drove Star's pay TV business in the UK and Australia and is being seen as someone who will manage both CAS and DTH in India. |
| Last but not least, Star is less than admired by some FM radio companies. Music Broadcast Private Ltd (MBPL), the company that runs Radio City, is said to be a Star company, though foreign equity in private radio stations is not allowed. |
| In a letter written to the I&B minister last month, at least two companies "� Bennett Coleman & Co and Zee "� again raised the issue of Star's presence in the FM radio business. |
| The letter, a copy of which Ice World has, states: "There is lack of clarity over MBPL's ownership pattern, its funding structure as well as its working agreement with other companies which provide it funding, program content and operational support." |
| The letter further states: "It is amply clear that MBPL is a mere shell company with no real powers and infrastructure, despite being the licence holder for the FM radio channel. This is in gross violation of the licence agreement which states that the licensee shall not subcontract, assign or transfer the broadcast responsibility." |
| Government as well as media industry sources say that Star has managed the political environment quite well despite the hectic lobbying against it by its rivals. |
| Notes Star's former distribution head Arun Mohan, if Star has managed the environment well, "one would say, well done boys." But he's quick to add that Star's very success on several fronts has spawned enemies. |
| "It's a question of sour grapes. I would say the company has done exceptionally well in India." Agrees former Star chief financial officer Sanjeev Nayyar: "When you have arrived, people hate you much like the Indian BPO companies are being hated in England and the US today." |
| Star India has certainly arrived. According to media industry estimates, the company declared a profit after tax of nearly $ 38 million (about Rs 173.31 crore) in 2001-2002 and of about $ 40 million (Rs 182.44 crore) in 2002-2003. |
| Television viewership monitoring agency TAM Media continues to put its flagship channel Star Plus ahead of all other Hindi entertainment channels in terms of audience share. |
| On a 24-hour basis, Star Plus has 21 per cent of the audience against Zee's 4 per cent and Sony's 7 per cent. |
| Besides, television rating points still hover between 8 and 10 for Star's best-rated long running-programmes like "Kahani Ghar Ghar Ki," "Kyunki Saas Bhi Kabhi Bahu Thi" and "Kasauti Zindagi Ki." |
| Not surprisingly, Star's advertising rates are much higher than those of Sony and Zee. A popular prime time show on Star Plus costs Rs 3.5-4 lakh for a 10 second spot compared with Rs 2.10 lakh for Sony's super A category spot. |
| "A little arrogance on the part of Star is valid. After all, nobody delivers TRPs like Star does," says Sulina Menon, head of media buying company Carat India. |
| Observes a former Star executive: "Some channels may also hate it for typecasting the Indian household, long mangalsutras and huge sindoors which many see as retrograde to the status of women in India." |
| But the fact remains that it's still working in the channel's favour, says Menon. Small wonder, then, that of the nearly Rs 1,000 crore in advertising revenue generated by Star, nearly Rs 800 crore is contributed by Star Plus alone. |
| Adds Mohan: "Everybody's just gunning for them. You can't get more Indian than Star Plus." |
| In other words, its success has bred envy "� and Star would do well to keep looking over its shoulders as it moves ahead in the Indian market. |
| Additional reporting by Surajeet Das Gupta |
| Point, counterpoint |
What Star is accused of
|
What Star says
|
Explore Business Standard