The break has finally come. With Subhash Chandra's Zee Telefilms acquiring Rupert Murdoch's 50 per cent stake in broadcasting firm, Asia Today Limited, distribution outfit Siticable and software firm Patco for $296.51 million, the erstwhile partners are set to go their own way as competitors this time.
With its bouquet of five channels, Star, as one media analyst points, could be perceived as the only network that could threaten Zee, which has four channels apart from its regional channels. Yet, it will be a while before that translates into ground reality. True, all attention is turned towards the flagship channel, Star Plus, today. Free from restrictions on being a competitor, the Star network is reportedly considering turning Star Plus into a full-fledged Hindi channel. After all, over the last two years, Star Plus's indigenisation has been a matter of dispute between Zee and Star.
For Star, this indigenisation has, to some extent, helped in increase viewership. According to industry sources, Star Plus's share of viewership has gone up from two per cent in March 1998 to four per cent in March 1999. It's still way behind Zee TV though, whose viewership share was 16 per cent for both periods. Sony Entertainment Television (SET)'s share rose from nine per cent in March 1998 to 11 per cent in March 1999. Star Plus and SET together have inched up from an 11 per cent share to 15 per cent against Zee TV's 16 per cent.
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The gains may not have come at the cost of Zee TV, the mother channel, but the flanking channels, Zee Cinema, Zee News and Music Asia have conceded share. For in terms of the viewership across networks, the Zee network's share fell from 28.7 per cent in March 1998 to 24.4 per cent in March 1999. For the Star network, the share has risen from seven per cent to nine per cent.
Yet, the gains didn't exactly come cheap. Star Plus has, over the last year, used blockbuster movie acquisitions like Satya to attract viewership. Such satellite movie rights reportedly cost Rs 1 to 2 crore.
Also, while movies may provide an upward blip in ratings, that rise needs to be sustained through other programming. Star is reportedly planning to enter the high-risk, high-reward film production business in India, which could offer it content, but again, this will entail huge investments.
Points one analyst, "Unlike Zee, which has an in-house software development division, Star primarily outsources software, which is more expensive." Adds Vijay Baoney, investment analyst, Jardine Fleming India Broking, "To be viable, you need a sustainable stream of viewership. On that count, Zee and Sony have an advantage over Star Plus. It will take a very long time for Star Plus to be a serious Hindi channel player."
Moreover, should Star Plus go completely Hindi, is there room for another mainstream Hindi entertainment channel? Ask Chandra that, and he returns a categorical, "I don't think so."
Others feel there could be room for three channels. The point then will be how many consumers can each channel reach profitably. Star Plus has already mounted up huge losses in India albeit, it will reportedly use the money from the ATL sale to write these off now.
In any case, as another industry veteran points, changing a satellite channel's identity is tricky business. He says, "Launching a satellite channel is almost the same as launching a soft drink. Once you've tasted a soft drink, if you don't like it, it takes a long time for you to give it another try. Similarly, it's very difficult to break people's viewing habits."
Adds another analyst, "Star's biggest mistake was to convert Star Plus into a Hindi channel since it is neither identified as a mass-based Hindi nor as an English channel today. They're still trying to make the transition." Whether it succeeds, remains to be seen.