Star to lose Rs 100 crore HLL ad deal

Broadcaster Star India stands to lose Rs 100 crore following the decision of India's largest advertiser Hindustan Lever (HLL) to pull its advertising off the Star network.

Talks were going on between HLL and Star for the past seven weeks to lower ad rates post the conditional access system (CAS) roll out in Mumbai, Delhi and Kolkata since January.

HLL was believed to be demanding a 35 per cent discount on the existing ad rates, while Star was not budging beyond 25 per cent, said sources close to the development.

Consequently, HLL has stopped advertising on the Star network.

Both HLL and Star India refused to comment on the matter. However, Paritosh Joshi, president-ad sales and distribution, Star India said, "As broadcasters, we expect fair value for our inventory which must reflect the growing audience size."

HLL is among the biggest advertisers on Star, buying about 20 per cent of the channels inventory. Star's annual ad time is about 1750 hours.

HLL is said to spend around Rs 300-350 crore on television advertising annually, out of which Rs 100 crore goes to Star.

According to media buyers, one of the main reasons why advertisers are demanding discounted ad rates is the drop in channel viewership after CAS was made mandatory. Star India has witnessed 1-1.5 per cent dip in the overall viewership post the CAS rollout.

About 60-65 per cent of a channel's total advertising comes from the fast moving consumer goods companies, while newer businesses such as telecom, travel and tourism, insurance and mutual funds contribute a third of it.

Meanwhile, the industry experts are trying to move away from a cost per rating point (CPRP) system to a cost per thousand (CPT) system. This would link ad rates with the actual household reach of the channel as opposed to how the show fares in terms of ratings.