BY the end of January next year, it'll be a transformed Star—a leaner but not necessarily meaner outfit—that will be visible in India. Plagued by mounting operational losses, continuing governmental hostility and debilitating delays in expansion plans, Star TV, Rupert Murdoch's Asian network, is going in for significant structural changes aimed at putting itself back on the track. Quite clearly, these moves are a response to the troubles the network has faced in India in recent months as a result of the notification temporarily banning DTH transmission and the concerted bureaucratic offensive on Rathikant Basu, Star TV India's chief executive officer.
Star is abandoning neither DTH nor Basu. "Early next year, we'll digitally encrypt all our channels and beam them from C-band transponders on Asiasat-3. The ban's on Ku-band signals, not on C-band transmission," announces Star TV's chief executive Gary Davey, who was in India last week with a host of senior network and NewsCorp officials for talks with I&B minister S. Jaipal Reddy and cabinet secretary T.S.R. Subramaniam. The parleys, he reveals, were cordial. "We've no reason to believe the Indian government is still out to get Star TV."
In another significant development, Murdoch held a crucial meeting with Zee chairman Subhash Chandra in early October and reportedly decided to divest 20 per cent of their 50:50 stake in the Hong Kong-based joint venture Asia Today Limited and place the shares on the New York Stock Exchange. While Davey isn't willing to divulge the exact quantum of equity to be divested, Zee TV sources are not yet sure any such thing's actually going to happen. But if it does, Star's cash flow is bound to improve.
The mood's clearly changing in Star's Indian establishment. Basu seems to have weathered the storm of the past few months pretty well and the network's relationship with the government is on the mend. "There's no question about it: we'll abide by the laws of the land. We've always done so," says Davey. Basu, too, dismisses the suggestion that the ruling establishment hasn't yet shed its hostility towards Star. "When I made my presentation before the JPC on the Broadcast Bill, the members never gave the impression they were unfavourably disposed towards us," he says.
But Star's problems are far from over. Differences with strategic partner Zee TV persist despite Davey's assertions to the contrary. "The Star-Zee relationship has survived for four years. In any relationship, differences are bound to arise occasionally," he reminds sceptics. But Zee sources pooh-pooh Star's plans to go digital on a new satellite,Asiasat-3. "Asiasat-1 will be operational till the end of the century. There's no reason to abandon ship now," they say. While Star's decided to 'rest' Asiasat-1, Zee's adamant about continuing in the analogue mode.
Star's digital plans have been prompted by doubts about the Broadcast Bill being notified as early as Jaipal Reddy envisages. "The Prasar Bharati Bill was in the deep freeze for seven years. Who knows how long the Broadcast Bill will take?" says Davey. The feeling among Star TV bosses is that Indian Sky Broadcasting, their DTH platform, will take some while before it gets off the ground because the JPC, scheduled to meet on November 17 and 18 to finalise its recommendations, has yet to reach a workable consensus. Hence the move to go digital within the next few months.
Basu points out that TV viewers will have to pay nothing extra to access digital channels. "We'll give decoder boxes to cable operators free of cost," he says. "Moreover, they will not have to change the direction of their dishes as Asiasat-3 will be parked in the same slot as Asiasat-1." According to Davey, encrypted signals will not only mean better pictures, they'll also cut down operation costs as a single transponder can then beam at least four channels.
Mounting costs are obviously the main worry. Although ad revenue from Star Plus alone shot up by 195 per cent since the channel Indianised itself in October '96, the huge investment on the ambitious DTH project—Rs 80 crore in the first year—is draining Star TV's resources. Davey and Basu are thus under pressure to deliver. "I don't see these as losses but as investments," says Davey.
But investments that don't yield profits can't be sustained forever. So Star TV is going out of its way to knock over the obstacles that have slowed down its progress of late: improve its relationship with the government, mollify an intransigent partner, open up new profit avenues and scrap many shows to tide over the worsening cash crunch. "We expect to break even by the end of the '98-99 fiscal year," says Basu. Misplaced optimism? Not if you are inclined to believe what Star foretells.