But the acquisition paid off because regional drives more than 40 per cent of the profitability at Star," points out Vivek Couto, executive director, Media Partners Asia, a Hong Kong-based consulting firm. "When Star bought Asianet, it paid a lot. "The only external factor to influence our decision is the change in sentiment that the new government has brought," says Shankar. While the Asianet acquisition happened soon after, in 2008, other investments got held back as the global economy slowed and the India sentiment weakened.
He points out that sports and regional markets were the two big growth planks he pitched for when he joined Star as CEO in 2007. In all the four (southern) states we now have a significant share.
It (Andhra Pradesh) was a key market that had always been on our radar. Uday Shankar, CEO, Star India, dismisses the Star versus Sun argument: "The competitive landscape was not a factor that played out in our decision. Except for Tamil Nadu, where Sun TV is still the leader, Star India has a strong regional portfolio with leading or number two positions in Marathi, Bangla, Telugu, Kannada and Malayalam. In the last quarter of 2014, Maa TV overtook Sun's Gemini TV to become the leader in the Telugu-speaking state. In Andhra Pradesh, Maa TV has been on the rise for more than two years now. It has used Suvarna to wrest market share from Sun TV's Udaya in Karnataka. The acquisition gave Star India, among other channels, the Kannada language Suvarna. In Kerala, Star India dominates the market with Asianet, a network it bought in 2008 at about the same price as Maa TV. In state after state in south India, the Rs 2,176-crore Sun Network is losing ground. From over 16 per cent in 2008, the Sun network's audience share, defined as a percentage of time Indians spend watching TV, has fallen by half. Sun's ad revenues are under pressure, say analysts. The deal gives the Indian subsidiary of Rupert Murdoch's $32-billion 21st Century Fox a huge leverage in its bid for the southern market just when Kalanithi Maran's Sun Network, by far the biggest player in the region, is at its weakest. So why bother?Ī partial explanation is that perhaps there couldn't be a better time for Star to go for the jugular. For a company that generated revenue of Rs 7,200 crore in 2013-14 and is on course to garner Rs 9,100 crore this financial year, the revenue boost from Maa appears rather small. Assuming it goes through, the deal adds an estimated Rs 300 crore to Star India's top line and about Rs 100 crore to its bottom line. The 100 per cent buyout is subject to performance targets set for March 2015. The money will go to N Prasad, Chiranjeevi, A Nagarjuna Rao and other co-promoters of Maa TV. Last week, Star India announced its plans to acquire Hyderabad-based Maa Television Network and its four channels in a deal valued at Rs 2,400 crore.
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