“Will that buy a house?” Rupert Murdoch asked the top brass at Star Plus, during a powerpoint presentation of the Indian version of Who wants to be a millionaire?
“Will that buy a house?” Rupert Murdoch asked the top brass at Star Plus, during a powerpoint presentation of the Indian version of Who wants to be a millionaire?
The year was 2000 and Murdoch was in Mumbai. The presentation was on a new reality game show to be anchored by Amitabh Bachchan, which eventually scripted the great turnaround in the fortunes of Star Plus, Murdoch’s flagship channel in India, and also of Amitabh Bachchan.
The poser from Murdoch came out of the blue. The Indian management had budgeted a few lakhs as the top prize for the show, a person involved closely with its programming told DNA. Sensing their discomfiture, Murdoch explained what was troubling him: “Will the prize be enough to buy a house in the vicinity?” As always, he was thinking big. “It has to be really big, if it is to succeed,” Murdoch told them. That’s how the show became Kaun Banega Crorepati? and the rest is history.
Riding piggy back on KBC, Star Plus launched several serials, enabling News Corp’s Indian operations to become very profitable. Numbers are difficult to come by, as Murdoch’s Indian companies are private limited companies, but the revenues estimated from India range from $600 million to $1 billion.
“When you have been in business as long as we have, you are no stranger to adversity or to instability. We hedge against uncertainty by investing in diversified assets,” wrote Murdoch in a recent annual letter to News Corp shareholders, and this will be a key strategy going forward as he battles the controversies and plateauing market dogging him in Europe and the US. India, in contrast, offers him a pure growth opportunity. Consultancy firm Deloitte’s report, Technology, Media & Telecommunications Predictions 2011, estimates that ad spends on TV will grow at 12-14%.
The jewel in Murdoch’s crown is Star India, but he has two challenges that he shares with his main rival in India, Subhash Chandra’s Zee Entertainment: A burgeoning market that spawns channels by the hundreds and piracy at the distribution end. The profusion of television channels has seen negotiating power shift to buyers of advertisement space. This has prompted Star India to combine with arch rivals, and give the fragmented and often fractious industry some negotiating power.
In May this year, Zee Entertainment Enterprises and Star India joined hands to distribute their television channels in the domestic market. The joint venture, Media Pro Enterprise India, will initially distribute 68 channels, largely paid channels.
“The rivalry between Star and Zee has cost the industry close to $10 billion,” Punit Goenka, managing director and chief executive of Zee Enterprises and the main brain behind the landmark deal said at that time. The two entities between them address almost 80% of the target market.
In the US market, Murdoch built a chain of television stations, bought Twentieth Century Fox and got into the movie and content business. In India, the strategy is the same. Having started with broadcasting through a joint venture partner (ZEE group), it has co-invested in the distribution space through direct-to-home (DTH), and got into content production through Fox Star Studios, making sure it has a hand in every part of the value chain.
Online could be another opportunity in the future. Already, the Indian edition of The Wall Street Journal is available online through subscription. Jehil Thakkar, an analyst with KPMG, speculates that eventually they would bring an Indian edition of the online publication called The Daily.
Murdoch is in India for the long term. He has done his homework well. In the late nineties, he once visited Dhirubhai Ambani, chairman of Reliance Industries, at his headquarters in Maker Chambers IV. Quizzed on the people the media tycoon met in New Delhi, who were senior ministers and bureaucrats, Ambani reportedly chided the media tycoon for meeting only the “right people.” It would be of no use to his then fledgling media empire in India. Instead, he famously told Murdoch: “You should have used the opportunity to meet up with all the “wrong people” (read the power brokers) in India’s capital.” Arun Shourie, who happened to be waiting outside for his turn to meet Ambani, recounted this episode.
A recent sojourn to India saw Murdoch meeting young parliamentarians. It remains to be seen, however, if the Indian government will respond to these overtures. The government has to decide if it will allow Indian media to be controlled by somebody who does not have equity in India.
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