Mediaah!: So what let to the Star-ABP split? Will Star start a new news channel?

17 Apr,2012

By Pradyuman Maheshwari

 

In many ways, Mediaah! owes its existence to the controversies around Star. Many moons ago – in July 2003 to be precise – the network was facing rough weather from rival interests on the issue of foreign equity in some of its ventures – especially news and radio. Most pro-FDI media entities were muted in their response, and realising that it was necessary to have an independent and active media observatory, I set up Mediaah!.

 

Given the pains that both parties went through to get together in their early days, it’s sad to learn of Star withdrawing its branding from its news channels managed by MCCS, an joint venture with the Ananda Bazar Patrika (ABP) group. No, Rupert Murdoch hasn’t exited the Indian news TV business. Star will continue to be a 26 percent partner in MCCS, but the only difference is that the channels will no longer be prefixed Star, but ABP. So: ABP News, ABP Ananda and ABP Majha.

 

Before the Kolkata-based Ananda Bazar Patrika turned majority (74 percent) shareholder (in September 2003), there was a time when the Star News was part-owned by folks like Kumarmangalam Birla, Vir Sanghvi and Suhel Seth.

 

So what led to this divorce? The reason that a Star India communiqué says is:

“Given the current regulatory environment and structural issues ailing the Indian cable and satellite television market and the news genre in particular, Star took this extremely difficult decision to withdraw its brand from the genre. Star, ABP and MCCS sustained this affiliation for a lengthy period of 8 years and Star is grateful to its partners, ABP and MCCS for acting as guardians for the Star brand during this period.”

 

The communiqué adds that this was “one of the steps proposed to be taken by Star in its endeavour to refocus and re-energize the core strength of its business viz. general entertainment channels”.  Note the choice of words in this carefully drafted statement. Announcements of this nature have been subjected to various checks, so you’ve got to read between the lines.

 

Hence it’s possible that Star might withdraw entirely from the venture. But what’s this bit about re-energizing the core strength of its business – GECS… Star recently exited Hathway, a cable TV company where it had minority stake. Could it therefore also move out of Tata Sky?

 

Meanwhile,  given the regulator environment cited for withdrawl, does it mean that Star will not return to the genre? Also, there has been no change in the regulatory framework in the last 8 years… why this shift in thinking now?

 

My questions to Star India have not been answered, but from I understand, yes, the restriction on ownership is the real reason. Star, my sources tell me, wanted greater control of the network (which is impossible with minority control). Since it already handled distribution, it also wanted to look at other non-editorial operations – specifically sales. Star now leads the sales effort for NDTV.

 

Even on content, Star wanted some say. As the channels bear the Star branding, there have reportedly been occasions when the GECs have lost business due to what’s aired on Star News. Since the Star brand is well-known, the network’s top brass would often be at the receiving end from governments and private corporations.

 

The problems have been simmering for a bit. Star was apparently unhappy that ABP launched a Bengali GEC to counter its own Jalsha and ABP in turn was said to be upset when Star chose to handle sales for NDTV. MCCS insiders also tell me that these differences were cramping their work and impacting the company’s desire to grow.

 

“It was an ego battle,” a senior manager told me adding that I shouldn’t be surprised if Star were to come up with a rival channel a year from now. There could be issues on that score though. There is apparently an 18-month cooling off, no-compete period. But, of course, the new channel needn’t be christened Star News. Also, Star India is said to have served the notice on ABP in January this year, so 18 months is just a year away.

 

Remember, Star India CEO Uday Shankar was CEO of MCCS, a role that he took on after many years as a journalist and editor, and from he has told me in the past that he isn’t happy with the way Hindi news channels were doing (in content) and wouldn’t mind going in for a news channel if and when possible.

 

So what next?

MCCS staff is happy to be part of the ABP group, known for its progressive outlook and emphasis on quality deliveries. Not that Star isn’t that, but the ABP group is known to be a fair employer. What they are worried about is the immense challenge that Star News will face with the rechristening. In fact, given that it’s been doing rather well in the TAM ratings roster, this development is a blow. Even MCCS CEO Ashok Venkatramani, in his interview to MxMIndia, concedes that while Majha and Ananda were popular prefixes, the new identity for Star News will be a challenge.

 

The ABP News logo is ready was unveiled to the staff, with an advisory that it should not be leaked out. Bossman Aveek Sarkar is said to be keen that the switchover happens even before May 31.

 

My own sense is that Star India will eventually get out of the jv entirely. MCCS is now profit-making and it aggregated sales of around Rs 300 crore in the last fiscal. Private equity players may invest in the enterprise but will be a little wary of how much the Star exit from the brand will take away from the company’s shine?

 

The brands may take some to regain their shine, but the one thing that is certain to grow at the all-new ABP News channels will be quality journalism. That much one has to grant the Sarkars.

As for Star, remember Rupert Murdoch is essentially a newswallah. So’s Uday Shankar.

 

Buzz me if you have a story to tell. Confidentiality assured. There are various ways you can reach me:

pradyumanm[at]mxmindia.com, BBM 23050B5D, Gtalk pradyumanm@gmail.com, Twitter @pmahesh and of course the mobile: 98338 76278.

 

Disclaimer: Although he is CEO and Editor-in-Chief of this site, Pradyuman Maheshwari’s views in Mediaah! are not necessarily those of the rest of the team and MxMIndia.com. And decidedly not those of the sales team 🙂

 

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