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Zee: Life after Star, and vice-versa - Views on News from Equitymaster
 
 
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  • Oct 1, 1999

    Zee: Life after Star, and vice-versa

    With the parting of ways of satellite Television (TV) majors, Zee and Star, the Indian electronic media is getting ready for a massive change of scene.

    Background:
    Both TV networks had nursed plans to enter each other's territory, but could not do so because of their partnership clause, which prevented them from competing with each other. So, while Star continued with English programming, Zee continued to dish out Hindi and other regional language programs.

    Star's losses continued to mount while Zee continued to post impressive gains. This led Star to subtly break the agreement with Zee. It roped in ex-Doordarshan (government controlled TV network) chief, Rathikant Basu, to slowly change the content of its channels from English to Hindi. So Star Plus and Channel V became predominantly Hindi channels, catering to the same viewers as Zee. Zee took Star to court over violation of the non-competing clause. This was the real issue that affected the Zee-Star marriage, finally ending in a divorce.

    The Plans:
    After the parting, both networks have announced plans to enter into each other's language zones. Zee has plans to introduce 3 new channels in English, including a news channel, which will directly compete with partner-turned-competitor Star News. On the other hand, Star TV is all set to launch a Hindi film channel that will compete directly with Zee Cinema. It has also planned investments to the tune of Rs 1 bn annually, for producing and marketing of Hindi films. It intends to widen its base from being a mere broadcaster to content-provider for its Hindi channels.

    The Future:
    Let's look at how these new strategies will affect both the networks.

    For Zee, it will mean broadening of its viewer base. Zee has a massive reach covering 200 m viewers across the globe. The English programming foray, will be promoted on its already popular channels, and will increase the number of channels that it can offer. This will help it develop its pay-per-view Direct-To-Home (DTH) plans. With Asia Today in its kitty, Zee has presence in Europe, USA and Africa. The English programs will give Asia Today operations a fillip.

    But the going will not be easy. For one, Zee, unlike Star does not have the experience in churning out English programs. Secondly, the network is trying to cater to too many viewer languages at the same time. It is already hosting Marathi and Bengali channels. Plans are also afoot to launch a Punjabi channel by the year-end. In all this melee, the network might loose out on its identity as the No. 1 private Hindi network, especially with Sony TV breathing down its neck. Sony, which entered the scene much later than Star and Zee, has reportedly broken even and has eaten into Zee's viewership. So it remains to be seen how Zee will survive unscathed.

    For Star also, it will be a whole new ball game. Known as a predominantly English channel, this identity will be hard to break. Its only Hindi foray till now has been Star Plus, which has not been able to garner enough viewership. Secondly, Star's plans to churn out a Hindi movie channel will prove very costly.

    Zee's Hindi movie library already contains 2,500 movie titles. Star's only real hope of giving Zee a fight is through its original film productions. Lots of the movies, which Zee owns, are old and have lost their repeat value. If Star is able to offer original programs and movies, it can form its own niche of viewers. Only then can Rupert Murdoch hope to reap profits from its Indian operations.

    So keep watching the segment!

     

     

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