Star India CEO Uday Shankar revels in taking risk. He recently won the broadcast rights to India's most expensive sports property, the Indian Premier League (IPL), with his bid of Rs 16,347.5 crore for a five-year period. (Sony earlier had the rights for a 10-year period for Rs 8,200 crore.) Analysts calculate that Star would need to earn Rs 55 crore per match in order to turn a profit. But that is only one of the risks Shankar is taking currently. He plans to bring TED talks for the first time to the television platform and has reportedly contracted to pay Rs 30 crore a week to Shah Rukh Khan to host the show. Around the globe, nobody so far has tried to turn TED into a TV programme, and no one knows whether the format of TED can be adapted to television. Shankar is confident though that it will work out, and there are other things he is betting on as well. He has launched Hotstar, a OTT rival of Netflix and Amazon Prime videos, and he expects that to gain traction over time. He has bet heavily on other sports as well - notably Kabbadi. He is also putting money behind a new, mass media channel called Star Bharat.
Since he was named CEO a decade ago, Shankar has often bet against conventional wisdom. He dropped two long running and highly popular soaps to change programming. He put money behind regional channels when they were still small markets. Those bets paid off and Star became quite profitable, though it has been making big losses for the past couple of years. But Shankar is unfazed and says he is betting for the long term.
I asked Shankar if the old saying that entertainment media flourishes when the economy is down and people are depressed is true. Shankar said that while people might watch more entertainment, advertisers tend to spend less money. So, a down economy is certainly not great for entertainment channels either.
On the topic of the economy, have we hit the bottom as yet, and will the recovery in GDP growth be robust and quick from now on? People arguing for a quick recovery point to the rise in tractor, auto and commercial vehicle sales, the improved IIP and PMI in manufacturing as evidence. They point out that exports have started rising once again, and the GST disruption is likely to be over in another quarter.
I am not too optimistic for a quick recovery, though. We might well have bottomed out as far as economic growth is concerned but private investment is still too low and capacity utilisation is refusing to budge beyond 71 per cent. Unless consumption takes capacity utilisation to over 80 per cent, I fear new greenfield projects will remain scarce. And unless private consumption and private investment both fire together, recovery will be slow.