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The demonetisation of Rs 500 and Rs 1000 notes will have an adverse impact on ad spend in India until January, 21st Century Fox CEO James Murdoch said.
Murdoch also conceded that its Indian subsidiary Star India will see a dent in the ad revenue of its entertainment business comprising Star Plus, Star Gold and other regional GECs. However, the sports business under Star Sports will manage to tide over the aftereffects of the Indian government’s highly disruptive move.
“India has been very, very strong. I think a little less strong than some outside commentators had thought from a total TV ad market. And this demonetisation thing that’s going on right now, which is where they took out the Rs 500 and Rs 1,000 notes, that’s definitely going to have an impact in the short term. So we look at that for, like, December, maybe January,” Murdoch told analysts.
Murdoch also said that the fast-moving consumer goods (FMCG) companies are going to pull-back on advertising. FMCG is the biggest advertising category in India. “There’s clearly been an impact particularly for a lot of the fast-moving consumer goods where those clients just aren’t moving inventory downstream because so much of the economy–90% of it—is cash-based and has run into a brick wall. So I think that washes out,” he said.
He further stated that sports business will not see any major impact due to big ticket properties including the India–England series.
“It’s really interesting. The sports business in India has not been affected by it all so far. And it’s largely because it’s bigger ticket item, so the category of advertisers there selling scooters and small cars and things like that, and it’s a very different advertiser. So, that looks sound, but our core entertainment business that will definitely—I think the ad market there is clearly going to take a hit over the next month or so. But I think it will come back to the underlying – the fundamentals are so strong. That’s sort of how I would look at it,” he averred.
The 21st Century Fox boss also expressed satisfaction that the India entertainment business is witnessing a two-fold growth—one coming from the Hindi entertainment channels and other from regional entertainment businesses. Murdoch didn’t forget to mention that most of Star’s South India business has come through acquisitions like that of Asianet and Maa TV.
“In a volatile market and in an emerging market, investing is always hard, but actually we’re where we wanted to be. Now, a lot of the growth in that is—I guess the growth is twofold. One is the continued growth of our entertainment business both in the big Star Plus, the largest channel there in Hindi, but more importantly a lot of the acquisitions we’ve made over the last number of years in regional-language networks and really integrating that into the Star network and really improving the quality and keeping the creativity, the creative excellence really high there. That business, the Asianet business, the Maa TV business, the old Vijay TV business and Tamil Movie, etc., has been tremendous,” he noted, Answering a question about Star’s EBITDA target of $500 million in 2018 and $1 billion in 2020, Murdoch had this to say: “Sure. Look, that’s still what we’re signed up for. And so far, we’re exactly on plan, believe it or not.”
He then went on to explain how each vertical within Star India is placed to help achieve that milestone.
“So, from an entertainment perspective, you’re really seeing this incredible growth because it’s not just focused on the big Hindi market; it’s really the whole of India. It’s very, very different economic situations in the South versus the North. There are different states that have very, very different profiles in terms of their advertisers, their filmic history, how they think about content. So being able to really spread that business and be truly national has been a big driver of growth and we think will continue to be,” Murdoch said about the entertainment business.
Elaborating about the sports business, which is the second important piece in Star’s business in India, Murdoch said that the peak investment phase is over and the time has come to reap the benefits.
“Second piece is the sports business. We acquired ESPN’s interest in Star Sports ESPN on a regional basis, really embedded that, the Indian piece, into Star India. And while the peak investment—we made a lot of—a big investment in sports there. But as that investment starts to come good and we’re already through it and the trajectory there, you just get that compounding growth. So, the profitability of the sports business within this period of time sort of layers onto that growth as well as just the total profit,” he added.
The third big piece in the Star India business is the digital business comprising video-on-demand (VoD) service Hotstar. Murdoch said that Hotstar has seen over 100 million downloads and 4 billion minutes of watch time excluding sports. Having built volumes on the Hotstar business, Murdoch said that the monetisation for the platform 3–4 years down the line will be huge.
Murdoch also emphasised that the launch of Reliance Jio’s 4G service has been a big driver of volume growth for Hotstar.
“The emergence of Jio in that new dimension of competition around flat rate data plans is something that I think is going to—means that even Hotstar today, which is, as I mentioned, over 100 million downloads, four unchanged billion minutes, the last time it was up 80% month-on-month, is really just at the very, very beginning of what it’s capable of doing. And that’s really about using content to create a platform that you can then monetise in a variety of ways. So, we’re focused very much on volume there right now, but I think as you see the business grow over the next three or four years, the monetisation of that digital platform will be very high,” he said.
Murdoch expects a flat rate data to become the norm for telecom operators to compete in the marketplace. This, he feels, opens up huge opportunities for Hotstar because it will free people from having to connect to the Wi-Fi at an internet café or at home, and consume more data on the move.
Demonetisation: James Murdoch expects Star’s entertainment biz to take a hit, sports to hold strong | TelevisionPost.com
Murdoch also conceded that its Indian subsidiary Star India will see a dent in the ad revenue of its entertainment business comprising Star Plus, Star Gold and other regional GECs. However, the sports business under Star Sports will manage to tide over the aftereffects of the Indian government’s highly disruptive move.
“India has been very, very strong. I think a little less strong than some outside commentators had thought from a total TV ad market. And this demonetisation thing that’s going on right now, which is where they took out the Rs 500 and Rs 1,000 notes, that’s definitely going to have an impact in the short term. So we look at that for, like, December, maybe January,” Murdoch told analysts.
Murdoch also said that the fast-moving consumer goods (FMCG) companies are going to pull-back on advertising. FMCG is the biggest advertising category in India. “There’s clearly been an impact particularly for a lot of the fast-moving consumer goods where those clients just aren’t moving inventory downstream because so much of the economy–90% of it—is cash-based and has run into a brick wall. So I think that washes out,” he said.
He further stated that sports business will not see any major impact due to big ticket properties including the India–England series.
“It’s really interesting. The sports business in India has not been affected by it all so far. And it’s largely because it’s bigger ticket item, so the category of advertisers there selling scooters and small cars and things like that, and it’s a very different advertiser. So, that looks sound, but our core entertainment business that will definitely—I think the ad market there is clearly going to take a hit over the next month or so. But I think it will come back to the underlying – the fundamentals are so strong. That’s sort of how I would look at it,” he averred.
The 21st Century Fox boss also expressed satisfaction that the India entertainment business is witnessing a two-fold growth—one coming from the Hindi entertainment channels and other from regional entertainment businesses. Murdoch didn’t forget to mention that most of Star’s South India business has come through acquisitions like that of Asianet and Maa TV.
“In a volatile market and in an emerging market, investing is always hard, but actually we’re where we wanted to be. Now, a lot of the growth in that is—I guess the growth is twofold. One is the continued growth of our entertainment business both in the big Star Plus, the largest channel there in Hindi, but more importantly a lot of the acquisitions we’ve made over the last number of years in regional-language networks and really integrating that into the Star network and really improving the quality and keeping the creativity, the creative excellence really high there. That business, the Asianet business, the Maa TV business, the old Vijay TV business and Tamil Movie, etc., has been tremendous,” he noted, Answering a question about Star’s EBITDA target of $500 million in 2018 and $1 billion in 2020, Murdoch had this to say: “Sure. Look, that’s still what we’re signed up for. And so far, we’re exactly on plan, believe it or not.”
He then went on to explain how each vertical within Star India is placed to help achieve that milestone.
“So, from an entertainment perspective, you’re really seeing this incredible growth because it’s not just focused on the big Hindi market; it’s really the whole of India. It’s very, very different economic situations in the South versus the North. There are different states that have very, very different profiles in terms of their advertisers, their filmic history, how they think about content. So being able to really spread that business and be truly national has been a big driver of growth and we think will continue to be,” Murdoch said about the entertainment business.
Elaborating about the sports business, which is the second important piece in Star’s business in India, Murdoch said that the peak investment phase is over and the time has come to reap the benefits.
“Second piece is the sports business. We acquired ESPN’s interest in Star Sports ESPN on a regional basis, really embedded that, the Indian piece, into Star India. And while the peak investment—we made a lot of—a big investment in sports there. But as that investment starts to come good and we’re already through it and the trajectory there, you just get that compounding growth. So, the profitability of the sports business within this period of time sort of layers onto that growth as well as just the total profit,” he added.
The third big piece in the Star India business is the digital business comprising video-on-demand (VoD) service Hotstar. Murdoch said that Hotstar has seen over 100 million downloads and 4 billion minutes of watch time excluding sports. Having built volumes on the Hotstar business, Murdoch said that the monetisation for the platform 3–4 years down the line will be huge.
Murdoch also emphasised that the launch of Reliance Jio’s 4G service has been a big driver of volume growth for Hotstar.
“The emergence of Jio in that new dimension of competition around flat rate data plans is something that I think is going to—means that even Hotstar today, which is, as I mentioned, over 100 million downloads, four unchanged billion minutes, the last time it was up 80% month-on-month, is really just at the very, very beginning of what it’s capable of doing. And that’s really about using content to create a platform that you can then monetise in a variety of ways. So, we’re focused very much on volume there right now, but I think as you see the business grow over the next three or four years, the monetisation of that digital platform will be very high,” he said.
Murdoch expects a flat rate data to become the norm for telecom operators to compete in the marketplace. This, he feels, opens up huge opportunities for Hotstar because it will free people from having to connect to the Wi-Fi at an internet café or at home, and consume more data on the move.
Demonetisation: James Murdoch expects Star’s entertainment biz to take a hit, sports to hold strong | TelevisionPost.com
