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November 28, 2005 10:02 pm

Critical time as competition intensifies

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Much of the media world might be ruminating over the eventual future of News Corporation without Rupert Murdoch, but not Michelle Guthrie.

Within days of Mr Murdoch giving what was widely seen as a valedictory interview to the UK?s Press Gazette in which he provided corporate obituarists with a handy aide-m?moire of his?lifetime?s achievements, many senior lieutenants might have been distracted by the excitement over his succession.

Not the chief executive of Star TV, however, who insists she and her team have kept their noses firmly to the grindstone.

?No company, including Star, is so dependent on one person,? Ms Guthrie says, maintaining that the external frenzy over whether Mr Murdoch is succeeded by Peter Chernin, chief operating officer, or by his son James, whom she followed at the helm of Star in 2003, is of no more than passing interest to top executives.

?I?ve been at News Corp for a long time. What all of the management team really concentrate on is the operating business and they don?t get too distracted by what?s getting said in the papers because most of it is absolute speculation,? she says.

Ms Guthrie, 40, arguably the most senior woman in the News Corp group of companies, has one of the more complex jobs in the media industry ? delivering entertainment, news and sports shows to viewers in 58 countries over a wide variety of platforms and within hugely diverse regulatory frameworks.

The business is driven by Star in India, which produces the 65 most-watched programmes on Indian TV and reaches about 40m of the 61m homes with access to cable TV. Out of India?s 200m households, about half have TVs.

It is a critical time for Star in its biggest market, as new entrants rush to provide advertising vehicles for businesses keen to reach the expanding Indian middle class.

Ms Guthrie says Star has yet to suffer from significant audience fragmentation, but competition is intensifying.

Operating profits fell in the quarter to September 30, despite revenue growth of 22 per cent, because of higher programme costs relating to the launch of new channels.

?Although there are a lot of channels that have launched recently, particularly news channels, I feel that there?s plenty of room for growth in terms of the market,? she says.

?We?re certainly finding that for Star Plus and Star One [its two main channels], the audiences we?re attracting are still very strong and we?re not seeing any significant fragmentation of those mass audiences.

?In a way, [it is] as fragmentation happens, which in the long-term is inevitable, that mass audiences become more valuable because they?re much more rare.?

Next year, Star, in a 20-80 joint venture with Tata, will make a big pitch for new viewers with the launch of a direct-to-home digital satellite service.

This will allow subscribers to choose which programmes they receive, rather than taking whatever is bundled by a cable operator, and enable Star to tell exactly how many subscribers it has.

?At the moment, some are paying, some aren?t. That?s the complication,? she says. ?Today, because there?s no addressability in the home, frankly a lot of the cable operators don?t know how many subscribers they have, let alone tell us the true numbers. That?s going to be the huge advantage of the DTH system.?

Star has yet to announce any targets for the new DTH service, but Ms Guthrie says it should enjoy the same growth as India?s mobile telephone market.

There are about 55m mobile subscribers in India today, but with over 2m signing up each month and rising, analysts predict that could reach 300m by 2009.?

?DTH will really revolutionise the customer experience,? she says. ?We?ll bring electronic programme guides and interactive sports and news, the best of what?s available worldwide. The intention is not to have this as a premium service, but as a mass market service.?

India has given Star plenty of lessons to apply to China, not least in the experience of managing a ?pretty arbitrary set of rules governing foreign investment?.

At a time when technological boundaries are blurring, New Delhi allows foreign ownership of telecoms up to 74 per cent, of cable up to 49 per cent and of DTH up to 20 per cent.

Different rules apply to content producers, with 100 per cent foreign ownership permitted for entertainment and 26 per cent for news.

?That level of inconsistency is pretty glaring,? she says. ?Indian regulators are doing a lot of things that ultimately are best left to the market.?

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