The Failure of Zee's Sawaal Dus Crore KA



Themes: ---
Period : 1991-2001
Organization : Zee TV, Star TV
Pub Date : 2001
Countries : India
Industry : Media and Entertainment

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Case Code : BSTR004
Case Length : 9 Pages
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The Failure of Zee's Sawaal Dus Crore KA | Case Study

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The Background

Zee TV, a Hindi television channel from Zee Telefilms Ltd. (ZTL) was launched in October 1993. ZTL was originally incorporated as Empire Holdings Limited in 1982. The company dealt mainly in leasing, hire purchase and other financial services until 1992, when the company was reincorporated after its memorandum of association was modified to include new businesses. The company was then re-christened ZTL. In the 1990s, the Government did not allow private channels to uplink from India.

Therefore, Subhash Chandra, CEO, ZTL, co-promoted Asia Today Limited (ATL) with a capital base of $ 11 million, contributed by a consortium of NRIs. ATL was incorporated in Hong Kong to broadcast ZTL's channels. ZTL's channels included Zee TV, Zee Music, Zee English, Zee MGM, Zee News, ZED TV, Zee Cinema, Siticable and the Alpha range of regional language channels. Launched in December 1991, Star Plus was the fifth channel from the STAR TV Network.

STAR, a wholly owned subsidiary of News Corporation6, was Asia's leading multi-platform content and service provider. STAR TV channels included Star Chinese Channel, Phoenix Chinese Channel, Star Plus, Star World, Channel [V], ESPN, Star Sports, Star Movies, Star GOLD, Phoenix Movies, VIVA Cinema and Star News, in addition to distributed channels Fox News, Sky News and National Geographic Channel. In July 1993, News Corp acquired 63.6% stake in Star, and a further 36.4% stake in February 1995. In January 1994, News Corp entered into a strategic alliance with Zee and bought a 49.9% stake in ATL.

This alliance agreement limited Hindi programs on STAR to a maximum of 50% of its total program time. Similarly, Zee was to limit its English programs to 50% in its channels. In 1999, Zee bought News Corp's stake in ATL, Siticable and Program Asia Trading Co. (Patco) for a consideration of Rs 1.26 billion, making the three companies wholly owned subsidiaries of ZTL. In February 2001, STAR TV was re-christened to STAR.

The Star Offensive - KBC

When Star Plus was launched, it offered drama, comedy, talk shows, documentaries and mystery movies solely in English. However, the channel failed to become as popular as the channels offering programs in Hindi. Star realized that it was handicapped by its image of being a foreign channel catering only to the cosmopolitan English speaking population. To increase its presence in the Indian market Star began a daily two-hour Hindi program band. Star Plus' move to 'go Indian' met with a mixed response from the viewers.

While fans of the earlier programming mix lashed out strongly against the channel, the media described this as Star's desperate attempt to garner viewership. Though initially the move was criticized, Star Plus' smart and consumer oriented programming (a mix of soaps and Bollywood based programs) won over the viewers. Soon, Star Plus and Zee TV emerged as the hottest contenders for the Indian satellite television market leadership.

Rivalry between the two channels on the TRP and ad revenue fronts became a routine feature in the media. Zee TV's programs consistently fared well in the TRP ratings war. According to Indian Market Research Bureau (IMRB) Peoplemeter ratings, in August 1998, even Star's popular programs such as The News, Tu Tu Main Main and Saans had taken a beating from Zee's top 10 programs like Amanat and Hum Paanch.

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6] News Corporation Limited was one of the world's largest media companies with total assets of approximately $ 38 billion (December 2000 figures) and total annual revenues of approximately $ 14 billion. News Corporation's diversified global operations in the United States, Canada, Continental Europe, Australia, Latin America and the Pacific Basin included production and distribution of motion pictures and television programming; television, satellite and cable broadcasting; publication of newspapers, magazines and books; production and distribution of promotional and advertising products and services; development of digital broadcasting; the development of conditional access and subscriber management systems; and creation and distribution of popular on-line programming.