Has Star India rationalised ad rates to fill its IPL inventory?

Barely a week ago, there was news of Star India managing to rope in 32 advertisers and Rs 800 crore advertising revenue for the Indian Premier League. There were also murmurs that convincing advertisers to shell out 20%-25% premium over last year has been a herculean task for the broadcaster. But the broadcaster has already managed to rope in as many as 80 advertisers and is on its way to garnering advertising revenue worth Rs 1,600 crore even before the tournament commences on April 7. Last year Sony Pictures had garnered Rs 1,300 crore from IPL.

While media professionals credit the sales team for garnering Rs 1,600 crore advertising revenue, they also believe that Star India is under terrible pressure and could have rationalised its ad rates in a desperate move to fill its inventory. The broadcaster needs to make at least Rs 2,200 crore this year in order to be able to breakeven in year three. The desperation also came to the surface during their recent spat with DTH companies when Star coaxed them to pay 20% higher for its high-definition channels.

In fact, when DTH operator, Airtel, ran a ticker message saying that Star Network had increased tariffs on its channels which would result in prices of HD packs shooting up to as high as Rs 1,000 from the current Rs 200 and that it would temporarily disconnect the Star channels, the broadcaster reverted with #MakeTheSwitch campaign, wherein it asked consumers to switch to another service provider. Even other cable operators and DTH providers were unhappy with the sudden hike in pricing. "On the face of it Star seems to be arm-twisting distributors, but in reality, the broadcaster is under tremendous pressure to garner revenues," points out a senior media professional.  

The broadcaster is well-known for its premiuimisation strategy. When it first started doing bulk satellite rights deals with actors such as Salman Khan and Ajay Devgan, it sold inventory at an all-time high rate of Rs 6-Rs 7 lakh for a 10-second ad, when the industry norm was Rs 3-Rs 4 lakh for a 10-second ad. "For the first few films it couldn't fill up its inventory, but Star didn't budge and eventually the premium rates became industry norm," remembers a senior media planner. Star India is trying its best with IPL too. It is going to live-cast the matches in Telugu, Tamil, Kannada and Bengali.

But creating a similar magic without buckling to pressure of rationalising its ad rates looks doubtful as of now. The broadcaster certainly can't afford to rationalise its pricing, else it will lose its upper hand. But having said that Star India head honcho Uday Shankar and his team are well known for their out of the box strategies.