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Star India on course to meet $500-mn EBITDA target by 2018, says 21st Century Fox CFO

MUMBAI: Star India, the crown jewel in the international business of Rupert Murdoch’s 21st Century Fox, is right on target to achieve operating profit (EBITDA) of $500 million by 2018.

Speaking at the 2015 Media, Communications & Entertainment Conference in Beverly Hills, California, 21st Century Fox chief financial officer John Nallen said that he is confident of Star India reaching the EBITDA target the company has set for 2018.

John-Nallen1“It is coming from two factors—one is the continued growth from the entertainment business, which is the hallmark of the Star business. We get 23–24 per cent market share every night. It’s the market that’s growing. In the last six months, the TV ad market grew 21 per cent. We over-indexed the cause of our strength,” Nallen said.

He emphasised that the company owns the IP rights to all the content. “All our products are local. We produce them, we own them, and they feed into the digital platform Hotstar.”

Regarding the second factor, i.e. the sports business, he said that the company does not need more investments in sports. “There is not massive or new or incremental investment we need for Star. This year, we grew the investments because we extended one of the sports franchises that we started, local kabaddi sport that has turned into a phenomenon in India.”

“The big investment cycle is behind us. In the years going forward, we have lumpy years because World Cup cricket is being sort of like World Cup football. But it won’t interfere with us hitting our target. We feel pretty good about it,” he added.

Star’s investment in Pro Kabaddi League (PKL) is pegged at Rs 300 crore (Rs 3 billion), with the inaugural edition last year absorbing Rs 150 crore (Rs 1.5 billion).

The company has completed the acquisition of Maa TV and also got out of the Champions League T20. “All of these are getting us closer to our fiscal targets,” he added. “Our biggest sports investment has been in Star India, where we launched six sports channels to be a national sports programming platform about two years ago. We had an enormous viewing success with that product.”

According to Nallen, India is clearly poised to lead 21st Century Fox’s international growth. “One of the top priorities uniquely for us is international. We’ve got a particular focus on growth outside the US. We continue to harness the assets we have in Star, FIC (Fox International Channels) and in Sky but we continue to be opportunistic to the extent we can outside the US.”

Earlier in May, Star India CEO Uday Shankar had said that by FY18 Star India should be able to deliver EBITDA in excess of $500 million and, by the turn of the decade, an EBITDA of $1 billion.

Recently, global financial services firm Morgan Stanley pegged Star India’s value at $11.2 billion. According to the report, Star contributed 11.3 per cent to the overall fair market value of 21st Century Fox.

As of June 2015, Star’s earnings from the entertainment business was at $300 million.

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