MURDOCH RUNS INTO TOUGH CUSTOMERS
ERIC ELLIS' INDIA

02/11/1994

If Mr Rupert Murdoch wants to turn Star TV into a pay-to-air operator in India, he's going to have to talk to people like Mr Kusruh Khan, whose last job was pumping petrol in New York City.
The heavily bejewelled Mr Khan, who, his competitors claim, is a bigamist and diamond-smuggler, is one of India's estimated 100,000 "cable-wallahs" -rooftop entrepreneurs whom Mr Murdoch has unwittingly helped enrich by having his TV signals pirated and cabled around the Bombay neighbourhoods.

Networks like Mr Khan's, operating from a four-square-metre shack on the roof of a Bombay tenement, pose the biggest challenge, and headache, to foreign broadcasters such as Star who hope to tap the much-hyped potential of Asian television.
As China bans private satellite dishes in a move seemingly directed at Star, Mr Murdoch has pragmatically turned his attention to India, where Star says it has 30 million viewers.

He is in India this week for a first-hand look, visiting the reformist Prime Minister, Mr Rao, his newly-acquired ZEE TV, and cable-wallahs like Mr Khan, who guide Star's destiny on the sub-continent.

But Mr Khan has absolutely no intention of paying for the Star signals he gets beamed to his lean-to "command centre". Moreover, he has plans to expand his own advertising, which he slots into Star's advertising breaks.

All of which increasingly makes the $US525 million ($730 million) News Corporation paid for the profitless Star TV look like a better deal for the seller, Hong Kong's richest man, Mr Li Ka-Shing.

But to be fair to Mr Murdoch, it's not just his signals that are being lifted in India.

Visiting two cable-wallahs last week, The Australian Financial Review was able to track skater Tonya Harding's travails on Mr Ted Turner's Cable News Network and applaud Mark Waugh's heroics against South Africa on reception lifted from Mr Kerry Packer's Nine Network.

"The day Jurassic Park opened in the United States, it was playing here on the networks through a pirated video. It is impossible to beat them," says Mr Lalit Mody, a scion of one of India's big business families who have teamed with the Disney group to tackle the fast-expanding Indian market.

The beauty of the Khan operation, and the scores like it, is its simplicity. One wall of the tiny ops room is coated with videos, which tape the 12 channels which Mr Khan's three dishes on the roof outside are picking up.

A giant cable spool nearby is the key. When new subscribers sign on, that spool is cut off in regular lengths and stretched across the rooftops of Bandra, a Bombay suburb, to their homes, including the lowliest of slums.

With Mr Khan boasting up to 7,000 subscribers, the skies around his shack are draped, spaghetti-like, with cable networking. Some wires are plastic-covered, but most are not; they fizz from the signal and current coursing through.

With the law way behind the reality, local authorities are powerless. Mr Khan is not above the occasional backhander to officials seeking baksheesh.

Mr Khan charges 150 rupees ($6.60) a month for the 12-channel service, including the five Star TV channels.

That brings in a monthly Rs700,000 to Rs1 million, physically collected by a 50-strong army of standover men. "If they don't pay after two days, we cut off the signal," says Mr Khan.

Like his competitors, Mr Khan also produces a monthly television guide, a magazine with news of programs, stars and gossip, supported by advertising.

He also produces his own advertisements for local restaurants, which he slots in before and after the movie channels.

His total monthly income is estimated at about Rs1-1.5 million.

Outgoings are limited to staff - no more than Rs100,000 a month - and the amortised cost of the dishes, which cost an initial Rs100,000 two years ago.

Net profit comes in at a conservative Rs800,000 ($40,000) a month, big money anywhere and particularly in India.

Indeed, it is such a cashflow business that the industry has attracted the attention of drug dealers and underworld identities.

Big Indian business groups like the Mody family and The Times of India media giant are soaking up operators like Mr Khan and building their own giant networks.

"There is no questioning the potential market here but apart from advertising how is someone like Murdoch going to pull money out of here on a user-pays basis like in Europe or the States," says Lalit Mody.

"The subscribers have been getting the signal for Rs100 and the pirates for nothing. They won't want to pay for it."