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21st Century Fox’s STAR in India and What It Means for Sony’s ESPN

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STAR India

Twenty-First Century Fox (FOXA) owns STAR India, India’s (EPI) largest media network. STAR India develops, broadcasts, and produces programming for 51 channels in seven languages in its portfolio.

FOXA stated at its fiscal 2Q16 earnings call that, even in the face of the currency headwinds that it expects in the second half of fiscal 2016, it still felt “pretty confident about the trajectory of the business” of its STAR Network in India.

The company is targeting a profit of $0.5 billion in fiscal 2018 and a profit of $1 billion in fiscal 2020 for STAR network in India. The company is on track to achieve this target through the growth of its STAR entertainment network, which has a 22% market share of entertainment in India.

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It’s also looking at competing for and acquiring sports telecasting rights in the Indian subcontinent in 2017 and 2018. STAR India also owns sports telecasting rights for major sporting events popular in India and internationally, including the ICC (International Cricket Council) matches through 2023 and Wimbledon through 2022. There is also the possibility that STAR India will compete with Sony ESPN for sports broadcasting rights in 2017 and 2018. Last year, Multi Screen Media, a subsidiary of Sony (SNE), and The Walt Disney Company’s (DIS) ESPN entered into an agreement to offer Sony’s ESPN sports channels in India.

Understanding hotstar

Another factor in the company’s STAR success story is through its over-the-top digital platform, hotstar, which saw 20 million downloads in the four months after its release in January 2015.

The company also completed the acquisition of MAA Television Network, which broadcasts Telugu language entertainment channels. The acquisition is expected to strengthen the network’s regional language portfolio in India. As the above chart indicates, FOXA had stated in an earlier earnings call that the Indian television market could be worth $20 billion by 2020.

Advertising revenues

Advertising is a major source of FOXA’s revenue on the Indian market. In fiscal 2015, 66% of the company’s advertising revenue came from the Indian and Latin American markets. A majority of the company’s advertising revenues in the Indian market are coming from e-commerce companies in India that are competing against each other.

The company stated in its earnings call that it expects the Indian market to contribute around $500 million to the company’s long-term profitability during the next two to three years.

FOXA makes up 0.67% of the PowerShares QQQ Trust Series 1 ETF (QQQ). If you’re interested in exposure to TV, QQQ has 4.7% exposure to that space. QQQ also has 2.9% of its total holdings in Comcast (CMCSA).

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