Two men under whose collective leadership rest the fortunes of Asia's most powerful media conglomerate. In a way, there is a commonality in how both have risen to the top at Rupert Murdoch's Asian media arm - from the blue as it were. It was just under ten months ago that Paul Aiello, a one time investment banker, was pitchforked into the hot seat of a company riven by internal power politics and stalled growth stories in the key markets it was operating in.

Three months later, Aiello opted for another dark horse in then Star News CEO Uday Shankar, giving the newshound turned corporate honcho operational charge of India's lead broadcast network and the difficult task of setting things right there.

In conversation with Indiantelevision.com's Thomas Abraham a day after Shankar was elevated to Star India CEO (on 25 October), the two offer their most detailed overview yet, of the media conglomerate's plans for this market and the region as a whole.

These are exciting times for the industry with the economy booming and the sector seeing 20-25 % growth. How does Star view all this? What are the key factors that will drive its growth? What could work as impediments?
Aiello: I continue to be extremely excited about the market and its growth, even though there are numerous uncertainties. You can argue that there are regulatory uncertainties, uncertainties created by increased fragmentation in viewership and increased competition. But these things are to be expected in a highly dynamic market place.

The challenge for us is not about focusing on what Star is. It is really about what should the next Star be? What should Star be in the next five to ten years from now? That requires a lot of internal focus and development of strategies.

So whether it's about our core broadcast business where we must deal with increased fragmentation, regionalization… all the phenomena that everyone looks at, we need to be there. As well as looking at the overall growth in the media market and knowing that there are other areas that we're not in as Star; but areas where we have tremendous capabilities within News Corp and in Star, that we should move in to and make sense of.

So we've been through a strategic review process and now we are coming out of that and are identifying the short term tasks and the medium term tasks to get to a new and bigger Star.

If you get detracted by a noise event like a new show that someone else has come up with in the last one week or some uncertain ruling or regulatory decision, you can get paralysed and miss what is the more important strategic initiative on where you want to be.

It is really important to keep that strategic vision because then you become really disciplined to stand by what the vision is and do the execution of the steps necessary, whether it is people moves or moving into new areas of business.

So which are the new areas?
Aiello: Certainly we need to expand the footprint of our core business of our channels. In the next six to nine months, we are going to be launching more channels.

'I really feel that in the entertainment space, this market will continue to primarily be a two player one'

Five channels?
Aiello: Five, six channels, yes. That is one manifestation of the extension of our core business. But we are looking at many other ways to build our business.

Like for example?
Aiello: News Corp has tremendous capabilities when it comes to films.

Everybody was waiting for that. Are you going to go the Sony Pictures route? Will you be getting into movies big time and will that be under your mandate?
Aiello: It is something for not just me to decide, but Fox to decide. We work very closely with our sister companies at New Corp. Let us see what we can do together if such opportunities make sense.

News Corp is pretty strong in new media, internet as well.

MySpace?
Aiello: Yes, MySpace, Fox Interactive Media.

Ajay Vidyasagar will be on that I am told.
Aiello: Ajay is very involved in our new media strategy.

If Ajay will be overseeing that side of the business, there are also the content challenges that lie ahead. How will all this be managed?
Shankar: Ajay did an amazing job in the last eight-nine months when there was a creative management vacuum when people had left and gone away. Now we have ramped up our content team. So there is Anupama (Mandloi), there is Vivek (Behl), there is Monica and two or three others who have come in. We've also created a structure which is more channel focused. So there is a general manager of Star Plus, who's Keertan (Adyanthaya). There is a GM of Star One, that's Ravi (Menon). So the day to day channel management activities have become pretty much independent and self contained.

So, for any of the other senior management, including myself, we don't have that kind of daily interface. Our task has moved on to doing strategic and long term planning for the channels. Our internal understanding is that Ajay is going to primarily spend his time in building the internet business. And that's in collaboration with MySpace wherever it's possible. And internally, we will do a whole lot of other things.

Where MySpace might not be a partner?
Aiello: That's right. Star will have its own new media strategy. At the same time Star will work with MySpace, Fox Interactive Media, in as many places as it makes sense.

'News Corp has tremendous capabilities when it comes to films'

The times of 50-on-50 top shows is history and we could soon well have a situation of three to four networks fighting it out for top honours. How do you see that panning out?
Shankar: I really feel that in this market, in the entertainment space, for a long time will continue to primarily be a two player market. Maybe there might be a third player who will have a little bit of traction. Who that first, second or third player is may change, in two or even in five years time. But I still think that for many years, that is what is going to be the situation.

The big difference will be this. Typically in broadcasting globally, two key players will be the ones making money. In this market, in GEC, simply because of the size of the universe, it is possible that if people have a disciplined content approach, even the No. 3 and the No. 4 can make money.

And our advertising space is becoming so segmented. Not everybody has to take big corporate advertisers. Not everybody has to target the same clients.

What it requires is for people to clearly identify their TG, their target geography and smartly design unique or signature content for these TGs. My big problem is that in category after category you see, people are just cloning the leader.

The fact is that it has worked because of the very size of the market. News is a classic example of that.
Shankar: It has worked. But the returns are diminishing. If you see sustainable leadership in whichever category, somebody has been able to challenge the leader's content model. Star News did whatever turnaround it could manage because it did not follow the Aaj Tak route of live breaking news. It went into appointment viewing and other kinds of signature programming.

Now what you see is that everybody is chasing one or other player. The same thing is happening in music. You are seeing more and more commoditization of content and less and less differentiation. That is a big challenge.

I think distribution is a huge challenge for this market; copy content is a big challenge. And the third, I am not saying necessarily in that order, huge challenge is the shortage of original quality talent; which nobody is really talking about. It is the same talent that is going around.

If you are smart, you change three jobs in two years, your salary will go up four times, and you will get three more promotions. That does not mean that the person's maturity has gone up or that person's quality of skills have increased.

Aiello: This is an issue that applies not only of India, but practically to all of Asia. You have to get fresh new talent. It is critical nurturing them and taking risks in developing them.

So the three biggest challenges over the next three years are distribution, commoditisation of content and talent management?
Shankar: In distribution, if you were to further focus, the two challenges would be, 1) to strengthen the cable infrastructure to allow more and more channels to be delivered to the end customer, 2) is to create a regulatory environment where premium content is encouraged by monetizing.it.

Not everybody has to pay Rs 500. There should be a good, decent family package available for Rs 75; but, somebody who wants to pay Rs 500 or Rs 1,000 and get great content, should have access to that. It is not to make an argument that people should pay through their noses; but people should have a choice.

What is your view on Trai's mandating pricing in non-Cas areas? I am told that broadcasters, as in the IBF, are debating challenging it legally.
Shankar: If there is a regulatory order, then everybody will have to comply with that. Obviously we have no choice.

But this kind of price cap in non Cas areas, in an Indian environment where there is so much of opacity in declarations of subscriber base, is going to be extremely counterproductive for this industry. Because you're operating in a situation where the cost of distribution has become a very important line item for all broadcasters. Except for one or two channels like Star Plus, everybody else has to shell out a large sum of money on distribution.

The problem is that this kind of artificial cap on value, when the input costs are not being controlled, is very, very counterproductive. A whole bunch of broadcasters and many of the niches are going to become uncompetitive because of distortions in the distribution space. I think this is going to be highly detrimental.

Yet you have all these new launches, new networks coming up.
Shankar: Three reasons. People have faith in the Government, in God and the Regulator.

'You have to get fresh new talent. It is critical nurturing them and taking risks in developing them'

It's 'karma' then?
Shankar: Seriously, if you look at it, there are niche channels where 30-40 per cent of their opex is the distribution fee. It is clearly unsustainable.

This is a market where the talent costs are going through the roof because of the supply side shortage. It is a market where new competitors are coming, so your content costs are going up. Because clutter is going up, your marketing costs are going up. And your distribution costs are going completely out of whack.

There is not even a logical relationship. Last year what you spent has no bearing on what you will have to spend this year. And in this market what you spend has no correlation to what you spend for similar deliveries in an adjoining market. This is clearly an insane situation.

Aiello: That is not to say that some of these people will not succeed.