MUMBAI: Three leading direct-to-home (DTH) operators are in talks to form a joint venture that will seek to reduce their content costs and demand higher carriage from the broadcasters.
Dish TV, Videocon d2h and Airtel Digital TV are in discussions to set up a JV where they will have equal stakes, according to a source familiar with the development. The broad intent of the three DTH companies is to have a structure similar to the channel distribution companies. This will allow them muscle power to negotiate with the broadcasters on content and carriage deals.
“We are in talks with two other DTH companies to form a JV that will work on content and carriage agreements with broadcasters. The idea is to float a combined entity with equal stakes of the three partners,” Dish TV chief executive officer R C Venkateish told TelevisionPost.com. Venkateish, however, declined to divulge the names of the two partners with whom Dish TV is in talks. Videocon d2h CEO Anil Khera and Airtel Digital TV CEO Shashi Arora were not available for their comments.
The move comes in the wake of a consolidation fever gripping the television channel distribution companies. The pay TV market is predominantly handled by Media Pro Enterprise India—a JV between Star Den Media Services and Zee Turner, MSM Discovery—a partnership between Multi Screen Media (formerly Sony Entertainment Television India) and Discovery, and IndiaCast UTV—a collaboration between TV18, Viacom18 and The Walt Disney Company India. Sun Distribution Services is the fourth entity that has a strong say in dealing with the multi-system operators (MSOs) and DTH outfits. Explaining the rationale behind the move, Venkateish said there was a need to unite against the content aggregators to ensure a balance of power prevails among the broadcasters and the distribution platforms. “Among the three of us, there will be enough scale as we have a combined subscriber base of over 25 million,” he said.
But when the Telecom Regulatory authority of India (TRAI) is working on a regulation against the content aggregators’ push to bundle channels across broadcasting companies, how will the brotherhood of the top-tier DTH companies be left untouched? “TRAI will view our concept favourably as it is anti-monopolistic. We will be able to push down content prices and consumers will stand to benefit,” said Venkateish. The primary reason for forming this JV is to pull down content costs. The broadcasting industry, according to Venkateish, earns almost 60 per cent of its subscription revenue from DTH alone. The proposed JV will also help drive carriage revenues, something which DTH companies have been trying to cultivate and grow. Dish TV, India’s largest DTH operator by number of subscribers, earned just Rs. 35 crore ( Rs. 350 million) as carriage income in the previous fiscal. “The current system is illogical. Despite its substantial subscriber base, DTH pays more to the broadcasters while getting negligible carriage revenue. For the MSOS, carriage revenue almost covers up their content cost to broadcasters ,” said Venkatiesh. The formation of a JV company, though, is a complex exercise and will not be easy. For the talks to be conclusive, a lot will depend on what kind of regulation TRAI brings for the content aggregators.
Source: Televisionpost.com
