TV network distribution space sees consolidation

The television channel distribution space is seeing heightened activity and consolidation. Recently, Times Television Network signed a strategic distribution deal with MSM Discovery, while Disney UTV announced a joint venture with IndiaCast for distributing its channels.

The process of aggregating channels under a platform was started in April 2002, when Sony Entertainment Television (now Multi Screen Media) and Discovery Communications had formed a joint venture company that distributed all channels of the two companies under the brand TheOneAlliance. Later, Zee Television (now Zee Entertainment Enterprises Ltd) and Turner formed Zee Turner.

However, it was only in 2010 that activity in this space gained momentum. That year, the Ministry of Information and Broadcasting started hinting at mandatory digitisation. In May 2011, two arch rivals — STAR India and Zee Entertainment — merged their respective bouquets, STAR DEN and ZEE Turner, to form the biggest entity in the media distribution space, Media Pro Enterprise India.

“The consolidation we are seeing today in the distribution space is driven by Media Pro. To compete with that, other players have no other option, but to strengthen their offerings by adding stronger channels. In the last two deals, too, both Disney UTV and Times TV Network had to get a bigger bouquet. Media Pro has shown massive rise in subscription revenues. It has shown bouquets are relevant, even in a digital addressable system (DAS) regime,” said Sibabrata Das, editor of media trade website Indiantelevision.com.

The digitisation programme has seen a phase-wise switchover from analogue cable to the DAS platform. This has brought hope to broadcasters, who were deprived of subscription revenue and were paying substantial sums to multi-system-operators (MSOs). The advent of bouquets also empowered broadcasters to bargain with MSOs. Many experts say with DAS in place, there would be greater transparency in the distribution system, and this would allow channels to significantly improve their pay-TV revenues. To have more bargaining power, standalone channels or small groups are aligning with larger distribution bouquets.

“Consolidation in this space is the need of the hour. In an environment in which a lot of consolidation is happening, it is good for broadcasters to consolidate, too,” said Gurjeev Singh Kapoor, chief operating officer, Media Pro. On Media Pro’s strengths, he said, “Both Punit Goenka (managing director of ZEE) and Uday Shankar (chief executive of STAR India) have a great vision for the industry and they have united for this.”

Currently, Media Pro Enterprise India is the largest distribution bouquet, with 74 channels from the STAR, ZEE and Turner groups. TV18 Groups’ IndiaCast, which has Network18, TV18, Viacom18 and now, Disney UTV channels, is the second-largest (once it secures regulatory approvals for Disney UTV, it would distribute 35 channels). A third bouquet, MSM Discovery, distributes 28 channels. In terms of revenue, MSM Discovery is second only to Media Pro, analysts say.

Experts believe now, there would little or no space for individual entities; these would have to align with one or more of the top three distribution bouquets.

However, Anuj Gandhi, group chief executive of IndiaCast says the market is big enough for all channels to adopt their own strategies. “We focus on getting our fair share of the distribution pie. It makes sense to aggregate and have scale. It is all about economies of scale,” he says.

While channels may shift from one bouquet to another and joint venture partners may split, for now, it seems broadcasters not aligned with any of the larger bouquets would find it difficult to bargain for reach.