Subhash Chandra's Zee and Rupert Murdoch's Star India , two leading media conglomerates of India, have merged their distribution business Star Den and Zee Turner and have formed a new 50:50 distribution company, Media Pro Enterprise India. The coming together of two the media giants after 12 long years of arch rivalry is a landmark of sorts and it could redefine the television distribution landscape.
What has forced the two entities to come together essentially is to incentivise digitisation and tackle piracy, a major source of leakage in distribution revenues. The origin of the partnership also finds its roots in Sameer Manchanda's departure from Network18 six months ago, following the latter's tie-up with Sun TV group and the pullout of the group's channels from Star DEN Network.
The new entity Media Pro will distribute a total of 68 channels now. The JV has clearly sparked of fears of cartalisation. But both Uday Shankar, CEO of Star India, and Punit Goenka, CEO and MD of Zee Entertainment Enterprises, dismissed fears of cartalisation and said that there would be no threat to competition. But, the fact of the matter is that multiple system operators, or MSOs, and independent cable operators cannot ignore the new entity. Media Pro will certainly have an upper hand with all the plum channels from Star, Zee and Turner stable in their kitty which consumers are now well hooked on to.
Industry observes indicate that this coming together has been in the works for the last six to seven months. While the Indian pay market as per a report by Hong Kong-based Media Partners Asia is Asia's largest Pay TV market and is likely to overtake the US as the largest global DTH market in 2012, the discomforting pace at which the carriage market is growing is forcing the consolidation in the pay-channel distribution business.
MPA report indicates that the carriage pool topped Rs 1,840 crore in 2010. Sun TV, Zee and Star India dominate the top 10 profit rankings for Asian pay-TV broadcasters but distribution platforms are yet to feature in the operator mix due to limited profitability. One cannot be sure how this new entity in the TV distribution space will help in digitization as once digitization comes into play in the four metros, consumers need not have to buy channel bouquets but buy only those channels which wish to watch.
Some section of cable operators say that if the distribution companies have consolidated there is no reason why they cannot consolidate as well. But the fact of the matter is that MSOs have not come together even in the matter of digitization. So one wonders if they can have a consensus on this issue and come together. It is understood that a section of MSOs had an informal meeting on Thursday to discuss the ramifications of such a joint venture and that there is an idea floating around to form a consortium of their own.
With Star and Zee having come together, there is certainly pressure on both Sony One Alliance and the newly formed distribution company Sun18 Media by Network18 Group and Sun Group. Although Shankar and Goenka say that in principle they are open to more players joining in but currently they are strong with the four large players.