So, what does Zee-STAR distribution JV mean to the industry?

By Anindita Sarkar , afaqs!, Mumbai | In Media Publishing | May 27, 2011
Industry observers are of the opinion that the joint venture (JV) will lead this sector into becoming a clean and neat highway through increased subscription revenue and restrained carriage fees; it will also curb piracy.

The new partnership between STAR India and Zee Networks to form Media Pro Enterprise India surely brings in a paradigm shift in the television distribution market. The distribution sector is a critical link in the value chain of the broadcast industry. There is an increased need for localisation and regionalisation in this country. However, this is held back because of a lack of a well-written distribution chain.

This JV will lead this sector into becoming a clean and neat highway through increased subscription revenue, restrained carriage fees and the curbing of piracy.

The coming together of the two leaders will lead to a larger consensus around a growth blueprint for the Indian electronic media industry, believe many.

Broadcasters and cable TV distributors in India hinge on local cable operators for the last mile of cable association and to assemble fees from consumers. Herein, numerous cable operators under-report their number of customers, and thus, cheat the broadcasters. This move will help the industry come together to fight piracy, notes Punit Goenka, managing director and chief executive officer, Zee Entertainment Enterprises.

Says Uday Shankar, chief executive officer, STAR India, "The rivalry between Zee and STAR has cost the industry approximately US$10 billion. The historic divide between the two led to a lack of a common point of view within the industry and resulted in a vertical split. This stagnated the industry's growth in business, content and technology."

However, industry experts also note that these two media houses can now be in a position to exercise enough monopoly to mop up a large revenue chunk of the total distribution market. The distribution sector is currently estimated to be worth Rs 16,000-18,000 crore, wherein the earnings are generated from the subscription universe.

A top industry official says, "This JV will have a huge impact on the channels that are not a part of the Zee Turner and STARDEN bouquet, as they will have to shell out more carriage fees to match up to what the Zee and STAR channels will be paying."

The merger of the two bouquets will eventually bring together a total of almost 100 channels. Various permutations and combinations of subsets of these 100 channels will be indispensable to various operators/MSOs across the country.

"However, what will be interesting in the coming months is the creation of these subsets and the internal corporate forces that come into play, which will define what constitutes these subsets and accordingly, the priorities of individual channels within a bouquet, adding up to almost a 100!," says Pankaj Krishna, founder and managing director, Chrome Media.

Another critical area that will get attention is 'what happens to the employees?' Zee Turner and STARDEN collectively have an estimated 350 employees. The new merged entity, Media Pro Enterprise India, is estimated to need around 225 employees in all. "The industry concern would be the balance 125 -- we do hope that maximum numbers get absorbed in the system," says an industry source.

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