afaqs!

Implications of Network18, ETV and RIL deal

By Anindita Sarkar , afaqs!, Mumbai | In Media Publishing | January 04, 2012
The move has put together three big players in their own respective fields into one large scheme. The Ramoji Rao-owned Eenadu TV has been losing ground in various markets, for a while now. But, industry experts still believe that ETV, with a first mover advantage, always had the 'phoenix' potential.

Network18 and TV18 will acquire the ETV Group channels. The deal will be funded by RIL Trust. Reliance will invest an approximate Rs 1,500 crore in the TV18 Group, to be used to get rid of its debt.

The move has put together three big players in their own respective fields into one large scheme. The Ramoji Rao-owned Eenadu TV has been losing ground in various markets, for a while now. But, industry experts still believe that ETV, with a first mover advantage, has the 'phoenix' potential.

Reliance

Network18

ETV Group

So, what could this deal mean to all three players, and consequently, the industry?

When it comes to television in Hindi, it's been quite a while that national has been debunked by advertisers. Hence, it is inevitable that TV18 had to venture into the regional space to be a truly national entity.

The deal will surely get in increased footprints, eyeballs, and some leverage in distribution in fast-growing markets for the TV18 Group. However, the coming together of the three is not going to be jazzy, at least for the TV18 Group.

"Currently, media is a very complex market and anything can happen in the next two-three years. While it does bring in financial stability to Network18 and TV18, one does not know how long its relationship will last with RIL. Secondly, it remains to be seen what will be the credibility of CNBC and CNN-IBN content, and how independent will they be after Reliance takes a substantial stake," says Prabhakar, head, CMS Media Lab.

And, it's not just this. The company will now have to work hard on building the brand, as well as the image of the ETV Network. The audience of ETV has been growing older, especially in the Kannada and Telugu markets. Many note that the current management at ETV is inept, and has allowed the network to lose leadership, especially in news, in every market (Andhra Pradesh, Karnataka, West Bengal, Maharashtra, and Orissa).

It will be a serious challenge for the new owners to leverage the news genre strength of Eenadu.

"Ten years back, ETV was a very good network. It had a loyal audience set, and of course, the first mover advantage. But, while that loyal audience set remained with the network, it was unable to capture the youth in its core target group. Hopefully, with the RIL and TV18 association, ETV will get the younger age group, below the age of 35," Says Ravishankar N, media partner, Media Planning Associates.

Overall, many media pundits feel that the association will go a long way in creating some parity in the regional space, with STAR and Zee already having a significant presence in this genre -- Bengali, Marathi, Kannada, and Telugu. It is also good for the market. While the TV18 Group will gear up for a major challenge, buying will become better with more competition and pressure on all three networks.

The pressure, in turn, can also push ETV further up to become a significant No 2. Udaya TV, a regional Kannada language Indian cable television station, and part of the Chennai-based Sun Network of Tamil Nadu, is way ahead of ETV in Karnataka. Meanwhile, Gemini TV, offered by Sun Network, is also significantly ahead of ETV in the Telugu market.

"Suvarna (Kannada) is doing well because of STAR's input. It has become a strong No. 2 in the market. Similarly, with such inputs, ETV, too, can also become a viable No. 2," says Ravishankar.

What will also be interesting is how these players tackle Sun TV (Tamil) and Asianet (Malayalam) in their respective regions. Lot of investments will have to go in if they have to develop the Malayalam and the Tamil markets. "If they don't do anything in Tamil Nadu and Kerala, the move will be a waste," note many.

However, there are some who still feel that the acquisition will not be a very big game changer for the industry.

"There are no new channel/channels being launched through this deal. The channels already exist. Therefore, while the deal does strengthen and enhance the TV18 Group's offering bouquet, only time will tell how beneficial the move will be for the industry," says Dinesh Rathore, vice-president, MediaVest, Mumbai.

As for RIL, it's a win-win situation as of now, as it gets into major diversification into the media and entertainment sector.

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