SET and Discovery in JV

In an increasingly cutthroat industry, consolidation is the only way forward.

Soon after the distribution tie-up between Sony Entertainment Television India (SET India) and Discovery Communications India (DCI) earlier this year, the two companies have now announced the formation of a new joint venture company SET Discovery Pvt. Ltd. The company hopes that it will become the "Number One Television Network" in the country. SET Discovery Pvt. Ltd will handle the distribution of both channels and will include ground cable and affiliate businesses. Seventy-four per cent of the equity will be in the hands of SET India, and the remaining 26 per cent will be held by Discovery India.

At the helm of the new company will be a four-member management team, headed by the chief executive officer of Sony, Kunal Dasgupta. Two directors from SET India, Martha Eberts and Michael March, and Deepak Shourie, managing director DCI, will support him. Shantonu Aditya, currently head of the distribution business of SET India, will be in charge of day-to-day operations.

The tie-up brings together the programming strengths of both the channels, and also combines their distribution strengths. Announcing the newly formed venture, Shantonu Aditya said, in an official release by the company, "With Discovery joining our existing bouquet of channels, The One Alliance partnership, announced earlier this year, is uniquely placed to offer our viewers an enhanced genre of programming supported by our combined distribution strength. We are now strategically positioned to be the No. 1 television network in the country." When the two companies had tied up, Michael Grindon, president, Columbia TriStar International Television, had said, "This joint venture enables both partners to offer consumers a comprehensive and diverse bouquet of programming choices, enhancing both partners' distribution strength. We plan to capitalise on our combined expertise to drive distribution throughout the region."

Analysts see the move as an inevitable outcome of the changing C&S scene in the country. As the Indian cable and satellite TV market switches from the older analog to digital broadcasting, as cable operators move away from a rough and ready market dominated by a several small players to one in which a few major players rule the roost, it is essential for major networks to come together as bouquets to strengthen their presence in the market. Such tie ups lead to greater clout in distribution, programming, and most crucially over the Rs 3,000-crore television advertising market, which remains the crucial arbiter of TV channel fortunes, despite moves toward garnering more subscription revenue.

At SET, the advertising revenue fell more than 25 per cent from April to December 2001 to $64 million, from $86 million in the corresponding nine-month period a year before, according to an earlier press report in The Economic Times. The same report also said that subscription fees accounted for 70 million rupees ($1.4 million) a month and the projected revenue for the year is put at $12.7 million (nearly three times the previous year's figure of $5.0 million). Rivals have also consolidated. Both STAR and Zee have their own bouquets.

The six-member The One Alliance brand represents Sony, Sony Max, AXN, Discovery, CNBC and Animal Planet. It is learnt that SET will be looking for other channels who might be willing to join The One Alliance brand, with reports indicating that the alliance is particularly keen on inducting a children-centric channel to further strengthen its offerings.

For the record, SET India is backed by Columbia TriStar International Television, a Sony Pictures Entertainment company and is flanked by such channels such as Sony MAX, that offers Hindi films, events and cricket, and AXN, which has made inroads with its mixture of action and adventure programming. SET also distributes CNBC in India. SET is estimated to reach viewers in more than 29 million households in the country. DCI, which debuted in the country in 1995, is now reaches more than 21 million subscriber households in the region. As the world's leading global real-world media and entertainment company, DCI's combined networks reach subscriber households in more than 155 countries and territories worldwide. Discovery Networks International (DNI), a division of DCI, includes the Discovery Channel, Discovery Kids, Discovery Health, Discovery Home & Leisure, Animal Planet, People and Arts, Discovery Sci-Trek, Discovery Travel & Adventure, Discovery Civilisation and Discovery Wings. © 2002 agencyfaqs!