Sony, Discovery enter distribution deal; warn of a hike in subscription rates

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NEW DELHI

It's a marriage that has been a long time in the making and has the potential to shake up the TV industry in India. Sony Entertainment Television (SET) India and Discovery Networks International (DNI) recently announced a distribution alliance that brings the two DNI channels, Discovery and Animal Planet, onto the Sony platform.

The deal will take effect from 1 April. The partners plan to convert the alliance into a joint venture, subject to government approval, which is imperative as both are foreign companies, the companies said. Once such formalities are over, the new venture will be headed by Shantonu Aditya, senior vice-president, franchise channels and distribution, SET India. He will operate as the company president. From the Discovery side, Anuj Gandhi, director, affiliate sales, India & South Asia, would join the joint venture as vice-president.

"This joint venture enables both partners to offer consumers a comprehensive and diverse bouquet of programming choices, enhancing both partners' distribution strength," Michael Grindon, president of Columbia TriStar International Television (Sony Pictures Entertainment owns Columbia TriStar International Television) was quoted as saying in a statement. Dawn McCall, the president of DNI, was quoted in the same statement as saying, "Sony and Discovery bring unique, complementary strengths and knowledge to this new joint venture that will offer consumers endless entertainment choices."

The alliance is being formed at a time when commercial broadcasters in India are counting on rising subscription revenue to offset a decline in advertising revenue. At SET, the advertising revenue fell more than 25 per cent in the April-December period to $64 million, from $86 million in the corresponding nine-month period a year earlier. This was reported by The Economic Times last month. According to the same report, 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).

With the addition of Discovery and Animal Planet, the SET bouquet would offer a six-channel ‘compact quality' package that includes SET, SET MAX, action channel AXN, and business news channel CNBC. SET CEO Kunal Dasgupta made it clear - while speaking at the press conference held in Mumbai to announce the deal - that the bouquet would cost more. Quizzed on how the JV partners expected cable operators to react to such increases, given that their resistance was becoming increasingly strident, Deepak Shourie, MD, DNI, indicated that under the joint venture, the quality of the package would certainly be better, which, he contended, justified the premium.

For the record, both the Discovery Channel and Sony Entertainment Television began broadcasting in India in 1995. According to available estimates, the former now reaches over 21 million subscriber households, the latter more than 29 million. © 2002 agencyfaqs!