MSM-Discovery, last of broadcast JVs, ends on Jan 1

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The two parted ways partly because the new regulations by Trai have made it difficult for such JVs to function.

The last of the broadcast distribution joint ventures (JV) in India will cease to exist in the new year. One Alliance, the distribution JV set up 12 years ago between Multi Screen Media (MSM) and Discovery Network, will be dissolved with effect from January 1, 2015.

The two parted ways partly because the new regulations by the Telecom Regulatory Authority of India (Trai) have made it difficult for such JVs to function. In February this year, Trai mandated that distributors cannot bundle channels from different broadcasters while selling content to various platforms such as cable operators and direct-to-home (DTH) entities. It further said the existing distribution platforms can only act as agents of individual broadcasters and need to sell each network bouquet separately.The two also decided to part ways over differences in the way the subscription revenues in the company are to be shared between the two partners. "According to the current market shares and calculations, Discovery's claim on revenue share is upwards of 33 per cent. MSM, on the other hand, wanted to increase its share to 88 per cent, citing the recent investments it made to launch Sony Max 2 and Sony Pal," says a person close to the development. Discovery was getting only 16 per cent of the total subscription revenue with the rest going to Sony.Twelve years ago, when One Alliance was started by the JV, MSM was the big boy while Discovery was a mere niche channel. As a result, while MSM controlled 74 per cent of the equity in the JV, the rest was with Discovery. However, those in the know say Discovery has gone from strength to strength and launched new channels, increased its market share within the genre and attained leadership position by a big margin in the area they operate. At the same time, MSM faced tough competition. MSM's flagship general entertainment channel (GEC), Sony Entertainment Television, has found itself at number six on the viewership ratings charts consistently for the past five weeks. It's newly-launched GEC, Sony Pal, has also had a slow start. Its comedy entertainment channel, Sony Sab, is a consistent number five, while in genres such as English entertainment, it has been at number two and three.

"Another point to note is that despite being an entertainment network, it has negligible presence in regional broadcast. Barring Sony Aath, MSM does not have any regional channel. The other genre it has explored is Hindi movies, which again is a cluttered place to be," says a cable industry professional.

On the other hand, Discovery has made inroads into different regions through multi-language feeds. While it operates English and Hindi feeds nationally, it also has a separate channel in Tamil. Additionally, the network's content is available in Telegu and Bengali as well.

Sources close to the development confirm the date for the divorce has already been set and Discovery, which runs 11 channels in the infotainment genre, has already started renewing its contracts independently. "Earlier this month, the network signed a new distribution deal with DTH player Dish TV and more recently, it entered a pact with Videocon d2h," says a person in the know.

Trai had disallowed distribution JVs saying they - Media-Pro (Zee Turner and Star Den), Indiacast UTV (Viacom18's Indiacast and Disney UTV's broadcast arm) and One Alliance - together accounted for close to 60 per cent of the market share.

As a consequence, the industry saw the dissolution of Media Pro in April followed by Indiacast UTV in June. However, One Alliance maintained that it would change its operation format to act as agents for the various broadcast networks it distributes, but the JV would continue. However, it could not convince broadcasters and networks. Neo Sports Broadcast was among the first to withdraw from One Alliance and go for independent or in-house distribution of channels.

MSM-Discovery, last of broadcast JVs, ends on Jan 1 > afaqs! news & features
 
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