Star, Zee to join hands for distribution


30 Apr 2011
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After 12 year zee and star talks to share distribution

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New Delhi: The Subhash Chandra-owned Zee group and Rupert Murdoch’s Star India Pvt. Ltd could be coming together, 12 years after they parted ways, to form a distribution company in India that is somewhat like Sun18, the distribution partnership between Kalanithi Maran’s Sun Network and Raghav Bahl’s Network18.

If the joint venture is indeed formed—and two people familiar with the subject say it’s more “when” rather than “if”, although there is bound to be significant uncertainty till the venture is announced, especially given the rocky relationship between the two partners—the new company will market all the channels under Star India as well as those under the Zee group. This will change the complexion of the cable TV industry, which is worried about the distribution conglomerate driving out competition and pushing up subscription rates.

Currently, the Zee channels are distributed by Zee Turner Ltd, a joint venture company of Essel Group (Zee’s parent company) and Turner International, which operates Cartoon Network and Pogo in India, while the Star channels are distributed by StarDen, a 50:50 joint venture between Star India and DEN Networks founded by Sameer Manchanda.

A top executive at the Zee group confirmed that Star and Zee were joining hands for distribution, but he declined to give details. He requested anonymity as the plans were yet to be announced. A senior executive at Star independently confirmed the formation of a distribution joint venture. He, too, did not want to be named.

Uday Shankar, chief executive of the Star group in India, did not comment on the subject.

The cable industry sees this uniting of rivals as a major move by the broadcasters to form a cartel to increase their share of subscription revenue. According to a report by Media Partners Asia (MPA), India’s pay-TV subscription revenue is expected to touch Rs. 38,000 crore by 2015 at a compounded annual growth rate of 12%.

Another MPA report suggests that local cable operators and multi-system operators (MSOs, or large cable networks) corner 83% of pay-TV revenue while broadcasters get the remaining 17%. According to audit and consulting firm KPMG India, in 2010, subscription revenue in India totalled Rs. 19,400 crore, of which 20% went to broadcasters. The firm estimates that by 2015, broadcasters such as Zee and Star will get 30% of the subscription revenue of Rs. 41,600 crore.

The proposed alliance between the two broadcasters will help. “As a single company selling all the channels, broadcasters will have more muscle power over cable networks to generate subscription revenue. More so, because cable operators cannot do without Star Plus and Zee TV at the same time,” said the former chief executive of an entertainment channel. He did not want to be named as the two companies are yet to make any announcement about the alliance.

Jagjit Singh Kohli, a cable industry veteran who sold his cable company to Reliance Communications Ltd last year, said that while there is, as yet, no clarity on the deal, big distributors can squeeze the cable operators and extract more subscription revenue as well as negotiate the carriage fee.

Commenting on the impending launch of the new distribution conglomerate, the head of a large cable network headquartered in Mumbai said: “The matter should be examined by the Competition Commission of India (CCI). Broadcasters are forming a cartel to wipe out competition. It will also hurt the independent direct-to-home operators as well as independent MSOs that are not part of these broadcasting companies.” He did not want to be named given the potentially controversial nature of the matter.

Mint learns that the two companies are scrambling to close and announce the deal before 1 June, when new merger regulations by CCI come into effect. Joint ventures are a grey area under the rules, although they are dealt with as part of the rules governing mergers and acquisitions in most other countries.

CCI should mandate that joint ventures fall under the ambit of rules governing mergers or push for an amendment to the Competition Act to this effect, said M.M. Sharma, head of competition law practice at Vaish Associates Advocates.

Justifying the effort to form a joint venture in this case, the Zee group executive said the move should be seen in view of the growing piracy of broadcasters’ signals as well as the monopoly of large cable networks in some markets such as Punjab and Tamil Nadu. “Some states are monopolized by a single operator and we find it hard to collect subscription fees,” he said.

To be sure, the exact contours of the deal between Star and Zee are not known and the Zee executive said that it’s possible that the joint venture may include other broadcasters as well, who may want to be part of the company. Talks are on with these firms, he added, without mentioning names.

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Sangeeta Singh and Utpal Bhaskar in New Delhi, and Anushree Chandran in Mumbai contributed to this story

Star, Zee in talks to share distribution Team

(24 May 2011 11:05 am)

MUMBAI: Star and Zee are in talks to share a common distribution company, a merger of operations that is set to shake up the broadcasting industry as it gathers muscle power to mop up subscription revenues and curtail carriage payouts to cable TV operators.

The Star channels are distributed by Star Den, an equal joint venture between Star and Den. Zee has a distribution joint venture with Turner International where it holds 74 per cent equity.

“Rupert Murdoch’s Star India and Subhash Chandra’s Zee are traditional rivals, but the new guard is having a more collaborative approach. Star India CEO Uday Shankar and Zeel MD and CEO Punit Goenka are close and are more co-operative. So a deal between the two is possible,” an industry source said.

There are several options that can be explored, if Star and Zee decide to combine their distribution business. A possible route could be merging Star Den with Zee-Turner.

“We are not clear what is being decided upon. Turner and Den could be included in the deal. Or it can take any shape. But there is a very strong buzz in the market that Star and Zee are joining hands for distribution,” said sources.

While Shankar and Goenka could not be contacted, Star Den CEO Gurjeev Singh Kapoor did not want to talk about the issue. had earlier hinted at the consolidation of the distribution business of these two companies without naming them.

According to the report, the discomforting pace at which the carriage market is growing could force a major consolidation in the pay-channel distribution business. “Don't be surprised if two big entities decide to merge for distribution," the report stated.

Digicable MD and CEO Jagjit Singh Kohli said that he had heard of the deal but was waiting for more clarity to emerge.

“If the deal happens, then there may be a slowdown in the carriage market. It could also have an impact on subscription revenues of broadcasters. Besides, there will be pressure on other channel distribution companies to consolidate,” he said.
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