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Media Pro splits, Zee and Star to set up independent affiliate sales teams

MUMBAI: With the Telecom Regulatory Authority of India (TRAI) disallowing bundling of channels from more than one broadcaster, Star DEN and Zee Turner have decided to split their three-year-old distribution joint venture Media Pro Enterprises.

Going forward, both Zee and Star will set up their independent affiliate sales teams for their respective channels.

The latest tariff order dated  31 March 2014, which permitted the inflation-linked hike of 27.5 per cent in Reference Interconnect Offer (RIO) rates (in two stages), is likely to provide a positive fillip to subscription revenues, the two said in a joint statement.

Star India CEO Uday ShankarStar India CEO Uday Shankar said, “Media Pro has been a truly delightful and path-breaking partnership. Punit and I created MediaPro with the objective of accelerating digitisation, promoting transparency and introducing best practices in distribution. Thanks to the commitment of both parties, the JV has delivered exceptionally well on each of these.

“I am proud to say that Media Pro has led the industry consensus for the most efficient way of moving to a digital domain. This, in turn, allowed us to offer better content to our viewers. In light of the new regulation, both partners have decided to build independent affiliate sales teams. I take this opportunity to complement the entire Media Pro team led by Arun Kapoor for creating a best-in-class organisation that helped pioneer digital transformation of cable.”

Zee Entertainment Enterprises Ltd (ZEEL) MD and CEO Punit Goenka added, “We had created this joint venture to address various anomalies in the analogue market, curb piracy and introduce transparency for the benefit of all stakeholders.

ZEEL MD & CEO Punit Goenka“I must say that we have been very satisfied with the outcome of the partnership. In the last three years, with DAS getting implemented, India is truly on the path to digitisation. The first two phases of DAS have already been implemented. Given the new regulation, Uday and I have taken a call to continue the business at an independent level.”

In May 2011, Rupert Murdoch-controlled Star India and Subhash Chandra-controlled Zee had come together after almost 12-year gap and announced formation of Media Pro, an equal JV between Star DEN and Zee Turner.

While Star DEN was a 50:50 JV, Zee held 74 per cent share in Zee Turner.

Initially, the company started with distributing all the non-sports channels, then 68 channels from Star India, ZEEL, Zee News Ltd (now Zee Media Corp), Turner India and ABP News. Today, the JV distributes over 85 channels. However, both Star and Zee have kept sports channels out of the Media Pro bouquet.

At the time of formation, the two companies were looking at driving affiliate revenues in an analogue regime. Both Shankar and Goenka had stressed that the deal aimed at creating efficiencies in the distribution sector, incentivising digitisation, addressing piracy issues and enabling a content revolution in India.

All was fine till February, when sector regulator TRAI notified amendments to the existing regulatory framework with regard to distribution of TV channels, narrowing down the role of the content aggregators.

Mediapro1The trouble for Media Pro (and other distribution bouquets) was that under the new regulation, content aggregators are barred from forming bouquets which have channels from more than one broadcaster. While curbing the powers of the content aggregators, the sector regulator has allowed them to function as ‘agents’ of broadcasters. The aggregators can continue to sell bouquets of more than one broadcaster, but they will be able to bundle channels from only one broadcaster (or its group companies).

TRAI gave broadcasters six months for reworking their existing deals with content distribution platforms.

Interestingly, in February, ZEEL had issued a statement that both Zee and Star are committed to the partnership (Media Pro) and will evaluate the opportunity based on the revised framework of the regulation.

Meanwhile, an ICICI Securities report said: “There will be marginal negative for Zee as jointly they were able to deliver better collections from the ground and most of the gains from the JV. The timing is bad for ZEEL as Zee has no India cricket in FY15 and little in FY16, whereas Star Sports has very high content. While the sports bouquets were never part of MediaPro, lack of India cricket will reduce ZEEL’s negotiation abilities.”

Also Read:

MSOs and DTH ops to gain from Media Pro split
How TRAI’s content aggregators’ regulation can shift the balance of power
Why content aggregators caught the eye of TRAI
TRAI issues regulations for content aggregators
ZEE, STAR come together to distribute channels