- JD(U) under Nitish decides to become part of NDA, denies split in party
- Customs arrests Air India cabin crew for smuggling ganja
- Government, RBI in talks to shore up PSU bank capital
- Bihar flood toll mounts to 153, 17 districts affected
- IndiGo cancels 84 flights over engine issues
- Trai gets tough on call drops; slaps penalty of upto Rs 10 lakh
- Yogi Adityanath targets 'Yuvraj' Rahul Gandhi: 'Will not permit Gorakhpur to become picnic spot'
- Shivraj to lead BJP in 2018 election: Amit Shah
Zee’s RIO approach
MUMBAI: Multi-system operators (MSOs) may not just have to contend with Star India on RIO (Reference Interconnect Offer) deals, where they need to take the television channels of broadcasters on a la carte rates. Zee Entertainment Enterprises Ltd (ZEEL), which already has a content contract with Hathway Cable & Datacom on such terms, could follow suit with other MSOs if the commercial terms are not in its favour.
Owning a broad spectrum of TV channels, ZEEL has left the door wide open. Unlike Star, which has taken the bold step of locking in only RIO deals, the Subhash Chandra-promoted entertainment network has the option to stitch in cost-per-subscriber (CPS) or fixed-fee deals with the MSOs in the digital addressable system (DAS) markets.
“ZEEL has taken a more cautious approach. It is not obligated to do only RIO deals. If MSOs are willing, it can settle on negotiated terms,” said a media analyst.
The broadcaster, however, will take recourse to RIO deals if the need arises. “As long as operators are willing to give us our terms, we will do negotiated deals. And if they are not willing to give our terms, we’ll go on RIO basis. I think it is high time that the MSOs wake up and smell the coffee. They can’t be taking the broadcasters for a ride forever,” ZEEL MD and CEO Punit Goenka told media analysts.
In case of Hathway Cable & Datacom, that is how the content deal concluded. The Zee-Turner channels are available to the MSO only on RIO terms.
“So, does this mean that we are open to the idea of going a la carte on other cable networks as well, if the need be? Yeah, absolutely… Why not? If we can demonstrate it with the largest MSO, why can’t we do it with the smaller guys,” Goenka said.
For ZEEL, going wholly RIO across all MSOs, like Star India, may not be the best business proposition at this stage. The broadcaster is planning to launch a Hindi general entertainment channel. With RIO disposing of carriage fees, the new launch will not find distribution support on cable TV networks.
“Unlike Star, ZEEL has a big general entertainment channel launch to make and carriage on cable TV networks will be very critical for its success. Carriage fees ensure proper distribution of the channel. But an RIO deal means no carriage fees. Zindagi is also a newly-launched channel. Under these circumstances, doing only RIO deals may not work out as a right strategy for ZEEL,” said a media analyst at a broking firm.
Under RIO, the falling reach of the not-so-popular channels may also be a concern. Since the MSOs will offer the channels to consumers on a la carte basis, the whole business dynamics will evolve around the off-take of these channels. If the viewership share falls due to reach, ZEEL’s advertising revenues may get impacted. In FY14, the company had earned ad revenue of Rs 2003.7 crore (Rs 20.04 billion), up 23 per cent over the year-ago period.
“Zee’s strength is that it has a plethora of channels, including Zee TV, which MSOs can’t ignore. But there are some genres where it will not like to slip because of distribution issues. Zee’s southern-language channels are also building up. So, a pure RIO approach across all MSOs may not be a strategy the company will adopt,” a media analyst said.
With Star betting on RIO, Zee will adopt a wait-and-watch approach to see how the whole pay TV distribution business evolves.