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| Punit Goenka |
Punit Goenka, managing director and chief executive officer, Zee Entertainment Enterprises Ltd (ZEEL) speaks about Media Pro, his new joint venture with rival Star India, and the way forward. Excerpts...
Media Pro is a huge development for the country’s television industry. How did it all really happen?
Around a year back, Uday Shankar (CEO, Star India Pvt Ltd) and me came up with this idea of collaborating in the distribution space which was really the need of the hour. We discussed the possibilities and after a series of brainstorming sessions it was decided that we should do a joint venture through our distribution companies. The entire process of putting together a joint venture has taken close to 10 months and I am really happy at the final outcome.
Could you take us through the key highlights of the venture?
It certainly was a very complex deal given the fact that we are rivals competing for our share of the market. A deal of this nature required a lot of thought, deliberation, internal approvals and so on. While it has taken us long to get the new entity in place I can say now that it was worth spending all that time on this initiative.
What does this mean for the partners in terms of meeting business objectives, distribution and reach?
I don’t think there will be any significant impact on reach because individually both entities are distributed extensively. Just to give some number on the reach part, content from both broadcasters reaches over 80% of the target market. So we don’t see much gain in those aspects. Having said that, what the JV really brings to the table is the formidable power to bring the change required in the distribution business i.e. to curb piracy and influence digitisation. We will be coming up with various incentive schemes for cable operators who are actually willing to digitise and make addressability
a viable option.
It is said that a lot of talk is happening around digitisation in the cable space, but no one is really investing…
See it’s not a question of not wanting to address / invest in digitisation. If you look at the direct-to-home (DTH) segment, it has really revolutionised the distribution business in the last five-odd years. With over 35 million DTH homes today, it doesn’t mean that people are not willing to invest. You have six DTH operators already investing heavily in this business. It’s because of the fragmented nature of the Indian cable TV business with a significantly high percentage of leakages built into the system that there isn’t much incentivisation happening in this space. Thus, the coming together of two large bouquets can very well influence that change and that is precisely what we hope to do.
You believe cable operators will be open to actively pursuing digitisation and invest?
Absolutely. Yes. We will have to make them do so by giving them necessary incentives and putting the right procedures and systems in place.
What could be the incentives to cable operators?
It’s too early to talk about and is it is something the management will work out after taking into consideration things that need to be taken forward. Just to give you an example, we give discounts to DTH operators to shore up penetration. Similar schemes will be worked out for the cable operators as well.
How many channels are you looking to offer in the newly formed JV?
There are 68 channels in all and some of them are free-to-air. These are channels in the Zee-Turner and Star-DEN distribution network and includes channels that do not belong to either broadcasters like on the Star side they have NDTV and we have Turner.
What are the possibilities of bringing WWIL and Dish TV into this collaborative entity?
No, this collaboration is not a vertical but horizontal integration. So entities like WWIL, Dish TV in addition to DEN, Tata Sky and a few others are our customers and we will deal with them on an arm’s length basis just like we work with any other partner in the industry.
Do you see other similar alliances like Sun 18 and One Alliance becoming part of this JV in future?
We are open to working with anybody who wants to work with our shared mission and shared goal. If they are willing to support that, we will welcome anybody. But in terms of the equity structure of this joint venture, it will be only between Star-DEN and Zee-Turner.
You mentioned earlier about 12 to 24 months timeline to assess the success of this initiative. What would be the milestones?
Right now we have a vision about the set objectives to be achieved under this joint venture. Now we will have to work out a roadmap on how these objectives will have to be achieved. From there will emerge the milestones etc. It’s still very early to talk about roadmaps as we have just started and we will see a lot more action happening as we proceed from here.
Will this alliance also impact advertising and distribution revenues?
Advertising is not impacted as this is a pure distribution entity. As far as deals on distribution revenues for multi-system operator (MSOs) or cable operators are concerned, our objective is not to milk them but to make the industry healthy. Today what is happening is that the MSO’s business is restricted to only the carriage fee and is not able to collect any money from the ground. We will have to effect that change. So the money which the consumer pays has to find its way in the value chain including the government — for that matter by way of service tax and things like that which the government doesn’t getting paid for at the moment. The impact of those changes will actually result in each individual in the value chain getting his fair share of the money and that’s that we want to achieve.
On the piracy part, can you throw some light on how will it get addressed and curtailed effectively?
Piracy is a national subject and the moment you try and switch off one cable operator, piracy starts. With this initiative in place, it will be a far more aggressive fight against piracy. We will have a collective, dedicated management teams reporting to the board, and will focus on enforcing anti-piracy. Those caught indulging in piracy will be dealt with very strictly. And with the coming together of two large networks, the chances of curbing piracy will be far better than before.
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