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Viacom Inc: The second coming

May 28, 2007 10:27 IST

Amit Jain, managing director of MTV Networks India,  is a great believer in joint ventures possibly because he's worked in 16 of them. That's why Jain, who joined MTV (the Indian arm of  media giant Viacom)recently, is so convinced that teaming up with a local player will help Viacom make it big here.

Despite  having been in India for about 15 years and owning  channels like MTV ,VHI and Nickelodeon, Viacom (CY2006 revenues $11.5bn) hasn't had much success. It's now  joining hands with the TV18 group, a strong player in the news genre to form a 50:50 joint venture, Viacom 18.

Together, they plan to launch a general entertainment channel, make content for the internet and mobile phones and churn out films mainly for Indian audiences.

Besides, channels from the Viacom stable such as MtvU or The N could soon find their way here. To get started, MTV Networks will move its three channels to Viacom 18 while TV18's contribution to the venture will be its  film assets, currently housed in Studio 18.

It's not surprising that Viacom wants a partner for its second stint in India.  Despite having been in India at a time when television audiences have grown, Viacom has not been able to do too well. 

As Jain says multinationals may create great programming but making money from them it is an entirely different matter. "We may have  differentiated content but  it's also a matter of good execution and execution skills are what TV18 brings to the table," he asserts.

Clearly Viacom is unhappy with the way things have turned out -- despite the television space having seen strong growth in the last ten years, its brands have not done too well. Observes Timmy S Kandhari, executive director, PricewaterhouseCoopers, "Viacom's been around but hasn't managed to get much of a footprint. I feel the best way to enter India is with a local partner and so this tie-up should work for them."

For the TV 18 group which is a strong player in the news business, it's a chance to grow in the entertainment genre where it has virtually no presence.

As Raghav Bahl managing director TV18, points out, "The entertainment space offers significant opportunities and this partnership gives us the scale to compete." Adds Haresh Chawla, TV18 group CEO, "We would like to exploit the compelling demographic synergies between our news channels and Viacom 18's entertainment offerings."

It's not hard to guess why  TV18 is  keen to get a foothold in the entertainment genre. Rival NDTV recently announced its intention to float both an entertainment and a lifestyle channel and for the former it has floated a joint venture with film-maker Karan Johar's Dharma Productions.

There are other contenders too-former Star TV chief Peter Mukherji's INX Productions too wants to roll out a channel.  Which is why TV18's not wasting too much time.

Viacom 18, says Chawla, should have a channel up and running by 2008. Given the group's track record especially with Global Broadcast News, that's not hard to believe. Says Farokh Balsara sector leader, media and entertainment,Ernst &Young, "This is a chance for the TV 18 group to enter a new genre and learn the game. In that sense, the alliance is a win-win for both parties."

The general entertainment genre, with strong incumbents in Star TV, Zee and Sony may be losing both audience share and advertising share to niche channels. But, as Nandita daCunha of KPMG points out, with the number of cable & satellite(C&S) households touching the 70 million mark and more importantly, direct to home and IPTV now a reality, broadcasters can begin to rely on subscription revenues to make money.

Balsara agrees. "The focus will shift from TRPs and advertising to subscriptions and  the way forward will be through differentiated content, catering for the various age groups," he points out. Balsara believes that higher subscription revenues and demand for newer content will attract more foreign players to India. PwC's Kandhari agrees." This is just the start, more foreign players will be here soon," he says. Viacom had better get moving;it doesn't want to get left behind again.

Shobhana Subramanian in Mumbai