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23 May 2007
Viacom
joint venture plans new Hindi TV channel
Joshua Chaffin and Joe Leahy
Financial Times
(c) 2007 The Financial Times Limited. All rights reserved
Viacom, the US media group that
owns MTV and Paramount Pictures, plans a big push into
India's television market and proposes to launch a Hindi-language
channel within a year.
The group is setting up a 50:50 venture with India's
TV18 to run the project. Viacom will also inject its
existing channels in India - MTV, Nickelodeon and Vh1
- into the venture, called Viacom-18. Its Indian partner
will inject its motion pictures division.
"India is one of Viacom's priority markets for
expansion internationally," said Philippe Dauman,
chief executive officer of Viacom.
Improving profitability in Viacom's international business
has been a priority for Mr Dauman since he took over
as chief executive of the media group in September.
The partnership comes amid cut-throat competition in
a market that has been dominated by foreign operators,
such as Rupert Murdoch's Star and Japan's Sony, and
large local groups such as Zee and Sun TV.
Viacom's new partner, TV18, has risen rapidly to become
the country's leading news channel operator through
its partnerships with CNBC and CNN in India but it has
been absent from the general entertainment market for
a decade.
Viacom hopes the partnership
will give it access to TV18's expertise in setting up
television channels in India's complex regulatory environment
while the Indian group will get access to Viacom's ready-made
content and expertise in production. Media Partners
Asia, a research organisation, said India's
market for cable and satellite broadcasters rose from
Dollars 537m in 2000 to about Dollars 1.7bn in 2006.
But the growth has meant a vast number of channels
have been launched.
"Profit margins are under pressure amid growing
competition, costs and regulation," Media Partners
said.
Under their joint venture,
Viacom and TV18 will also jointly own a management company
for The Indian Film Fund, which they are listing on
the Alternative Investment Market in London. Viacom's
Paramount and DreamWorks studios will also explore working
with the joint venture on films for Indian audiences.
Analysts said the deal represented a good bet for Viacom,
as TV18 was a strong local partner that had enjoyed
rapid growth. But they questioned the match between
a US group focusing purely on entertainment content
and an Indian group whose core business is news.
The US group's concentration on India follows a major
restructuring in Asia this year, when Viacom cut jobs
in Singapore.
Its focus is now on Japan and India, where the business
is growing, and China, where it has potential to develop,
once tight restrictions on foreign broadcasters are
eased. Mr Dauman said other channels the group could
roll out in India included Comedy Central, which it
had successfully launched in Germany.
Additional reporting by Joshua Chaffin in New York.
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