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.