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25 May 2007
Viacom's
Indian venture still needs luck of Ganesh
Joe Leahy
Financial Times
(c) 2007 The Financial Times Limited. All rights reserved
Announcing Viacom's push into India this week,
Bill Roedy, vice-chairman of MTV Networks, brandished
a fist-sized statue of Ganesh, the revered Hindu elephant
god.
His India staff had given him the icon a year ago for
good luck as Viacom embarked on talks to find a local
partner that culminated this week in apartnership with
TV 18, a leading domestic broadcasting group.
"I have carried this around now for the last year
and I'm here to say this is not a myth - there are powers
here," the MTV boss said of the deity.
Mr Roedy and Viacom, the US-based group that owns MTV
and Paramount Pictures, may have found a strong local
partner in TV 18 to help with the group's ambitious
agenda of launching a Hindi-language channel in India
within the next year. But he had better not let go of
his Ganesh statue just yet.
The new partners are embarking on the joint venture
at a time when India's cable television broadcasting
industry is preparing for unprecedented competition
that many believe will lead to a period of blood-letting
and consolidation in the months to come.
Under their plans, Viacom and TV 18, which is best
known in India for its news channels run in partnership
with CNBC and CNN, will set up Viacom-18, a 50:50 joint
venture.
Viacom will inject its three channels in India (MTV,
Nickelodeon and VH1) into the joint venture while TV
18 will contribute its fledgling motion pictures division.
Viacom's DreamWorks and Paramount studios will also
co-operate with the joint venture on producing films
for Indian audiences and the partners will jointly run
a film fund that is listing on London's Alternative
Investment Market.
The push by Viacom comes amid increasing excitement
over India's Dollars 1.7bn broadcasting business, which
is estimated by Media Partners Asia, a research firm,
to be growing 21 per cent a year.
The market is dominated by foreign-owned operators,
including Rupert Murdoch's Star TV and Japan's Sony,
and several large domestic broadcasters, such as Zee,
Sun TV and Sahara.
However, a new breed of domestic broadcasters has begun
to challenge the hierarchy, among them the TV 18 Group,
run by Indian entrepreneur Raghav Bahl.
Viacom views India as a more promising market in a
region where its main channel, MTV, has been losing
money.
"We are really choosing to focus our activities
in those markets where we believe our investments will
pay off in a big way for a long time," says Philippe
Dauman, Viacom chief executive.
Analysts in the TV industry say the partnership with
TV 18 buys Viacom the co-operation of Mr Bahl, a shrewd
entrepreneur who has rapidly turned TV 18 into the country's
primary news channel operatorby using rights to the
CNBC and CNN brand names.
TV insiders say the partnership creates what is known
in the industry as a "full bouquet".
Although his news channels are not part of the venture,
Mr Bahl will be able to cross-sell the entire offering
to advertisers, from news to general entertainment and
children's TV in the form of Nickelodeon.
"We can boast of one thing that no American media
company can boast of," he said. "Where can
you see CNBC, CNN, MTV, VH1, Nickelodeon, Paramount
Pictures, DreamWorks, where can you see a collection
of these brands (in one stable)?"
This may look good on paper but the new partnership
faces many challenges.
Neither partner has experience in operating a Hindi-language
entertainment channel in today's market.
Competition is fierce. There are more than 200 channels
in India with more being created every day.
But fewer than half will generally be carried on a
given cable network and the advertising market is not
growing quickly enough to cater for them all.
The market share of general entertainment channels
is also falling.
Still, analysts believe the Dollars 100m the partners
are rumoured to be investing in the venture will give
it a head start. And for Viacom, TV 18 might not be
a perfect fit but it was probably the best available.
"For Viacom, I think it's probably the only thing
they could have done to get a platform in the market,
it's a bet and I think it's a reasonable bet,"
said Vivek Couto, director of content and research at
Media Partners Asia.
The challenge will be to realise a return on that bet
before another Hindu god - Ganesh's father, Shiva the
Destroyer - begins visiting the weaker players in the
industry.
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