Broadcasters Zee, Star end JV under new TRAI rules
12 April 2014
Broadcasters Zee Turner and Star Den Media Services have decided to wind up MediaPro, the distribution joint venture the two had formed three years ago, and stop distributing their channels through the JV in order to be compliant with the Telecom Regulatory Authority of India's new norms on content aggregators.
The telecom regulator had recently tightened the norms for content aggregators (distribution companies of big broadcasters), saying aggregators enjoy undue bargaining power over distribution platform owners. The amended rules are designed to limit the capacity of content aggregators to bundle channels from different companies to sell as packages to distribution platform owners.
The channels from Zee Turner and Star Den will now be handled by independent affiliate sales teams.
Under TRAI's new norms, notified in February, only broadcasters can enter into inter-connection agreements with distribution platform operators (cable and direct-to-home platform operators).
A time-frame of six months had been set for the broadcasters to amend their existing deals, enter into new inter-connection agreements and file the amended RIOs (reference interconnect offers or contracts) and the interconnection agreements with TRAI.
The regulator, while passing the new rules said that the three major content aggregators - The One Alliance joint venture between MultiScreen Media and Discovery Networks, IndiaCast UTV between Viacom18 and Disney UTV channels, and MediaPro - command as much as 59 per cent of the total pay TV market share, giving them unfair bargaining power.
Star India chief executive officer Uday Shankar said, ''Punit [Zee MD Punit Goenka] and I created MediaPro with the objective of accelerating digitisation, promoting transparency and introducing best practices in distribution. In the light of new regulation, both partners have decided to build independent affiliate sales teams.''
Zee Entertainment Enterprises Limited's (ZEEL) managing director and chief executive Punit Goenka said, ''We had created this joint venture to address various anomalies in the analogue market, curb piracy and introduce transparency for the benefit of all stakeholders.''
Analysts say the move will have a negative impact on Zee even though most of the gains from the JV have already been realised.
''The timing is bad for ZEEL as Zee has no India cricket in FY15, whereas Star Sports has very high content. While the sports bouquets were never part of MediaPro, lack of India cricket will reduce ZEEL's negotiation abilities,'' says a report from ICICI Securities reported by Business Standard newspaper.
According to the report, this move will marginally increase the cost of the sales team for Zee and will make it difficult for the network to hike prices since it plans to launch new channels and will need the support of cable operators.