Zee, Star form distribution joint venture

Television network Zee Entertainment Enterprises and a unit of Rupert Murdoch's News Corp, Star India, have joined hands to distribute their television channels in the domestic market, the companies told reporters on Thursday.

Zee Turner, a 74:26 joint venture (JV) between Zee Entertainment and Turner International, will form a JV with Star Den Media, an equal JV between Star India and Den Networks, company officials said.

The JV, Media Pro Enterprise India, will initially distribute 68 channels, most of which will be paid channels.

The firms did not disclose their investments in the new JV.

"The rivalary between Star and Zee has potentially cost the industry $10 billion. This alliance will facilitate us and the industry to grow faster," Punit Goenka, managing director and chief executive of Zee Enterprises, told reporters.

Star launched in India in 1991 and operates 33 channels in seven languages such as Star One, Star News and Channel V, while Zee has a library of 80,000 hours of television content.

Zee owns channels such as Zee TV, Zee Cinema, Zee Cafe, Zee Khana Khazana and Zing, among others.

Star and Zee have shared a partnership in the past. The two companies had entered into a broadcasting JV to deliver quality programming content.

They had also co-founded Siticable, a cable multiple system operator, soon after the launch of Zee Telefilms in 1992. However, Zee bought News Corp's stake in both the ventures in March 2000.

Through Media Pro Enterprise India the companies aim to incentivise digitisation and tackle piracy, a major source of leakage in distribution revenues, they said.

The JV had sparked fears of cartelisation among some analysts, as Zee and Star are top players in the general entertainment television, but the companies maintained the venture would not be a threat to competition.

"Two major players are forming the joint venture. Basically four players (Zee, Turner, Star and Den) are consolidating," Angel Broking analyst Chitrangda Kapur said. "So we are left with only the South-based cable operators and Hathway Cable."

Uday Shankar, chief operating officer at Star, dismissed such fears.

"I think the fears of cartelisation are a little exaggerated. There are many verticals where we wont even have a nominal presence," Uday Shankar, chief operating officer of Star India, said.

The $12 billion Indian media and entertainment industry is forecast to grow 13 percent for the next five years, according to a FICCI-KPMG report.

Ad rates hike
Separately, Zee is in talks with clients to hike advertising rates by an average of 10-12% effective next quarter, Goenka said on the sidelines of the conference.

"Every client cycle we raise our ad rates. We are already in the process now. The quantum varies from client to client, with the average between 10-12 percent," he said.

Zee posted advertising revenue of Rs4.79 billion, a 36.4% jump from the previous year, in January-March.

Last month, Star had hiked its ad tariffs by 20% effective April 26 in response to rising cost of talent, increased investments in technology and a jump in production costs.

Shares of the Mumbai-based Zee, which the market values at $2.97 billion, rose as much as 4.3% to Rs143.20, but gave up gains to close up 0.55% in a firm Mumbai market.