Is a mega broadcasting alliance on the cards? Anil Ambani, chairman of Anil Dhirubhai Ambani Enterprises (ADAE), and Subhash Chandra, chairman of Zee Telefilms, met on Monday to explore the possibility of working together in DTH broadcasting.
The meeting was held without aides for most of the time at a hotel suite in south Mumbai. Prakash Bajpai, Reliance Infocomm's head of 'enterprise' businesses, joined the meeting for some time, it is believed.
A spokesperson for ADAE confirmed that the Subhash Chandra-Anil Ambani meeting had taken place, but maintained that it was a general discussion with “no DTH on the agenda”. He said that as of now, there are no plans to ally with anyone, and exploratory talks could be held with other players as well.
The Anil Ambani group recently applied for a DTH licence under the Reliance Skymagic brand name. On the other hand, the Subhash Chandra-promoted Zee subsidiary, Dish TV, is the only commercially operational private DTH service in India today.
The attempt at striking an alliance by Mr Ambani, if indeed that happens, could be driven by the fact that Reliance is a late starter in a space that already has four players. u ADAE seeking DTH alliances to cut launch time:
The players are - DD and Zee's Dish TV, which are functional, and STAR's T-Sky and the Chennai-based Sun Group, which are waiting to launch.
However, though Zee's Dish TV has launched, it has been slow to take off because of a lack of strong content and promotion. It now has less than 2 lakh subscribers. The synergy between the two could be strong. Zee's experience in the broadcasting and television space is undisputed, while Reliance has pledged to pump in Rs 400 crore for starters, besides offering a huge telecom subscriber base and communication infrastructure that could hitch on to Zee's Dish TV set-up.
Reliance sources said that Mr Ambani was extremely keen on the high-end, direct-to-home (DTH) broadcasting and was looking at alliances that would shorten the launch time. It is significant that the Tata-STAR venture was formally branded and launched as 'T-Sky' soon after ADAE's official announcement of its proposed DTH venture.
The Reliance-Zee exploratory talks are believed to have taken two important issues with respect to the DTH market into account. The DTH market, though high-margin, is small and competitive. In most developed markets, it is usually just two players that manage to be commercially successful.
For instance, in the US, the two big DTH platforms are DirecTV and Echostar; in France, it is TPS and Canal Satellite; in Poland, Wizja TV and Cyfra Plus; and in Japan, SkyPerfecTV and DirecTV.
In some countries, especially the developing economies, there are single operator DTH monopolies. In the case of the UK, News Corp's BSkyB, a runaway success story, has a monopoly over DTH broadcasting, while in Malaysia, it is Astro's subsidiary Measat that controls the skies.
In India, if Reliance and Zee are to make an impact, a consolidation process will have to be undertaken. Besides, STAR has been in the DTH picture in India for over eight years and will obviously be a formidable competitor. The Tata-STAR JV has finally wrested a licence and the launch process for the group was kicked off recently.
As is also known, STAR has a significant pedigree. Its sister company, BSkyB, also a News Corp subsidiary, has valuable experience of winning over a 'cable-connected' nation over to DTH. News Corp also recently took a controlling stake in the largest US DTH platform DirecTV which has 12m subscribers. An internal Zee broadcasting survey has forecast DTH subscribers in India growing to 5m by '07 and up to 11m by '11.