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Industry gives two thumbs up to the Disney-Hungama marriage

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Industry gives two thumbs up to the Disney-Hungama marriage

Was it a move waiting to happen or was the competition tougher than what some expected – the rationale could be anything, but the kid’s genre in India rarely had a move this exciting. Walt Disney International’s decision to buy out Hungama TV has many media stalwarts talking. Some see this as a precedent of times to come, others see it as a great strategic move – all see it as a beneficial step for both entities involved.

It’s not that different brands working together in the broadcast space hasn’t been seen earlier. Examples date as far back as STAR Sports joining hands with ESPN in the sports genre or other media entities joining forces in the news genre to work towards a common goal like CNBC TV-18, CNN-IBN or Times Now (BCCL and Reuters).

However, Hungama’s takeover by Disney has generated interest, and in the course has raised questions like how does it change the competitive dynamics in the kids’ genre? In a day and age where fragmentation is a common complaint, can this move lead to more such examples? The industry has really differentiated opinions on these issues.

Needless to say Walt Disney India and Hungama TV offices are excited about this development as they see it bringing them closer to achieving greater heights in the domain.

Turner Entertainment, the player that is expected to be affected most by this, too, has a point of view here. Presenting it, Ian Diamond, Senior Vice-President and General Manager, Turner Entertainment Networks Asia, said, “We expected this (the consolidation) to happen, and we are surprised that this didn’t happen earlier. When you are competing with well-entrenched and successful brands such as Cartoon Network and POGO, it makes sense to consolidate.”

So what is Turner’s plan of action following this move? Diamond replied, “Maintaining our position and identity in a multi-player environment is nothing new for us. We don’t believe in short term planning like shifting or changing our strategies to accommodate others, but prefer to continually assessing ourselves and respond to the varying market dynamics. Both Cartoon Network and POGO are the leading kids’ entertainment superbrands in India and have been for the past decade, despite other choices available. We sincerely believe that we are our own greatest competition, and we will continue to work towards maintaining our leadership position in the market.”

For Diamond, it may make sense to consolidate, and industry leaders like Sameer Nair, CEO, STAR Entertainment, seem to agree. “Consolidation can happen and should happen when there are synergies. In this case, it is a good move. Disney already has two channels and they have added a third locally produced channel with Indian content – that in a sense enhances its offering. At the same time, they are one competitor less – it makes perfect sense for them,” Nair said.

He further said, “For Hungama, the group was able to start a channel, build a brand and was then able to be associated with some one like Disney.” STAR Entertainment is the distributor for Hungama TV, as it is for Walt Disney India channels.

Madison Communication’s Sam Balsara, too, agreed to these points. “I think Ronnie (Screwvala) and his team have done a great job with Hungama and this marriage with Walt Disney will benefit both of them. It does set an example of where likeminded players can come together and join forces.”

Media e2e’s Chief Evangelist, Atul Phadnis, believes that this move was almost “predictable”. He said, “For anyone who is second, which in this case are Hungama and Disney, such a move is predictable. Organic growth can be too late and too far away and acquisitions are much faster. In this case, it really is a win-win. Disney instantly gets a larger market share with Hungama in its fold and Hungama can draw on the international forces that Disney brings to the table.”

In fact, Phadnis believes that the industry at large should be looking at consolidations. He observed, “Today, the media environment is highly fragmented and from the industry point, there are various difficulties – distribution, pricing, ad sales, network benefits and so on. With consolidation, you can really bring together common strengths. Plus, the cable and satellite industry is 15 years old now – it’s not exactly young. If we don’t see M&As now, when would we see them?”

Balsara also sees positives in consolidation, but has his reservations. “I don’t think consolidation is a really good thing from a media owner point of view. It can lead to over pricing. And then again, certain amount of consolidation is good – it controls the proliferation of media and gives vehicles with larger reach,” he said.

Nair, on the other hand, felt consolidation and M&As really weren’t “fashionable terms”. He said, “There has to be some synergy and sure wherever it makes sense, that would be the way to go for some, but I think in the Indian context there is still time before we see it happening. One of the classiest examples of consolidation is STAR Sports and ESPN, which took place seven years back and in a way consolidated the sports genre, but old consolidation has given way to new competition today. That is the nature of this business.”

And perhaps that is the reason that even if the consolidation was predictable, its implications aren’t. Is Disney-Hungama a trendsetter of sorts? One would think so – together they can claim a network share that would bring them within striking distance of a formidable leader.


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