Do Sony & Network18 talks hint at consolidation in TV industry?

Consolidation will work well for the television industry but will also lead to overlapping of segments, say industry experts

e4m by exchange4media Staff
Updated: Dec 2, 2019 9:20 AM

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The broadcast industry seems to be going through a phase of consolidations, the most recent development being Sony Corp entering into talks with Network18.

The deliberations between the Japan-based conglomerate and Mukesh Ambani’s entertainment business, according to experts, clearly shows the need for consolidation and acquisition to stay ahead in the game where all players are trying their best to woo the audience.

As per reports, Sony will own 51 per cent stake in the joint venture, with the rest going to TV18. If the deal is struck, the new JV will own 63 channels along with two OTT platforms - Voot and SonyLIV, four film studios and two digital content studios, media agencies have reported.

Sony Pictures Networks India owns 29 TV channels and one digital platform, and reaches to over 700 million viewers across 167 countries. Whereas Network18’s listed subsidiary TV18 owns and operates the broadest network of channels – 56 in India spanning news and entertainment. The network also caters to the Indian diaspora globally through 16 international channels.

According to Karan Taurani, VP, Research Analyst (Media), Elara Capital, “The consolidation is good for the industry but you also have to see overlapping of segments. They are the core competitors in the segment. Both SPNI and Viacom18 have heavy dependence on Hindi GEC. They are also into the non-fiction space which is expensive. However, overall the TV industry in India is not doing very well right now in terms of ad revenue, actually in some cases it has declined. This could be one of the reasons why they would have decided to come together.”

In terms of the TV industry today, regional television is doing very well, informed Taurani. “The regional industry is growing almost one and a half to two times in some cases, and in genres as compared to Hindi. Obviously, it is because of the low-pricing and launch of new channels. Whereas in Hindi we haven’t seen any big channel launches. Colors has its presence in the regional sector, so both coming together will lead to consolidation in the industry but it’s not going to impact the competition as such. Star India and ZEEL are very strong in the regional portfolio. There might be some impact on the Hindi GEC segment in the urban market.”

Star India currently owns over 45 entertainment channels whereas ZEEL has 32 domestic channels and reaches to 1.3 billion viewers across 173 countries.

An earlier development in terms of consolidation was seen in 2017 when Walt Disney acquired 21st Century Fox, the deal including Twentieth Century Fox Film and Television Studios, and cable and international TV businesses. The deal was worth approximately $52.4 billion.

A media expert, on the condition of anonymity, said, “One of the things that people say periodically is that the Indian media and entertainment sector needs to consolidate. There are too many players and all are perhaps not making any profit. And the only way that we will become profitable is if there are fewer players, but larger ones have better economies of scale.”

Another media analyst said consolidation is a good development for genres like Hindi news where we have too many players.

“For the size of the market that we have in India, there are many genres where many are profitable, while some are not and are surviving on injection of capital by investors,” the analyst further said.

Even today we have excess advertising inventory and unnecessarily low advertising prices, as far as TV advertising in India is concerned, he added.

Thus, these varied points of view signal that if the Sony-Network18 deal materialises, there will be some areas where this complementarity will be effective but in some cases it might result into one surviving and the other getting eliminated or duplicated.

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