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To comply with Telecom Regulatory Authority of India’s (Trai) new norms on content aggregators, Zee Turner and Star Den Media Services have decided to stop distributing their channels through MediaPro, the distribution joint venture the two had formed three years ago with much fanfare.
Trai 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.
According to 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 the Trai.
Trai justified the new regulation saying 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 (CEO) Uday Shankar said: “Punit 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 CEO 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.”
However, analysts say the move will have a negative impact on Zee and that most of the gains from the JV has 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 bouquet were never part of MediaPro – lack of India cricket will reduce ZEEL’s negotiation abilities,” says a report from ICICI Securities.
According to the report, this move will marginally increase the cost of sales team for Zee and will make it difficult for the network to push inflation since it plans to launch new channels and will need the support of cable digital players.
The report also notes that there will be little stock impact since the new norms have been in the news for quite some time now.
