Passage to India

October 2008

After months of speculation, Steven Spielberg last month concluded a deal to take back control of DreamWorks from Paramount Pictures. His backer for the reported $1.2-billion deal? An unlikely source in the form of an Indian media conglomerate: the Reliance ADA Group.

The family-run company is well placed in the financial services, telecommunications, energy and healthcare sectors, and is making an ambitious play in the media business through its Reliance Big Entertainment division. Reliance announced a slate of Hollywood partnerships at the Cannes Film Festival this year, but the deal with Spielberg, for which it coughed up about $500 million, gives it a stake in an established Hollywood studio, led by one of the industry’s most lucrative and acclaimed directors.

The agreement validates what many in the entertainment community have known for some time; India is the hot Asian territory of choice these days. There is a long line of channel brands waiting for clearance to launch in the country, where pay-TV platforms are rapidly proliferating; Reliance is the latest company to launch a DTH system in this nation of over a billion people, and it is unlikely to be the last.

More platforms means more capacity, and the pace of new channel launches continues unabated. This explosion is revolutionizing the local-content market, allowing producers to go well beyond the melodramatic serials and mythology-based epics that have dominated local ratings for years. “‘Young India’ wants to consume very different genres of content and on different platforms,” Ronnie Screwvala, the CEO of UTV Software Communications—another Indian studio that has begun doing business in Hollywood—told me in an interview that appears later in this issue.

Screwvala has established a solid business on keeping in tune with what young Indians want—he built Hungama TV into a leading kids’ channel, which he sold to The Walt Disney Company last year. And now UTV’s Bindass is positioning itself as a multiplatform youth brand, while IndiaGames.com is targeting the country’s huge mobile-phone market.

The STAR Group, too, is bullish on Indian consumers, aligning with its sister company, Twentieth Century Fox, to begin producing Bollywood feature films. In this issue, STAR’s COO, Laureen Ong, explains how STAR Plus, the Hindi-language entertainment channel, is refining its programming strategy to maintain its leadership position in an increasingly fragmented landscape. Once dominated by the three stalwarts of the Indian market—STAR, Sony and Zee—the general-entertainment segment is now home to NDTV Imagine, 9X and the Viacom joint venture Colors. “The good news is that people have started moving from what used to be channel loyalty to program loyalty,” Rajesh Kamat, the CEO of Colors, told me recently. Kamat is tapping into his years running Endemol to bring international concepts into India; the channel, in fact, launched with a local version of Fear Factor, with Bollywood icon Akshay Kumar as host, and subsequently rolled out its own Big Brother, hosted by a veteran of the U.K. version of the show, Shilpa Shetty.

The developments in India will certainly be on the agenda at the CASBAA Convention in Hong Kong this month, as will the opportunities developing region-wide. As the feature in this issue indicates, there has been a mad dash to launch channels in Asia, with established companies increasing the size of their bouquets and new players entering the scene. Amid all this excitement, there are shades of the rush to Asia that took place in the late ’90s, as the nascent cable business was beginning to take shape. And we all know what happened when so many of those Asian economies crashed, leaving channel operators with unpaid carriage fees and a bleak advertising environment. Markets certainly are buoyant today, but that doesn’t mean that the risks have been eliminated. “It’s a tough market to play in, because there’s not a lot of money to go around to support the channels,” says STAR’s Ong. “It’ll be interesting to see how that shakes out in the future.”

Simon Twiston Davies, a longtime observer of the Asian media market who today heads up the Cable & Satellite Broadcasting Association of Asia, offers a similar sentiment. “Asia is still a very healthy market. We’ve seen some declines in the economy in the U.S. and in Europe. Asia Pacific is still seeing growth, both in terms of economics [and] in the media markets.” But, he notes, “We don’t want to be patting ourselves too hard on the back. From our perspective, we know we need to work harder and be more creative than ever before—and that’s exactly what we’re doing.”