Digital Media

Reliance's majority stake in Network18 - green for India M&E industry, but challenges abound

by Vidya Subramanian Nath 30 May 2014
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Reliance's acquisition of Network18 is big on money, but blurry on value of growth of the brand and content. It undoubtedly is a sweep stroke for access to a variety of content as Network18 has 24 channel properties at national and regional level, a number of movie titles, and distribution rights to a fairly large bouquet. 

However, content is fast becoming a commodity today, especially what's made for digital media consumption. Irrespective of the valuation on paper, it is going to be hard to sustain it in the long term. Digital distribution doesn't just require a wide repository, but a significant amount of customization. From that perspective, INR 4000 crore seems an exaggerated price. In addition, a network's assets and goodwill lie in its brand and human resources, hence with a mass exodus of the top order, Reliance is staring at a rehaul of content production, which leaves room for too many imponderables for the network.

But from a larger perspective, this is the reality in TV business. The Indian TV industry as well as cable/ DTH service segments have been struggling over the last couple of years. Advertising has taken a beating, and the conflict within the industry over content carriage rights and fees, poor regulatory support, heavy taxation, resource churn, and the demand for digital content has impacted the business. Increasing viewership has not translated into profitable bottom lines majorly and it has been hard to sustain growth. Consolidation is the only way out to streamline operations and cut costs, and throughout multimedia and international distribution, companies are working towards consolidation.

There is skepticism about large corporates taking over content companies, especially as they acquire stake in news avenues. But, this is not the first majority holding of a large conglomerate in the media business in India, although this is the biggest deal as yet.

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By  klara andrian
klara, klara

15 Jun 2017 06:08
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