Sony, Discovery ink distribution deal, warn of hike in subscription rates

It has been a marriage a long time in the making. Sony Entertainment Television (SET) India and Discovery Networks International (DNI) announced yesterday a distribution alliance that brings the two DNI channels, Discovery and Animal Planet, onto the Sony platform.

While talk of such a deal has been doing the rounds for well over a year now, company officials admitted that some urgency came into the whole equation only in the last three months. It may be recalled that it was just under three months ago (13 December to be exact) that Subhash Chandra's Zee Telefilms and AOL Time Warner's Indian unit announced a channel distribution joint venture that brought the three Turner International channels Cartoon Network, CNN and HBO onto Zee's 14-channel bouquet.

The two companies will be setting up a joint venture to handle distribution. Queried as to what sort of equity break-up the new company would have, neither Sony Entertainment Television CEO Kunal Dasgupta nor Discovery Networks India MD Deepak Shourie would offer any clues. Their explanation: It will be worked out after regulatory approvals (from the Foreign Investment Promotion Board?) had been secured. However, if the JV is anything like the Zee-Turner one (where Zee has a 74 per cent stake), SET is likely to hold a larger chunk of equity.

The deal is to take effect from 1 April and the new venture will be headed by Shantonu Aditya, senior V-P, franchise channels and distribution, SET India, who will be the company president. From the Discovery side there is Anuj Gandhi, director, affiliate sales, India & South Asia, as the JV's vice-president.

The alliance is being formed at a time when commercial broadcasters in India are increasingly looking at subscription revenues to shore up bottomlines in a climate where the fight for a share of the stagnant ad pie is becoming more and more difficult.

With the addition of Discovery and Animal Planet, the SET bouquet offers a six-channel compact quality package that includes SET, SET MAX, action channel AXN, and business news channel CNBC. One thing that Dasgupta made clear without providing any numbers was that the bouquet would cost more. Queried as to how they expected cable operators to accept increases when resistance was becoming increasingly strident, Shourie said the quality of the package added to an improvement in the services that two companies working together would bring in would make the difference.

MAJOR INCREASE IN CONNECTIVITY IS THE GOAL: The addition of the Discovery package is even more significant now that Sony has acquired the Indian broadcast rights to ICC designated tournaments for the next six years. The newly acquired cricket properties will without doubt be the cornerstone of Sony's drive to increase connectivity across the country as well as push through whatever new subscription rates that will decided. The two channels just add some more muscle to that effort and it is an alliance that is bound to prove mutually beneficial.

"This joint venture enables both partners to offer consumers a comprehensive and diverse bouquet of programming choices, enhancing both partners' distribution strength," Michael Grindon, president of Columbia TriStar International Television, SET India's parent company, said in an official release.

According to the same release, Dawn McCall, the president of Discovery Networks International, said: "Sony and Discovery bring unique, complementary strengths and knowledge to this new joint venture that will offer consumers endless entertainment choices."

Both the Discovery Channel and Sony Entertainment Television began broadcasting in India in 1995. According to the channels' estimates, the former now reaches over 21 million subscriber households, the latter more than 29 million.

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