New Delhi: Videocon d2h, the direct-to-home (DTH) television arm of Videocon Industries Ltd, and Zee Entertainment Enterprises Ltd-owned DTH platform Dish TV will merge, the companies said in a joint statement on Friday.
The board of directors of both companies approved the merger on Friday and the new entity will be renamed Dish TV Videocon Ltd, Dish TV and Videocon d2h said in the statement.
“The proposed transaction is expected to provide better synergies and growth opportunities and enable Dish TV Videocon to provide differentiated and superior service to all customers through deeper after-sales, distribution and technology capabilities, and also become a more effective partner for TV content providers in India,” the companies said.
At present, India has six private DTH firms—Dish TV India Ltd, Videocon d2h, Reliance BIG TV Ltd, Tata Sky Ltd, Sun Direct TV Pvt. Ltd and Bharti Telemedia Ltd.
State-owned broadcaster Doordarshan also runs a DTH platform for free-to-air channels called DD Free Dish.
Jawahar Lal Goel, managing director of Dish TV, will lead the combined entity as chairman and managing director. Dish TV will own 55% and Videocon a 45% stake in the new company.
“There was a need for consolidation in the industry because of the competition and regulatory challenges. This transaction, that brings together two powerhouse brands of the cable & satellite industry in India, will provide us with a gateway to harness growth opportunities in an ultra competitive multi-player environment,” Goel said.
The transaction, still subject to regulatory approvals, is expected to create a leading cable and satellite distribution platform in India, the companies said in the statement.
“This merger will take the company to another level. The combined synergies will create value for all the stakeholders. It’s a new opportunity,” said Saurabh Dhoot, executive chairman at Videocon d2h.
In July, the information & broadcasting ministry accepted recommendations of the Telecom Regulatory Authority of India, which had proposed increasing licence duration of DTH firms to 20 years from 10 years and cutting their annual fee to 8% of adjusted gross revenue (AGR), from 10% of gross revenue.
“We have been facing discrimination in the broadcast distribution space. These changes will sure come as a relief,” said Goel of Dish TV.
For the quarter ended September, Dish TV posted a net profit of Rs70.1 crore. It added 259,000 subscribers during the quarter, taking its net subscriber base to 15.1 million.
Jehil Thakkar, head (media and entertainment) at consulting firm KPMG, said consolidation in the DTH industry was long expected.
“This may potentially spark a consolidation in the Indian DTH and cable distribution space. The broadcasting space has consolidated over years and it’s only a matter of time that distribution follows,” Thakkar said.
Revenues in the DTH industry are expected to touch $3.9 billion by 2017 and $5.3 billion by 2020, up from $1.5 billion in 2012, according to a 2013 report on the Indian DTH market by Hong Kong-based research firm Media Partners Asia.