Mumbai: Luxembourg-based RTL Group SA is entering India through a joint venture (JV) with Reliance Broadcast Network Ltd (RBNL), the media services arm of Anil Ambani’s Reliance Group.
RTL, Europe’s largest television and radio broadcasting network, will forge an equal JV with RBNL to launch general entertainment channels in English.
The two companies signed a preliminary, non-binding term sheet on Thursday, RBNL said in a statement to the bourses on Thursday evening.
This is RBNL’s second major international partnership signed in the past 12 months.
In August, RBNL signed an agreement with US-based CBS Studios International to launch a bouquet of three English language general entertainment channels, one of which, BIG-CBS Prime is already on air.
The JV with RTL will launch two English general entertainment channels, built around reality shows. One of the channels will be based on extreme action and sports, and target male viewers.
RBNL and RTL will also explore the option of getting into the regional entertainment space, especially in Hindi.
“The joint venture company...would be a limited liability company incorporated in India. As currently proposed, RTL and RBNL, or subsidiaries of such companies, would act as shareholders and shall have an equal 50% equity interest in the JV,” RBNL’s statement to the bourses said.
The JV will entail an initial investment of around Rs 100 crore, a Reliance Group official familiar with the development said. He did not want to be identified.
The person added that RBNL could fund its share of Rs 50 crore from the money it has recently raised and through cash generated by the firm’s radio business.
In September, RBNL raised Rs 283 crore from its existing promoters and foreign investors. In February, the firm also received a nod from the Foreign Investment Promotion Board to raise another Rs 45.47 crore.
RBNL’s share price on the Bombay Stock Exchange lost 2.12% to close at Rs 76.30, while the bourse’s benchmark equity index, Sensex, lost 0.77%.
RBNL’s letter to the bourses, which came after market hours, stated that the company’s association with RTL would be “independent” and not conflict or compete with its existing venture with CBS.
“Both the ventures will represent very different content bodies,” Tarun Katial, chief executive of RBNL, said. “While BIG-CBS is more to do with premium general entertainment, RTL brings to the table a vast library of factual, reality entertainment.”
The JV will also give RBNL access to the RTL’s library of content produced by its group production house, FremantleMedia Ltd; this includes shows such as The X Factor, American Idol and America’s Got Talent, and their various regional franchises.
RBNL would look to air these shows on the new channels to be launched along with RTL.
The fate of Indian Idol and India’s Got Talent, aired on other channels in India currently, is yet to be decided. However, the Reliance Group official quoted earlier said the JV would look to produce its own local versions of these internationally successful formats at some point.
Katial said while many channels aired reality shows at present that enjoyed high viewership, India lacked a 24-hour reality channel, and its association with RTL aimed to fill that gap.
Bellator-Fighting Championships, the action-entertainment show based on martial arts, which is currently aired on BIG-CBS Prime, is one the channel’s most viewed shows in India, Katial pointed out.
The JV is planning to roll out the first channel under the new partnership by the middle of the current calendar year, he said.
Analysts said reality programmes have shown that they can attract viewers and advertisers, but added that much would depend on the quality content, rather than the format of the channel.
“Compared to last year, there has been a 10% growth in airtime taken up for advertisements on reality shows, but much would depend on the popularity of the particular show,” said Ashesh Jani, partner at international audit and consulting firm Deloitte Haskins and Sells.
Jehil Thakkar, executive director at audit and consulting firm KPMG, said that though there is a market for niche channels in India, including one based on reality shows, which could command higher advertisement rates than other general entertainment channels, demographics would be a critical factor.
“If there is a format that appeals to the young male and commands significant viewership, advertisers such as automobile and financial services companies would definitely consider it,” he added.
RTL, which has a market capitalization of $15.5 billion (Rs 69,900 crore), operates 40 television channels and 33 radio stations across 10 countries in Europe and the US. RTL is part of Europe’s largest media firm Bertelsmann AG, which has a 91% stake in it.