Opinion
Season 2 of Indian TV’s soap opera: All it needs is some background music
Summary
- Plot twists reign as Reliance and Disney work out an alliance even as the drama of the Zee-Sony split threatens a fallout that could potentially upset negotiations between the first two.
Dramatic close-ups and unexpected plot twists reign supreme as two heroes from opposing teams fiercely negotiate the terms of their cooperation. Meanwhile, another two characters make us suspend disbelief as they tear apart their friendship with over-the-top drama, whose fallout even threatens to upset the talks between the first two. Captain America and the Winter Soldier? Nope! I’m just talking about what’s playing out between Disney Star and Reliance Industries on one hand, and Sony and Zee on the other.
India is a complex media market where success is contingent upon the ability to adapt to local audience behaviour, their demand for culturally relevant content, and manoeuvring through an ever-developing policy landscape. Global media giants that have tried to go it alone in India have inevitably failed. Right from the early 1990s, as Rupert Murdoch’s Star TV transformed into India’s largest broadcaster by going after the Hindi-speaking audience, we have seen Viacom, Turner, Disney and many others Indianize. This is true for almost any large market in the world, including Indonesia, the Philippines, Vietnam, Korea, Latin America and the Middle East North Africa region, to name just a few.
Disney has had a chequered run in India. Its first attempt to enter the market in the 90s came apart quickly. Its second attempt with the progressive acquisition of Ronnie Screwvala’s UTV was a much more solid proposition. It propelled Disney to the top of the kids’ broadcasting pile with Hungama TV and made it the most premium Bollywood force, thanks to UTV Motion Pictures. I was fortunate to have had a front seat watching the early part of Disney’s growth in India over my 13 years at UTV. However, what really changed Disney’s hold on India was the 2019 mother of all deals: Its $71 billion acquisition of 21st Century Fox. With it came India’s Star TV and Hotstar, making Disney the largest broadcaster in India and also a neck-to-neck competitor of Netflix in direct-to-consumer digital subscriptions.
The most gripping stories always have their main protagonists encounter their deepest challenge when they are at the top. And just like that, Hotstar too suffered a big blow with its loss of Indian Premier League streaming rights, sparking a sharp subscriber drop. Coupled with it were impacts from the covid pandemic, high spending on its global Disney+ service and questions around what to do with the company’s non-core US assets. Disney’s solution was to align interests with Reliance, with the latter expected to have a majority stake in a forthcoming merger between Reliance’s media business and Disney-Star. With it, Disney’s India business will be back to having an Indian partner shareholder, and that too, one of India’s strongest.
The Indian audio-video entertainment industry stands at a crossroads, marked by that transformative Disney-Reliance deal and the inevitable breakdown of the Zee-Sony merger. The latter would have created a giant that could’ve rivalled the coming together of Disney Hotstar and Jio Cinema. The emergence of one mega-player that controls almost a third of all general entertainment viewing in India could have a wide impact, touching even big-budget advertisers. Media planners will expect to pay a higher premium for an audience chunk available at one stop. Especially when that one player also happens to be India’s largest telecom firm with the most enviable direct-to-consumer reach.
Many will benefit from these developments. Waiting in the wings, like the quintessential frenemy in all stories, is the content creation industry. Creators would already be counting on new opportunities, as demand for more dynamic and innovative content to feed this giant would certainly increase.
The Zee-Sony plotline has not concluded yet. Sony’s decision to call off the merger is just the midpoint in this story arc. This will play out for months at arbitrations in Singapore and Indian tribunals. Don’t count out the institutional shareholders or activist shareholders of Zee who have seen the value of their holdings go down sharply after the break-up. They could force changes at the board and management levels and make conditions right for Sony again. Or perhaps a new knight might emerge to sweep Zee off its feet. I can think of many conglomerates in India with media aspirations. Zee also seems like the perfect damsel-in-distress candidate. It has already missed a $200 million payment to Disney for ICC cricket broadcasting rights—part of a larger deal valued at more than $1.3 billion over its lifetime. So significant is this cricket-rights deal that it might end up devaluing Disney Star by up to $2 billion in the acquisition math for Reliance. There must also be merger-deal memo penalty clause payments that Zee might have to deal with. If Indian media is a spectacle, then what’s going on right now is nothing short of a soap opera.
Early in my career at UTV, I worked for a few years on soap operas for Malaysian audiences. It feels apt to quote what my then Canadian-Indian boss Firdaus Kharas used to say at screenings: “This really needs some background music."
