MUMBAI: TV18 founder-promoter Raghav Bahl has become much bolder in setting up his distribution business in 2012, first sheltered under MSM Discovery‘s TheOneAlliance and then moving to a strategic alliance with the Sun Group.

Adding the ETV regional-language channels and getting billionaire Mukesh Ambani (RIL invested in Network18 Media & Investments and TV18 through Independent Media Trust) to clean-up his debt overhang, Bahl has identified pay-TV revenues as his next growth driver at a time when India is preparing to migrate from analogue to digital cable.

Bahl will have media conglomerate Viacom as a minority partner with 25 per cent stake in IndiaCast, the new distribution company that will also house the syndication business and exploit content across all media platforms.

TV18 will hold the remaining 75 per cent as Bahl searches for new revenues that will propel his media empire to the leaque of major broadcasting networks like Star India, Zee Entertainment and Multi Screen Media (formerly known as Sony Entertainment Television India) in subscription revenues.

"TV18 is a laggard compared to the biggies so far as subscription revenues go. It will really have to ramp up pay revenues," says the head of a leading broadcasting network who did not want his name to be revealed.

TV18 group of channels, including flagship Hindi general entertainment channel Colors, earn a subscription revenue of around Rs 3 billion a year. The handling of the ETV channels (barring Telugu which is still with ETV) will mean another Rs 1 billion, says a source close to the company.

Compare this with Zee Entertainment Enterprises Ltd (Zeel) that posted domestic subscription of Rs 9.22 billion in FY‘12, up 28.4 per cent from the earlier year. Star and MSM also enjoy pay revenues that are more than double that of TV18.

Carving out an independent existence, Bahl has spotted Anuj Gandhi, a veteran with years of experience, to shepherd the growth of IndiaCast. The equal joint venture company between TV18 and Viacom18 will bring pay revenues, carriage and placement under one roof, allowing it to plan its deals with cable TV networks with a focus on net revenues. Setpro, the Network18 subsidiary that used to handle carriage and placement fees, stands dissolved.

"Bahl has the knack of picking up the top person who would make a difference to his expanded business. When he launched general news channel CNN IBN, he got Sameer Manchanda and Rajdeep Sardesai. When Colors was planned for launch, he got Rajesh Kamat to head the channel. For his distribution and content syndication business, he will have Gandhi to nurse the company to growth," says an analyst who tracks media.

Barely three months after joining TV18 Group, Gandhi has plotted a free existence for IndiaCast. Sun Group will no longer distribute the TV18 channels in the southern states of Andhra Pradesh, Karnata and Kerala. It will still have Tamil Nadu, the regional broadcaster‘s home turf.

"We have got three more markets while Sun will continue to distribute our channels in Tamil Nadu. We also have the ETV channels to distribute in India and overseas barring ETV Telugu (GEC) and ETV2 (Telugu news channel) that they own. We will continue to distribute the Sun group and Disney channels in the Hindi speaking markets," says IndiaCast Group CEO Gandhi.

TV18‘s subscription revenues from the southern markets is dismally low, accounting for around 12 per cent of its total pay revenues. The other big broadcasters manage to mop up 20-25 per cent of their total pay revenues from the southern region.

"We are expecting to get an upside in subscription revenues from the south. We have not fully tapped the market there," says Gandhi.

Why did IndiaCast decide to leave the distribution of the TV18 channels to Sun Group in Tamil Nadu when it had lost its cable TV dominance in the state after the Jayalalithaa government decided to float Arasu Cable?

"We still feel that Sun is a very powerful network in Tamil Nadu. We also wanted to continue having amicable relationship with Sun," says Gandhi.

The possible reason of doing away with Sun distributing the TV18 channels in Andhra Pradeh, Karnataka and Kerala could be that ETV, now under ownership of TV18 (100% in ETV’s news channels and 50 per cent in GECs), competes with Sun in the southern markets. In Tamil Nadu, where Sun will distribute the TV18 channels, ETV doesn’t have a presence.

In Tamil Nadu, where Sun will distribute the TV18 channels, ETV doesn’t have a presence.

"That logic doesn’t hold because in Andhra Pradesh, where ETV is distributing the two Telugu channels that it controls (TV18 has 24.5% in ETV Telugu and ETV2), we are distributing our channels," avers Gandhi.

Gandhi also gets in bargain the Disney channels through Sun as the global media conglomerate has a distribution arrangement with the Kalanithi Maran company.

The new structure will, however, not add any competitive advantage. "In the south, they do not have an English movie channel. They also do not have strong English general entertainment channels. And under the new power equations, with Arasu becoming a powerful cable TV network, it is actually a disadvantage to go with Sun for distribution in Tamil Nadu," says the head of a distribution company.

IndiaCast will distribute 26 channels, including entertainment, kids, news, infotainment, music and regional languages, across cable, DTH, IPTV, Headend-In-The-Sky (HITS), and MMDS (Multichannel Multipoint Distribution Service). The leading channels in the bouquet are Colors, CNBC TV18, CNN IBN, IBN7, MTV and Nick. The company will also distribute the Disney and Sun channels in the Hindi speaking markets.

IndiaCast will, however, have to compete in a strong neighbourhood. Media Pro Enterprise India, the equal JV between Zee Turner and Star Den, has a much wider and powerful bouquet with 68 channels. TheOneAlliance has 22 channels to distribute, lower than IndiaCast, but in its bouquet it has sports channels.

"We have strengthened our position. We have added ETV which has a string of popular regional-language channels," says Gandhi.

IndiaCast is given a broader shape with content asset monetisation across geographies, platforms and mediums falling under its umbrella. The other channel distribution companies do not have such a wide canvass and content syndication falls outside their functional zones.

"The company is structured in such a way that it takes into account the fact that technologies are merging. The lines are blurring and if you are doing an OTT (over-the-top) deal, the content is visible across the world. So you need to look at it wholistically," says Gandhi.

Content syndication is still a low business. Zeel earned Rs 1.32 billion in FY‘12 through other sales and services (syndication sales, playout & transmission services and facility usage income) while Colors ended up with Rs 300 million, says a source.

IndiaCast will have sufficient room for growth. "We see scope in upping revenues from all the lines: online, digitisation and existing businesses. There will be growth from DTH and analogue cable as well. We will launch more channels in overseas markets. We also expect strong growth from future businesses like content syndication," says Gandhi.

For Bahl, the time to marshall his resources to push for high subscription revenue growth has arrived. It has been a bumpy ride since he signed a contract with TheOneAlliance to distribute his highly popular entertainment channel, Colors. The deal for Colors and the other Viacom18 channels was for Rs 3 billion minimum guarantee (MG) over a three-year period effective 1 April 2009. Souring relations, he formed a strategic alliance with the Sun Group in 2010 but growth was far from satisfactory. Now he hopes to see the next leg of growth under a company that is structured to make the leap.