The content and distribution juggernaut

Reliance makes another media move

VIASandip Sen
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It is already happening in the US. Cable companies are increasingly buying content providers to consolidate their hold on what the consumer is reading, listening and hearing. While in India earlier this year, Raju Narisetti spoke spoke about this consolidation gripping the US –“AT&T just bought CNN. Comcast owns shares of Buzz Feed and Voux. Verizon bought Yahoo, AOL and The Huffington Post. The telecom companies have a big advantage. They already have pipes into our homes that feed the Internet, cable TV and our phones.” (Indian Printer and Publisher, September 2018.)

Buying the content producers

In India, Reliance is taking rapid steps to consolidate its position similar to AT&T and Verizon’s in the US. After years of low profile investments, it positioned itself strategically into the central space of Indian media less than five years ago. In January 2014, following up its multilayered 2012 deal with Raghav Behl’s Network TV 18, it lent TV18 Rs 2,000 crore in order to get the company to consolidate a majority stake in Eenadu’s ETV regional television stations. (TV 18’s stake in Eenadu was itself a legacy of a Reliance loan or bail-out to the Hyderabad-based publishing and media group.)

In return, the TV18 holding company would own 100% stake in regional news channels ETV Uttar Pradesh, ETV Madhya Pradesh, ETV Bihar and ETV Urdu and in entertainment channels ETV Marathi, ETV Kannada, ETV Bangla, ETV Gujarati and ETV Oriya. Apart from these, it would own 49% of Eenadu’s two Telugu channels – ETV Telugu and ETV Telugu News.

Months later, in a swift strategic move in May 2014, Reliance exercised its option to buy out Raghav Behl’s entire stake in Network 18 which included magazines and television networks that Behl had acquired and built up over the previous decade. It was a win win deal for both. It is said that Behl got around Rs 4,000 crore, a large part of which was offset by loans given to him. Mukesh Ambani’s Reliance got control of news channels CNBC TV 18, CNN IBN, CNN Awaz, entertainment channels Colors, MTV, ETV and Homeshop Entertainment, the news and financial websites Firstpost and Moneycontrol, a half a dozen magazines including the license to publish Forbes India. He also got control of TV 18 and most of the ETV channels. In less than six months Reliance became India’s largest television producer, beaming content through 44 news and entertainment channels in English, Hindi and six regional languages across India.

Laying the content pipes and controlling distribution

A year later, Reliance entered the telecom industry with the launch of Jio 4G services across India. Despite stiff opposition by competitors Airtel, Vodafone and Idea, Reliance Jio made fast inroads with aggressive pricing and a fairly strong fibre optic network infrastructure. Within two years of entry, Jio gained nearly 10% market share. With the unveiling of its upgraded 5G network, the new but powerful entrant is expected to launch the fibre to home technology giving it dominance in the country’s broadband and TV broadcasting landscape.

In October 2018, Reliance Jio consolidated its grip on content distribution by buying controlling stakes in two major cable and data carrying companies – Hathway Cable and Datacom and Den Networks for Rs 5,230 crore. This will pitch it strongly against Airtel, a competitor that has steadily been building its broadband and fixed line services over the past decade. This sent ripples of worry across the media industry unable to do much about the speed of the petrochemical giant’s acquisition in the cable and data distribution space. In reality, the Reliance juggernaut is too massive for any other media house or cable company to stop or challenge. In the next five years, Reliance’s position may give it a near monopolistic total control on content generation and distribution in the country.

For the September 2018 quarter, Reliance Industries reported a 54% rise in consolidated revenue to over Rs 1,56,000 crore (approximately US$ 22.28 billion). Of this, it’s core operations of oil, gas, refining and petrochemical business accounted for 80%, retail business accounted for another 19%, while the data and content business accounted for less than 1%.

The capacity of the petrochemical major to invest in and buy key players in the puny distribution and media industry is immense. Without the net neutrality and data laws in place, it could run amok and create an unbeatable monopoly in a decade. Even the largest Indian media house or telecom major cannot match its financial strength or political clout, and that looks worrying.

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