There's much more in the Network18 and A&E Television deal

Though the advertising revenue in the genre of specialised channels is only in the range of Rs 150-200 crore which is not very high, the JV is expected to give a push to Network18's recent distribution venture, Sun18

The newly formed JV (joint venture) between Network18 and A&E Television, called AETN-18 India, which will see the roll out of international AETN channels such as History and Bio in India, is much more than a mere tie up or Network18's expansion to other genres.

Media analysts believe that such tie ups are a sure sign of consolidation in the industry and foray into innovative business ventures. Tie ups like these are the order of the day - for even the AETN entity is a joint venture between several big media corporations. Interestingly, AETN is a joint venture of The Hearst Corporation, Disney-ABC Television Group and NBC Universal.

Network18, through its JV Viacom18, is already present in genres such as general entertainment, news, kids and music. It currently enjoys a presence of about 75 per cent across TV genres, which together see most of the advertising money flowing in. The specialised channels will help the group claim a share in the additional pie of Rs 150-200 crore of advertising revenue that goes into this sector - which is certainly not very high. However, the tie up is expected to boost Network18's recent foray into the distribution business through a JV with the Sun group.

It is to be noted that AETN is the fastest growing pay television company in the US. Currently, it operates two of the top five pay TV networks, including History and A&E, along with the No. 1 women's network, Lifetime. Industry observers feel that the group will air the new specialised channels free-to-air for the time being but later, after substantial sampling by the viewers, these channels could also turn pay.

Ashesh Jani, leader, media, Deloitte India, observes, "In-house distribution alliances for marketing such new channels go hand in hand with such ventures as the partners can then exploit the entire value chain in the business."

Though Network18 officials declined to comment on the JV beyond the official announcement, it is learnt that the new planned niche channels by AETN-18 India will also be distributed by Sun18. The distribution network is entitled to distribute a total of 33 channels, comprising various offerings from Viacom18, Sun TV Network, Disney India and Network18.

Besides, Nikhil Vora, managing director, IDFC Securities Ltd. comments that through this tie up, Network18 will have access to ready content without any extra cost - AETN will essentially air its global content in India. This makes the tie up a more viable business. Besides, it will be able to cater to every segment of the audience with specialised offerings.

However, Jani of Deloitte observes that as always, the marketing of the new channels is where the challenge remains. "The success of any venture depends on the strength the broadcaster has in marketing the time slots and earning ad revenue. An important subset of this is the content, which is increasingly becoming more region specific. In this context, the quality of programming of material that pertains to other regions of the world will determine the extent of viewership and in turn, the extent of noise the cash registers make for the channel owners," he says.

Many industry observers also feel that the JV is a result of Network18's desire to be seen as a big network - at par with the Zee group or STAR Network.

However, on the flip side, there's still much to happen following this announcement. As Rohit Maheshwari, research analyst, KR Choksey Securities, asserts, "Whatever channel the JV plans to launch has to seek due approval and clearances from the Ministry of Broadcasting. As per the recent media news, the government has, of late, only approved about 400 new channels and out of these, only 200 have been commissioned. Since 2007, the government has not issued any new licenses."

He adds, "The news related to the JV is merely a formal announcement of the partnership between the two parties and does not translate into immediate plan of action. The new entity will take time in getting through all the legal formalities and government regulations before being active in real form."

The JV also means a lot for A&E Television, which will try to duplicate its worldwide success stories in India riding on Network18's strength.