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Network18, Viacom Tie up With Walt Disney in India

01/30/2013 | 05:22am US/Eastern
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-- IndiaCast to own 74% of venture; Disney UTV to hold remaining stake

-- New venture to offer 35 channels across several platforms

-- Move to help Disney UTV increase visibility in India

(Adds executive's comments, context, background)

By Dhanya Ann Thoppil

BANGALORE--India's Network18 Group Wednesday said its equal joint venture with U.S.-based Viacom Inc. (>> VIACOM'A') has formed a partnership with Walt Disney Co. (>> The Walt Disney Company) to gather content and distribute television channels.

The partnership will be 74%-owned by IndiaCast Media Distribution Ltd. -- the Network18-Viacom joint venture -- and the rest by Disney's India unit, Disney UTV.

Network18 didn't reveal any financial details of the deal but said that both IndiaCast and Disney UTV will move their domestic distribution businesses to the new venture, offering 35 channels across the cable, direct-to-home and Headend in the sky, or HITS, platforms.

The partnership will help Walt Disney -- which currently offers only nine channels in the kids, youth and movies segments in India -- enhance its visibility and improve revenue generation at a time of rapid growth for the country's media and entertainment industry.

According to a 2012 report from the Federation of Indian Chambers of Commerce and Industry and consultants KPMG, India's media and entertainment industry is set to grow at an annual rate of 15% to reach 1.4 trillion rupees ($28 billion) in the next five years.

The new venture, to be headed by IndiaCast Chief Executive Anuj Gandhi, also comes at a time of major change for India's television sector.

The federal government has set a Dec. 31, 2013, deadline for all cable TV networks to convert their transmission signals to the digital format from analog.

The move will help broadcasting companies streamline content distribution and allow for better gathering of user data.

Walt Disney entered India through a partnership with UTV Software Communications Ltd. in 2006. Last year, the U.S. entertainment giant took full control of UTV Software and rechristened the company Disney UTV.

Viacom18 is a joint venture between Viacom and Network 18 Media & Investments Ltd. (532798.BY), the holding company for the Network 18 group, which houses a portfolio of popular entertainment channels such as Colors and the Indian version of MTV.

"There are some clear and unique synergies in this partnership," M.K. Anand, managing director for media networks at Disney UTV, said separately.

"From our point of view, a channel like Colors becomes an extremely good running mate for our movie channels business between UTV Action and UTV Movies," Mr. Anand said on television.

IndiaCast will continue to manage its international distribution business and new media distribution for a few channels separately, Network18 said.

The latest partnership will significantly add to IndiaCast's bargaining power and strengthen its distribution venture business in India, Network18 group Chief Executive Sai Kumar said.

An executive at Viacom18 wasn't immediately available for comment.

IndiaCast, created last July, posted distribution revenue of 2.39 billion rupees in the six months through December. The company is a joint venture between Network18's broadcasting and films arm TV18 Broadcast Ltd. (532800.BY) and Viacom18 Media Ltd.

Shares of TV18 Broadcast were recently trading up 2.1% at 34.10 rupees, while Network18 Media stock was down 1.7% at 37.85 rupees in a Bombay Stock Exchange market 0.2% higher.

Write to Dhanya Ann Thoppil at dhanya.thoppil@dowjones.com

Stocks mentioned in the article : VIACOM'A', The Walt Disney Company
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