When two arch rivals shake hands, it certainly makes for news. So, when last month, Subhash Chandra's Zee Entertainment Enterprises Limited (ZEEL) and Rupert Murdoch's Star India, two of the country's biggest and most popular broadcasters, decided to merge their distribution businesses, Zee Turner and Star Den, respectively, to form a new 50:50 distribution company, Media Pro Enterprise India, it made all stakeholdersespecially multi-system operators (MSOs), local cable operators and direct-to-home (DTH) playersin the broadcast industry sit up.
The rivalry of the two media conglomerates is perhaps as old as the history of satellite television in India . ZEEL, as the first satellite television broadcaster in India , and Star India, which is part of News Corp, have been fighting for the top slot in the broadcast space for the last 12 years. But while the cable and satellite television market today boasts of around 104 million households as subscribers out of the total television-owning household base of 140 million, according to the FICCI-KPMG Media and Entertainment Report of 2011, both the broadcasters have been dependent on the local cable operator to help them reach subscribers and raise subscription fee. Currently the market is highly fragmented with over 50,000 local cable operators (LCOs) controlling over 74% of the market. This results in widespread leakages, under-declaration of subscriber base, poor service mix and low ARPU (average revenue per user).
Both Star and Zee have tried to get an upper hand by setting up their own distribution companies, but it has not been of much help. Zees parent company Essel Group and Turner International formed a 74:26 distribution company in 2002. It distributed all Zee channels other than its sports channels, and the channels owned by Turner including Cartoon Network, HBO and Pogo.
Initially Star distributed its channels directly to MSOs before setting up a 50:50 joint venture with DEN Networks, a cable services company in 2008. The joint venture (JV) company Star-DEN distributed all Star channels along with some non-Star channels such as NDTV 24x7, NDTV profit, NDTV India and NDTV Good Times. Star Sports was not part of this bouquet. Zee-Turner is estimated to have garnered revenues of Rs 800 crore in 2010-11 while Star-DEN generated around Rs 1000 crore in revenues. However, both Star- DEN and Zee Turner claim that they are getting only a mere 12-13% of the total subscription due to them, with local cable operators under-declaring their subscriber