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BW Businessworld

Slow ’N’ Steady

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Reliance Broadcast Network (RBNL) is following a low-risk model to expand its footprint. After signing a joint venture (JV) last year with US major CBS to launch three English entertainment channels, RBNL has now signed a JV with Germany's RTL Group owned by the $22-billion media giant Bertelsmann. The new 50:50 alliance will launch two Hindi channels under the ‘Big RTL' brand. The first will be an action channel, while the second will be a general entertainment channel (GEC), driven exclusively by reality shows.

"AXN missed an opportunity by limiting itself to English," says RBNL's CEO Tarun Katial. "We'll make the action channel our flagship."

RTL is Europe's largest television broadcaster with 40 channels; it owns FremantleMedia, which produces shows like American Idol, America's Got Talent, X Factor and Family Feud. As action and reality programming are expensive and require expertise, the new Big RTL channels will source most of its content from Fremantle.

Tying up with CBS and RTL gives RBNL a 50 per cent cash flow; it also gives  a relatively inexpensive and assured source of programming and expertise for RBNL's first set of five channels. Big-CBS has three channels on air since last October — Prime, Love and Spark. The company has, meanwhile, kept off the GEC slot where GECs such as NDTV Imagine and INX Media's 9X channel have met their Waterloo. With programming costs close to Rs 250 crore a year, a leap into the GEC space is a daunting task.

Katial, however, is confident. "There is too much clutter and we hope to get our distribution right with our other channels first." Broadcasters such as Star and Zee Entertainment source 50-60 per cent of their revenue from their flagship GEC channels — Star Plus and Zee TV, respectively. The flip side is that by RBNL keeping off the GEC space means it also stays out of the big league. Perhaps the action and reality channels will pave the way or even morph into a bigger and more comprehensive Hindi entertainment channel later.

That it is experimenting in this respect is apparent from the fact that RBNL recently launched a GEC called ‘Big Magic' for the Hindi heartland based on low-budget programming. With game shows such as Khiladi No. 1 and B-Grade action films dubbed in Hindi, the channel has made fair inroads into the regional market.

RBNL is also readying for the third phase of FM radio auctions. "We hope to raise Rs 200 crore for the new licences. With the norms easing, investors are now interested," says Katial. Big FM 92.7 is the largest broadcaster with 45 stations. Will it acquire struggling radio stations? "It will be a build-and-buy strategy for expansion," says Katial.

RBNL's radio business shows growth; in the first quarter of FY2012, its revenue grew 22 per cent to Rs 49.5 crore over the same period in the previous fiscal. However, losses from new channel launches have dragged RBNL to an overall net loss of
Rs 3.5 crore.

(This story was published in Businessworld Issue Dated 12-09-2011)