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Reliance Broadcast TV venture faces uphill task
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Reliance Broadcast Network (formerly Reliance Media World)'s joint venture with US-based CBS Studios International signals its big-ticket entry into the broadcasting space. There will be a joint investment of $100 million over five years in this joint venture. But for Reliance Broadcast, which is set to launch a clutch of channels, the going may not be smooth.

The joint venture initially envisages the launch of English language General Entertainment Channels (GECs) and later on Hindi GECs. Both these endeavours have inherent challenges. The English GEC is dominated by channels such as AXN and Star World with Zee Café too providing competition. The genre commands far lesser viewership than Hindi and Regional GECs, that together account for a bulk of all television viewership. This, with the fact that there is stiff competition, means that driving advertising revenues would be an uphill task for Reliance Broadcast.

The most lucrative markets – Hindi and other regional GEC – are an even more difficult terrain. The Hindi GEC is dominated by Colors, Star Plus and Zee TV, which take away a lion's share of the advertising pie.

Of course the success that Colors has had, with limited operating history, in toppling the other two to reach top viewership would make Reliance Broadcast replicate the feat, though it may not be easy.

Reliance Broadcast is still a loss-making business, though its radio business (Big FM) has generated marginal operating profits on a revenue base of Rs 184.3 crore for FY10.

This division was its core until now, and it remains to be seen how much the company is able to spend to get to a sound position in this and its new television business.

From a more macro perspective, this move clearly ups the ante, what with the 18 per cent stake purchase in Bloomberg UTV recently.

The stock has risen by over 58 per cent in the last three weeks. On Tuesday the stock ended higher by about 3 per cent to close at Rs 81.5.

Source: The Hindu Business Line

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