Having invested heavily in Bollywood
and Hollywood and lined up a stable of forthcoming
releases produced by everyone from Nicholas Cage
and George Clooney to Julia Roberts and Brad Pitt,
it is going to be increasingly important for Reliance
to have direct access to audiences. ITV, through
its main channel ITV1 is recognised as the major
entertainment channel in Britain. ITV2 screens
a lot of films and digital channel ITV4 has just
completed a sports deal to the screening rights
for the forthcoming IPL cricket season. The combined
share of all ITV channels and ITV.com would, therefore,
deliver a large Asian diaspora and mainstream
audiences for Reliance, allowing not only screening
options for new releases, but also the entire
back catalogue that Reliance Big Entertainment
If Reliance’s audacious bid for
troubled US film company MGM (23rd January 2010)
goes through, Ambani will also have the MGM back
catalogue of 4000 movie titles including James
Bond and Pink Panther films which it could leverage.
The ITV audience would give Reliance
a major stake in the European market, where the
demand for English-language programming is high.
Mix it with a dash of sub-continent output from
channels like ‘B4U’ and ‘Zee’ and Ambani’s audience
base could readily start in Ireland and end in
Dhaka without major investment in new programming
content. The ITV platform would be worth a great
deal, not only to Reliance, but also other smaller
Asian Sub-Continent channels who could ‘lease’
slots in the schedule.
As the major mainstream TV advertising
channel in Britain, ITV offers Reliance a huge
potential profit stream. ITV reported a small
increase of 7% in advertising revenue for the
first quarter of 2010 even though it remains cautious
during the “worst television advertising downturn
on record”. But more than that, the advertising
channel is a potential route to market for a lot
of Reliance products: from financial services
and insurance to mobile phones, downloads and
interactive games. The platform would also create
new avenues for Reliance Games – currently a market
dominated by the internet and mobile phones.
ITV’s incoming management has a
pretty good understanding of the “Indian way”
of doing business. Adam Crozier, CEO at ITV was
the Royal Mail Chief Executive and former FA boss
and Archie Norman, Chairman of ITV, was formerly
CEO of Asda, a retailer dubbed as “The Asian Supermarket”!
Both men bring a practical approach to the channel
and are likely to put business issues ahead of
programming concerns. This means that Ambani is
likely to find an Executive Team that focuses
on managing the profitability of the business.
In 2009, ITV slashed budgets to make cost savings
of £169m and it shed 1200 jobs while winning back
market share and increasing its international
ITV has won back its share of peak
TV viewing figures and its share of the advertising
market. Given the broadcaster’s current reliance
on TV advertising as a major source of revenue,
Sir Martin Sorrell, boss of the world’s largest
advertising agency WPP, could well be a valuable
boardroom asset to Anil Ambani. Sorrell needs
a better foothold in India and Ambani needs Sorrell’s
steady “hands on a thousand advertising budgets”.
Reliance ITV Cost Savings
The acquisition of ITV for Reliance
(R-ADAG) could potentially lead to more cost savings.
The channel which has been busy divesting itself
of non-core services, like its share in Liverpool
football club TV and its purchase of friendsreunited.com,
still has some more savings to make in the pipeline.
It could divest itself of ITV Studios and its
UK and overseas production business – outsourcing
the lot to Reliance’s Indian production companies.
The cost savings could then be used to plug the
£436 million ITV pension deficit and boost its
online presence itv.com.
For Reliance ITV, the online business
will deliver greater revenue once merged with
Zapak.com – Reliance’s Games platform online and
JumpGames – its mobile games platform; BigAdda
– Reliance’s Social Networking Platform linked
to entertainment and Bigflix.com its Hollywood
& Bollywood film platform online. ITV.com
video views online reached 215 million from 8.7
million unique users in 2009. However it trails
competitors like the BBC whose popular iPlayer
format it cannot access. The acquisition by Reliance
would, however, give the group immediate access
to over 100 million customers and done with skill,
the integrated group – under the larger Reliance
ITV umbrella, in largely an English Language format
– could reach not only 55% of India’s population
that is under the age of 30, but, also the same
youth market across Europe, the Middle East, Asia,
Australia and the USA.
Further cost savings could be made
by closing ITV’s news functions and regional newsrooms
and syndicating the content directly from channels
like CNN, NDTV and Al-Jazeerah! If this sounds
totally crazy, consider the issue of news reporting
and quality of journalism. The BBC with its newly-tightened
remit to improve news, documentaries and dramas
is more likely to produce better news content
that could be syndicated leaving Reliance ITV
to refocus itself on entertainment programming:
‘mid-brow’ stuff that people really want to watch.
Leaving expensive news gathering to other channels
could lead to cost savings in the long term and
a more international flavour to the ITV stable
of channels. By sourcing news and entertainment
content from other production companies globally,
Reliance ITV could also improve its scheduling
and reduce the number of repeat screenings.
Boost for Britain
The acquisition would also give
a boost to Britain. TV regulator Ofcom can’t object
to the acquisition given that Reliance isn’t currently
involved in TV broadcasting. And even if it does,
London offers Anil’s corporation countless lawyers,
analysts and advisors who could “oil the wheels”
for such a takeover. And frankly, Britain needs
a third adversary to the sparring duo of Sky TV
& Virgin Media who have both fought over control
of ITV in the past few years. The City of London
would get a welcome boost with an acquisition
of this size and would probably raise the capital
that Reliance would need to fund such a venture.
Given that more than 90% of ITV shares are held
by institutions, rather than private individuals,
the acquisition could be relatively quick provided
regulators like Ofcom and the Competition Commission
and broadcasting unions are appeased.
British viewers want more entertainment
But what would the average viewer
think? Given ITV’s penchant for strictly mid-brow
TV dramas and soaps, most viewers would welcome
more entertainment. Simon Cowell’s ‘The X Factor’,
popular shows like “I’m A Celebrity Get Me Out
of Here’, Ant and Dec and ‘Coronation Street’
is what helps pull in the viewers so maybe more
of the same from around the globe would be a welcome
move. Bollywood films, when subtitled in English
are popular in countries as diverse as Nigeria
and Brazil, so perhaps a loyal British following
is not too far behind?
“If the last century was about
meeting human needs, the new millennium is about
matching human aspirations. We live in a world
where the young are reaching higher, dreaming
bigger and demanding more; a world that is challenging
the limits of hope and possibility” says Anil
Ambani in his Chairman’s message to Reliance Big
Entertainment shareholders. Perhaps Reliance’s
motto of: "Think big. Think fast. Think Ahead."
is just what ITV needs.
About Reliance Big Entertainment
The Reliance – Anil Dhirubhai Ambani
Group (R-ADAG) is among India’s top three private
sector business houses on all major financial
parameters, with a market capitalisation of Rs.325,000
crores (US$ 81 billion), net assets in excess
of Rs.115,000 crores (US$ 29 billion), and net
worth to the tune of Rs.55,000 crores (US$ 14
billion). Across different companies, the group
has a customer base of over 100 million, the largest
in India, and a shareholder base of over 12 million,
among the largest in the world.
The interests of the Group range
from communications (Reliance Communications)
and financial services (Reliance Capital Ltd),
to generation, transmission and distribution of
power (Reliance Energy), infrastructure and entertainment.
Reliance Big Entertainment Ltd. (RBEL) is the
flagship media and entertainment arm of the Indian
conglomerate, with significant presence in film
entertainment (film production, distribution,
and exhibition), broadcasting and new media ventures.
investments over USD 1 billion in its Filmed Entertainment
business RBEL's motion picture brand, BIG Pictures
has built a formidable film production slate in
Hindi, English & other Indian languages, which
it markets & distributes worldwide. The slate
has projects with leading production houses and
marquee Indian directors like Vidhu Vinod Chopra,
Rakesh Roshan, David Dhawan, Indra Kumar, Ravi
Chopra, Farhan Akhtar, Sudhir Mishra. Shaji N.
Karun, Shyam Benegal, Rituparno Ghosh, Buddhadev
Dasgupta, M.S Sathyu & Amol Palekar,
On the Hollywood slate, BIG Pictures
has development silos with Nicolas Cage's Saturn
Films, Jim Carrey's JC 23 Entertainment, George
Clooney's Smokehouse Productions, Chris Columbus'
1492 Pictures, Tom Hanks’ Playtone Productions,
Brad Pitt's Plan B Entertainment, Jay Roach's
Everyman Pictures, Brett Ratner’s Rat Entertainment
and Julia Roberts’ Red Om Films.
For further information, please
Your right to reply
If you'd like to reply to this
article, post your comments here:
* Please note that that the
author of this article has no links to Reliance
Anil Dhirubhai Ambani Group , ITV Plc or any subsiduaries
of either company.