May 2013

CCI OK FOR MEDIAPRO

Fair trade regulator - the Competition Commission of India (CCI) has rejected allegations of market dominance against MediaPro Enterprise - a joint venture between Zee Turner and Star Den Media Services for distribution of television channels.

BACKGROUND

In May 2011 the distribution industry was shocked by a hurriedly called press conference in Mumbai, to announce a joint venture distribution company that effectively merged the distribution companies of Zee and STAR India, to distribute channels of leading arch rivals Star & Zee!

Talk was that the Competition Commission of India (CCI) was to commence operations in June with strictly implemented curbs on monopolistic practices. The JV was apparently announced to pre-date this development. At the time of announcement the JV did not have a name nor a logo.

The establishment of the JV - MediaPro Enterprise India Private Limited was difficult given the very diverse corporate cultures at both Star India and Zee TV. It commenced operations from July 2011, distributing and controlling 68 channels. The industry was apprehensive that other distribution platforms such as TheOneAlliance and SUN18 would be elbowed out by the goliath JV.

MediaPro Enterprise India is the 50:50 joint venture between Zee-Turner and Star-Den Media Services. In turn, Zee-Turner is a 74:26 JV between Zee Entertainment Enterprises Ltd & Turner International India Pvt Ltd. while Star-Den Media Services is a 50:50 joint venture between Star India and DEN.

CCI PROBE

For a while there was no action by the CCI. However, several months later, the CCI declared that it had launched an investigation against MediaPro's dominant market position, based on a complaint.

The complainant had alleged that players in the market would suffer due to undue advantage available to the joint venture and consumers' interests would also be impacted.

The Director General (DG) - the investigation arm of the Commission submitted its report on the matter on October 15, 2012.

CCI OK

The CCI's final order dated 21 March, was made public in April 2013. It gave MediaPro a clean chit.

The CCI said it cannot be concluded that the joint venture "is a dominant player in the relevant market of the services of aggregating and distribution of TV channels to MSOs (Multi System Operators), DTHOs (Direct To Home Operators) and IPTVOs (Internet Protocol Television Operators) in India."

According to the DG report, market condition where the joint venture has neither the power to determine the price of its product nor has the capacity to refuse to supply or impose any condition in violation of TRAI regulations, "its position cannot be termed to be a dominant enterprise within the meaning of section 4 of the (Competition) Act".

The fair trade regulator said the joint venture cannot create any entry barriers for the new entrants in the market nor it can foreclose the competition by creating hindrance for new players to enter in the market due to the present market dynamics and TRAI regulations.

"Therefore, in view of the present TRAI regulations, there is almost no scope for the aggregators / broadcasters to indulge into the restrictive activities of controlling the supply of their channels to MSOs or other distribution platforms," CCI said.

According to the DG's investigation report, "It is clear that the obvious purpose behind this joint venture is to create efficiencies by optimum utilisation of resources and cost reduction; promote digitisation and addressability; and curb piracy of channel signals". n