MUMBAI: In a cluttered environment where news channels are struggling to up advertising rates, NDTV has assigned Star India to exclusively handle the airtime sales of all its news channels - NDTV 24x7, NDTV India and NDTV Profit.
The five-year deal will come into effect from 1 April, bringing together two broadcasting companies that would fight it out in a marketplace that is unfriendly to ad rate hikes.
For Rupert Murdoch’s Star India, the commercial alliance will mean that it has news in its bouquet mix. The network had earlier handled the ad sales of MCCS, the news broadcasting company where it owns 26 per cent stake with ABP Group as the senior partner, but that got separated and is now managed independently.
Said Star India CEO Uday Shankar, "The combination of the NDTV news brand and Star’s leadership should be able to unlock significant value for NDTV. The presence of NDTV news shall strengthen Star’s sales bouquet and enable Star to offer a comprehensive option to advertisers and agencies."
NDTV, which has seen a slowdown in its advertising revenue from news operations, will continue its ad sales arrangement with Raj Nayak‘s Aidem Ventures for lifestyle channel NDTV Good Times, while pulling out all its news outfits from the media consulting, marketing and advertising sales company.
NDTV will focus on content and business development, areas where it is more comfortable with. For consolidating its revenues, it will adopt the outsourcing model. While Star will handle its ad sales, NDTV will depend on Star Den, a 50:50 joint venture between Star India and Den, for its subscription income.
Prannoy Roy has worked with Murdoch earlier before they split in 2003. After the divorce, Roy went on to launch his news channels and got the company listed in 2004.
Said NDTV chairman Roy, "Star, India‘s leading and most successful television network, has been a trusted partner in the past and NDTV looks forward to this new initiative which we are certain will be of mutual benefit. In many ways, it‘s a perfect fit."
Will the alliance jack up ad rates for the news business? "The deal does not necessarily mean that ad rates will go up for NDTV. News is a cluttered market and all will depend on the demand and supply equation," said Madison Media group CEO Punitha Arumugam.
Star India, however, believes that the getting together of the two broadcasting companies will help create value. Said Star India EVP - business development Nitin Kukreja, "There is value to be unlocked with proper packaging. We can command a premium for the news genre."
Selling airtime for NDTV will help strengthen Star‘s offering for male targeted advertisers. “We have a bouquet of English channels including Star World, Star Movies and National Geographic. We, however, haven‘t yet decided which of our channels we are going to package with the NDTV news channels and offer to advertisers," Kukreja added.
Some senior executives, however, believe that the outsourcing model is not a good strategy. "The reality in today‘s world is that in the news business, there is a lot of healthy interaction between business and content. There is overlap in events and sponsorship. So it is better to have the ad sales functions handled internally," the CEO of a news broadcasting company said on condition of anonymity.
Some experts also feel that it won‘t be possible to club general entertainment channels with news channels. "The advertisers are different. The target segments are also different," a media analyst said.
Will Star‘s relationship with ABP be strained? Will MCCS, which owns and operates Star News (Hindi), Star Majha (Marathi) and Star Anand (Bengali), be impacted?
When contacted, MCCS CEO Ashok Venkatramani did not want to comment on the new deal between Star and NDTV.
