RTL, Reliance Broadcast Agree on Deal to Start English Channels in India

RTL Group SA (RTL), Europe’s biggest television broadcaster, agreed to set up a venture with Reliance Broadcast Network Ltd. (RBN) to start two English channels in India, marking its first foray into Asia as a broadcaster.

The venture plans one channel based on reality shows provided mainly by RTL’s production arm, FremantleMedia, and another targeting male viewers with action content, RTL said today. Programs will start in the second half of 2011 as part of pay-TV packages on cable, satellite and Internet television, said Oliver Fahlbusch, a spokesman at Luxembourg-based RTL.

Hartmut Ostrowski, chief executive officer of RTL parent company Bertelsmann AG, Europe’s largest media company, said in March that he wanted to tap Asian markets for growth and named China and India as targets. RTL will have to compete for viewers in a country with hundreds of satellite channels and against established rivals such as Rupert Murdoch’s News Corp. (NWSA)

“It’s a cautious move and a toe in the water to find out how the business works over there,” said Thijs Berkelder, an analyst at Petercam in Amsterdam with an “add” recommendation on RTL stock. “Normally RTL’s strategy is to only be active as a number one or two in a given market.”

Financing Plans

The channels will be mainly financed through advertising in the beginning, Fahlbusch said. RTL’s platform will be attractive to advertisers of brands to an “aspiring, urban” section of the Indian population, he said. RTL estimates the advertising market for English-language channels in India amounted to $143 million, or 7 percent of the country’s total TV advertising market in 2009.

RTL declined as much as 0.3 percent to 68.65 euros and was down less than 0.1 percent as of 3:17 p.m. in Brussels trading. The stock has lost 10 percent this year, giving the company a market value of 10.7 billion euros ($15.2 billion). Reliance Broadcast gained 0.6 percent to 70.30 rupees in Mumbai.

Reliance Broadcast is part of billionaire Anil Ambani’s business group, which includes investments in power, telecommunications and infrastructure. The Mumbai-based company operates radio stations and has a joint venture in South Asia with New York-based CBS Corp. (CBS)

Bertelsmann Chief Financial Officer Thomas Rabe has said the Guetersloh, Germany-based media company can spend as much as 1 billion euros on acquisitions after focusing on debt reduction since the 4.5 billion-euro purchase of a stake that returned full control to the Mohn family.

RTL’s Productions

RTL owns 41 television channels and 34 radio stations in 10 countries, while FremantleMedia, which makes programs including “American Idol” and “The Farmer Wants a Wife,” provides content in 54 countries.

In 2010, Germany, France, the U.K. and Netherlands contributed 77 percent to RTL’s 5.6 billion euros in group sales to external customers, according to its annual report.

“We are committed to offering Indian audiences unprecedented international television content, and RTL Group’s extensive library and lineage compliment the partnership perfectly,” Tarun Katial, CEO of Reliance Broadcast, said in the statement.

To contact the reporters on this story: Cornelius Rahn in Frankfurt at crahn2@bloomberg.net; Ketaki Gokhale in Mumbai at kgokhale@bloomberg.net

To contact the editors responsible for this story: Kenneth Wong in Berlin at kwong11@bloomberg.net; Young-Sam Cho at ycho2@bloomberg.net

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