Success in India hides weakening outlook for global pay channels in Asia

LOS ANGELES (Variety.com): Pay-TV channels operated by global media conglomerates managed 9% earnings growth across Asia in 2017, according to a new study. But without the growth of the India market, they would have shown a 4% decrease.

New pay-channels research by consultancy Media Partners Asia show that India accounted for 65% of revenues for the global channels groups in the Asia-Pacific region last year, primarily those operated by 21st Century Fox, Sony and Viacom. Southeast Asia accounted for 15%, Japan 7% Australia 5%, and South Korea just 1%.

The MPA data shows region-wide revenues up 4% to some $5 billion and earnings before interest, tax and depreciation of $1 billion. Excluding India, revenues were down 1% to $2.2 billion, with EBITDA dropped to $560 million.

“The performance reflects a more challenging wholesale and retail market for pay-TV in Southeast Asia as well as in Australia and New Zealand, Japan and Hong Kong and Taiwan,” Media Partners Asia’s Executive Director Vivek Couto said. “Ex-India, declines have been evenly spread across most genres. The notable exception is sports, where the growth of BeIN Media Group has helped boost the category.”

Taken together, factual, lifestyle, kids, news, music, movie and the global groups’ Asian entertainment channels experienced an aggregate contraction of close to $150 million in affiliate and advertising sales ex-India in 2017.

The report suggests that the global channels groups cannot turn around the pay-TV market, but that they are increasingly seeking revenues from other sources. These include licensing deals and strategic partnerships with online video and telecom platforms; consumer products; nascent online video advertising. They are also increasingly launching their own branded online video services and investing in premium Asian content and local deals in Korea, Japan and Southeast Asia.

“Success in a large-scale market such as India shows that regional broadcasters that invest in IP and local businesses can create a lot of long-term value,” said Couto. “These bets are starting to percolate across Southeast Asia, Korea and Japan. At the same time, businesses are starting to tap more growth from streaming platforms, including partnerships with online video and telco services.”