If you want to compete with someone, take some of their best product. Roughly speaking, that is how RTL and CBS intend to compete in the cluttered world of English entertainment in Asia.

Top-rated US broadcaster CBS and Europe’s leading broadcast and content major, RTL, will launch an entertainment channel through a joint venture on the back of previously syndicated content. A second, male-focused channel will launch in 2014.

RTL CBS Asia Entertainment Network (RTL-CBS), headed by RTL executive Jonas Engwall, will air shows from its parent companies within 24-48 hours of airing in their original markets.

Shows running on RTL CBS Entertainment will have full exclusivity in pay-TV with a 6-12 month holdback for free-to-air. “We are very fortunate because our parent networks have set aside content exclusively for this partnership,” Engwall says.

Engwall’s team will have first right of refusal for shows from both parent companies, fueling ambitions for the scope and targets of the new business as it looks to compete with established brands such as AXN, Fox and Star World, as well as newer players like Universal and Warner TV.

“Some of the top performing shows on other competitor channels have been moved onto our channels on an exclusive basis,” Engwall says. This should help grow viewership within the pay-TV window, which in turn will help build affiliate value and, gradually, local ad sales.

Two-thirds of the channel’s content will be sourced from parent company libraries, including current hits like Elementary, Under the Dome, The X Factor and America’s Got Talent.

Channels will be subtitled, while dubbing will be considered on a market-by-market basis. All channel feeds are HD, but some operators have reduced them to SD for specific markets.

Distribution deals have already been struck with pay-TV market leader TrueVisions in Thailand, SingTel’s Mio TV in Singapore and Telekom Malaysia, to offer the channel in HD across basic family packs.

“As a rule of thumb, we are seeking between 50-80% penetration of total customers on each platform,” Engwall says.

An agreement with Sky Cable in the Philippines was announced mid-October, with Hong Kong, Indonesia, Taiwan and Vietnam yet to be secured.

Missing from the list so far are agreements with the two biggest players in Southeast Asia, Astro in Malaysia and MNC Sky Vision in Indonesia. These operators have close to six million customers in aggregate.

Strategic rationale

The launch of RTL-CBS forms part of a broader effort by both companies to expand their businesses internationally through repackaged TV channels and syndication, ahead of potentially a large local acquisition in the future.

Companies such as 21st Century Fox and Discovery have patiently built up large, profitable channel businesses outside the US, while Disney, Sony, BBC, Time Warner, Universal and Viacom have developed a combination of channel and syndication revenues outside their home markets.

Owned by German media giant Bertelsmann, RTL is largely dependent on franchises in Germany as well as production company Fremantle, a successful international player.

RTL has been slow to expand outside Europe however, despite a strong balance sheet generating about €700 million (US$950 million) a year in free cash. Its first foray into Asia, made in India through a JV with Reliance Broadcast, has proved challenging.

Significantly, CBS has had a similar experience in India through its own JV with Reliance. CBS generates almost US$2.5 billion in free cash every year, and has a strong international business primarily based on content syndication.

The company is likely to end up with US$1.2 billion in international sales this year, although it remains underweight in Asia.

This article has been revised to reflect the following correction:

Correction: December 2013

"The article "RTL, CBS Reclaim Primetime Content", published in the Q3 edition, quoted Jonas Engwall as saying RTL CBS will move shows from competitor channels to its new channel. It was a misquote and has since been removed."