Last year, Viacom spent US$725 million to add a major free-to-air asset, the UK’s Channel 5, to its international portfolio.

It was an uncharacteristic move, noted Viacom International Media Networks president and CEO Bob Bakish, speaking at this year’s APOS conference on a session called Pillars Of Future TV Industry Growth.

“Fundamentally, we are an organic growth company,” Bakish elaborated. “We believe there is a substantial opportunity to continue to partner with pay-TV operators all around the world.”

While Viacom remains open to M&A, the Channel 5 takeover – the biggest outlay by the US broadcaster in eight years – should not be seen as a strategic step-change, Bakish explained.

“We look at a lot of stuff, but we have a pretty high bar,” he said.

“If an interesting acquisition opportunity materializes in Asia, we would look at it. Whether we do it or not, who knows. But it’s not an essential part of our strategy.”

Despite currency headwinds, the promise of rising GDP and consumer spend in international markets continues to entice US media majors.

The growth dynamic, originally based on rolling out curated branded pay-TV channels with varying degrees of localization, is changing however.

Strong channel brands are coming to the fore, supported by digital rights, differentiated content and closer relationships with distribution platforms.

Catch-up and multiscreen rights helped Viacom helped secure distribution in Latin America for Paramount, its ad-supported linear movie channel, Bakish noted.

“That turned the conversation from: ‘We don’t need another one of those’ to ‘That’s a pretty interesting proposition’,” he said.

Rights Economics

It isn’t easy securing digital rights for top-tier US entertainment content, while rising costs for the most popular shows add to margin pressure, increasing the appeal of more regional and local plays.

In April, Sony unveiled Asian entertainment channel Gem, a partnership in Southeast Asia with Japan’s Nippon TV. The move follows Sony’s successful tie-up with Korea’s SBS to create and distribute another Asian entertainment offering, One.

“There are certainly other opportunities for genres and content that isn't being served, but no-one is going to watch your channel if you’re not providing all the rights, because that's what the operators want and that’s what they need,” remarked Andy Kaplan, president of worldwide networks for Sony Pictures Television, speaking on the same panel at APOS.

“That's a lot more challenging in the general entertainment world, so the local and regional content is a little bit of an alternative strategy,” Kaplan added.

“It’s lower cost and a lot more flexible. I think there’s a lot more leverage in those sorts of things.”

Sony has also placed a bet on OTT video consumption in Asia, taking a stake (alongside Warner Bros) in Singtel’s SVOD play, Hooq.

The move signals a new phase of industry experimentation on both a country and regional basis, Kaplan explained, with other forays likely to follow.

“Everybody needs to look at this world we’re going into with open eyes, in a very optimistic and pragmatic way,” Kaplan said.

“If everybody just hunkers down and gets defensive about choosing sides, it goes against the nature of all of our businesses, which is that our channels are supposed to be ubiquitous and available to the widest audience,” he added.  

“I think the days of having one partner and one particular business are behind us.”

For US broadcasters, overseas businesses are buoyant, especially compared with slower growth and challenges around monetizing new consumption behavior at home.

“The strong dollar sometimes gives us the wrong picture,” observed Gerhard Zeiler, president of Turner Broadcasting System International.

“But if you look at Turner, within three years – if we would see the same dollar ratio to most of the currency as in 2012 – this year would have more than doubled our profitability with a strong revenue growth," Zeiler told APOS attendees.

"That’s not only for us; that’s for a lot of our colleagues too.”

Brand Battles

It’s not business as usual however, Zeiler added, outlining plans to cultivate powerful brands at both a regional and local level.  

In Asia, The company has launched a number of new regional offerings in Asia in recent years: kids channel Boomerang, to sit alongside Cartoon Network (“Boomerang will not be a flanker channel, it will be a fully-fledged kids channel all over the world,” Zeiler said); Korean entertainment channel Oh!K; and World Heritage Channel, a factual offering.

“We need more must-have channels and fewer nice-to-have channels,” Zeiler stressed.

“I think this is true for every one of us working internationally. Will some channels that now exist disappear? Absolutely.”

One market where Zeiler is treading carefully is India, where Turner has a strong suite of kids and English entertainment, but endured two costly failures in Hindi entertainment.

“To go in at full speed now would be quite risky and probably very costly, but we have to be smarter,” he said.

“We have a great partnership and great relationship with Zee; let’s see what comes out of that.”

Private equity Saban Capital Group is also evaluating prospects in India for an Asian portfolio that includes stakes in Indonesian TV major MNC Group, kids portal Taomee in China, and regional Asian channel group, Celestial Tiger Entertainment.

“It’s a low-Arpu but tremendous growth market,” said Saban Capital’s president and COO, Adam Chesnoff.

“We unfortunately have not found an entry point into India yet but it’s very much on our radar. We’re looking at a variety of opportunities, some of them in digital,” he added.

“At Celestial Tiger Entertainment, we think some of our channel brands have expansion opportunities in India. I think we’ll continue to spend a lot of time in India, and hopefully by next APOS find a way to actually go into the market.”