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India: Why Is It Viacom’s Valuable Asset?

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Mar. 30 2016, Updated 8:12 a.m. ET

Viacom’s Voot

The OTT (over-the-top) video streaming market in India (EPI) is heating up. Viacom (VIAB) is set to launch Voot, an OTT service, in India by the end of March. Other existing OTT players in the market include Netflix (NFLX), 21st Century Fox’s (FOXA) hotstar, and Sony’s (SNE) LIV.

The company stated at a Deutsche Bank (DB) investor conference earlier this month that its joint venture with Reliance Industries in India Viacom 18 makes them “the largest media groups in India.” The company has 16 networks in India. Viacom 18 caters to a broad demographic in India with its regional language portfolio of channels and its target of kids and youth with Nickelodeon and MTV, respectively.

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21st Century Fox is another company that’s targeting a profit of $0.5 billion in fiscal 2018 and a profit of $1 billion in fiscal 2020 for STAR network in India. The company is on track to achieve this target through the growth of its STAR entertainment network, which has a 22% market share of entertainment in India.

India: Why Is It Viacom’s Valuable Asset?

As the chart above indicates, FOXA stated in an earlier earnings call that the Indian television market could be worth $20 billion by 2020.

Viacom continues to grow in India

Viacom’s revenues in India are experiencing a strong double-digit growth. Regarding India, Viacom stated at the Deutsche Bank investor conference, “So it’s a very valuable asset, which we’re going to build. And as we’re doing with various parts of Viacom, we’ll look at ways to make that value that we’re building more transparent.”

The company went on to say “And where we have joint ventures, as you pointed out, it’s not consolidated. I’m not sure we’ll have the opportunity with our partner to consolidate, but we may have other opportunities to show where the value is. So, for example, we can take advantage of capital markets in a place like India someday that can bring out the value a little better.”

FOXA makes up 0.64% of the PowerShares QQQ Trust Series 1 ETF (QQQ). If you’re interested in exposure to TV, QQQ has 4.7% exposure to that space.

In the next part of this series, we’ll take a look at some of Viacom’s new avenues to license its content.

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