MENA satellite pay TV operator OSN has agreed to acquire Pehla Media & Entertainment. No financial details for the deal, funded by a mix of cash and debt, were given.
Pehla is a pay TV channel operator targeting the South Asian expat communities living in the Gulf States. Pehla's offer comprises four packages carrying between 20 and 47 channels. All four packages were added to OSN on 1 September under the commercial name OSN Pehla. The channels carry programmes in Hindi, Urdu, Bengali, Tamil and Malayam. All Pehla packages will continue to be provided in the UAE by IPTV operators Du and Etisalat, but from now on under the new name.
Pehla packages are very popular among the South Asian community because, apart from the major Bollywood blockbusters and dramas, Pehla has exclusive rights for all International Cricket Council (ICC) competitions.
Just one week before the Pehla acquisition announcement, OSN inked a deal with UK telecom operator TalkTalk to launch the channel OSN Yahala in TalkTalk's YouView platform. OSN Yahala is an Arabic-language general entertainment channel that currently is the second most popular among the 108 channels that the Dubai-based operator is carrying. The channel distributor internationally is French company Thema. According to the official OSN announcement this deal marks the first time that an Arabic general entertainment channel has been transmitted internationally outside the MENA region.
OSN is the single pay TV operator in the MENA region that caters for a wide range of target groups: women and families, young people, Western and South Asian expats as well as for the majority of the Arab male population. Its content proposition is the most diverse in the region distinguishing OSN from the monothematic offers of the other pay TV operators (sports for Al Jazeera and previously for ADMC, and religious and family programmes for Al Majd). This policy paid off as OSN's subscribers had experienced a compound annual growth rate (CAGR) of 18.1 percent between 2009 (the year the company was formed from the merger of satellite pay TV operators Orbit and Showtime) and 2012 according to IHS E&M MENA Intelligence data.
The acquisition of Pehla follows the partnership agreement with ABS-CBN, the largest Filipino TV network in the world, and is a clear indication of OSN's strategy to expand its appeal by approaching new target groups. The Filipinos together with SouthAsian expat communities (Hindu, Pakistani, Bangladeshi, Malay, Thai and Indonesians) form around 60 per cent of the population in those states. OSN's pricing policy for the Pehla packages, is attractive as the price for the four Pehla packages that OSN has integrated to its offerings is on average around five per cent lower than when the packages were sold independently. The acquisition of Pehla serves also one of the major strategic goals of OSN - to diversify and expand its client base away from its target at launch in 2009 of the more affluent segment of MENA's inhabitants, the Western expats and the local Arab elite. OSN's packages are by far the most expensive pay TV offers in the region costing, on some occasions, up to five times more than the Al Jazeera Sports and Al Majd packages. The Pehla packages are, on average, around 63 per cent cheaper than their OSN equivalents.
Apart from the South Asian community, OSN is enriching its original Arabic content offer. The operator has created three exclusively Arab language channels: OSN Yahala, OSN Yahala Shabab (primarily targeting the Egyptian market) and OSN Yahala Arabella (Latin American telenovelas dubbed into Arabic). Currently, around 84 per cent of OSN's client base speaks Arabic and around 93 per cent of its new clients are Arabic speakers. A recent move that serves the same purpose is the negotiations between OSN and French channel operators for the acquisition by the former of exclusive rights for the whole MENA region. This move will permit OSN to expand its client base in the Francophone countries of North Africa (Morocco, Algeria and Tunisia).
The launch of OSN Yahala channel on Youview in the UK serves also the aim of diversifying and expanding the client base by targeting the 240,000-strong British Arab community. A positive reception of the offer will certainly induce OSN to plan the launch of the channel to other major European markets with strong Arab expat presence (France, Germany, the Netherlands and the Nordic countries). The first Arabic channel to dedicate a special satellite feed for Europe in order to reach the Arab expats is Baraem TV, a subsidiary of Al Jazeera Children's Channel. The feed, called Baraem Europe, reaches audiences in Central Europe through the Hotbird satellites and it carries the same children's shows as the Arabic version broadcasted on a delayed schedule a few hours after Mecca time.
All these recent moves should also be seen under the framework of a prospective initial public offering (IPO) for OSN, possibly in New York or London. KIPCO, the parent company of OSN controlling 60.5 per cent of the shares (the rest 39.5 per cent is controlled by Saudi-based Mawarid Group), is reported to have hired financial advisors Rothschilds. OSN's high potential for future growth has played a major part on this decision as it created a window of opportunity for the Dubai-based operator's shareholders.