Among the latest tranche of WikiLeaks cables released by The Hindunewspaper is one that throws light on an under-noticed dimension of U.S.-India relations: Their compatible strengths and convergent interests in the area of global entertainment and media. For all the glamour attached to Hollywood and Bollywood* in their home countries, their potential in fostering bilateral ties has been scarcely appreciated.With the United States and India possessing the world’s largest entertainment and media sectors, both in terms of sheer output and global popularity, the opportunities for collaboration are large for jointly producing new content, forging new creative collaborations and accessing new markets. With a growing middle class, a large English-speaking populace, a booming number of multiplexes and television channels, and a cinema-obsessed popular culture, India is a natural destination and partner for Hollywood studios.

Besides a burgeoning market, India possesses another alluring if sometimes overlooked quality: It is Asia’s most liberal market for foreign media companies, both in terms of investment regime and political climate. On both counts, Star Network relocated its Asia hub from Hong Kong to Mumbai last year (see here and here ), and India has become the most important country for News Corporation’s Asian regional business. As a recent PricewaterhouseCoopers report suggests, India – not China – is emerging as Asia’s media hub.Bollywood firms are similarly expanding their global reach, including in the United States. Reliance ADA Group, one of India’s headline industrial houses, is aiming to create a world-wide entertainment conglomerate. It has entered into a high-profile joint venture with Steven Spielberg to form a new movie studio and has cut deals with a number of Hollywood heavyweights to fund the development of scripts and jointly present proposals to studios. Last year, the company also entered into talks with Universal Studios about creating India’s first film-themed amusement park, as well as purchased a majority stake in IM Global, a Los Angeles-based company specializing in foreign-rights sales.Yet, as a February 2010 dispatch from the U.S. consulate in Mumbai makes clear, greater effort is required in order to exploit synergistic possibilities. Despite Hollywood’s growing interest in the Indian market as a way of offsetting its own sluggish box office sales, the cable notes that the U.S. movie industry has still not found a good working model for partnering with Bollywood. Hollywood films face constrained revenue potential in India, due to much lower box office prices compared to the U.S. but also because cinema-goers prefer big-budget action movies over Hollywood’s other fare.

U.S. and Indian studios have entered into a number of high-profile co-production deals, though to date none of them have enjoyed much commercial success. Given its vital market, U.S. studios will continue searching for the right formula for success. But the cable casts doubt that co-productions will pay off anytime soon given that Bollywood fears opening the door too widely to Hollywood’s presence.

Still, the cable points to useful synergies in a number of behind-the-scenes areas. The Indian film industry, which has rarely enjoyed global success beyond diasporic communities , would profit from Hollywood’s expertise in international marketing and distribution, as well as from sourcing U.S. production and technical talent. In turn, Hollywood would benefit from shipping animation and post-production work to India, taking advantage of its modern facilities and affordable workforce. One might add that Indian studios, which are leaders in experimenting with innovative ways of film distribution, like the Internet and mobile applications, could also be a valuable source of new business models for their Hollywood partners.

Yet even if bi-national movie collaborations have yet to live up to expectations, other interactions in the entertainment and media space are bearing fruit. India is one of the world’s fastest growing entertainment and media markets; a new forecast by the KMPG consulting firm puts its size at $28 billion by 2015 . The number of television-viewing households has exploded in recent years. The country also has the second largest pay-television market after China, with an estimated 105 million Indian households currently subscribing to terrestrial analogue cable, satellite and digital networks.

These headline numbers explain why so many U.S. media companies, including Walt Disney, News Corporation, Time Warner and Viacom have joined up with Indian partners to launch channels over the past several years. Last August, CBS Corporation likewise jumped into the game, hooking up with Reliance ADA Group to launch several English-language channels.

Although many of these venues simply offer a platform for U.S.-made fare, jointly-produced content is also beginning to emerge. Indeed, TV productions that combine U.S. and Indian strengths present a large opportunity, both in India and far beyond. According to the consultancy Media Partners Asia, there is a huge, largely untapped global market with a cultural affinity to television content from India, including Mauritians who watch Hindi-language TV and people in Saudi Arabia, which does not have a local media industry.

All of these developments signal a new era in global entertainment. Although U.S. and Indian government officials would not naturally think of it, enhanced partnership in the entertainment and media sector has important policy implications. Since Hollywood and Bollywood are successful exporters of cultural content, the two countries have a major shared interest in keeping global markets open for their products. Washington and New Delhi should thus craft a common approach on cultural market access and use their combined weight to advance it in international trade negotiations. True, the two governments have been at loggerheads in the Doha Round of multilateral trade talks. But a joint proposal on cultural access would focus U.S. and Indian energies on discrete, easily-managed trade issues in which the mutuality of economic benefit is self evident. Beyond its commercial ramifications, the initiative would have political value, further solidifying the U.S.-India partnership and providing an important example of joint leadership in the global economy.

With broadband penetration continuing to accelerate worldwide, the private sectors and governments in both countries similarly have a common interest in advancing the digital transformation of the global media industry. Washington and New Delhi should thus convene a summit of all relevant parties in both countries to consider implementing this objective on a joint basis. Real-time creative and production partnerships could also be enhanced by the development of advanced fiber-optic networks capable of transmitting data at a rate of one gigabyte per second between the two countries. Efforts now underway by U.S. and Indian universities to create collaborative network tools need to be encouraged by adequate government funding on both sides. Such networks would not only spur interactions in the entertainment and media field but in other innovation economy sectors as well.

Policymakers gathered at next month’s U.S.-India Strategic Dialogue in New Delhi will no doubt concentrate on matters like defense cooperation, the endgame in Afghanistan, and Pakistan’s volatility. But a focus on things like global entertainment collaborations is also worth their while, given the importance of private-sector and societal linkages in helping bind the bilateral relationship together .

* With apologies to the vibrant local-language film industries in southern India, Bollywood is used here as a shorthand signifying the Indian entertainment sector writ large, though strictly speaking it refers only to the Hindi-language movie industry centered in Mumbai.