FE Editorial: New show in town

Written by The Financial Express | Updated: May 30 2011, 07:56am hrs
Media Pro, the 50:50 JV between the distribution arms of Star India and Zee Entertainment, has the potential to change the way India reports its television revenues. Right now, thanks to the way the Local Cable Operators (LCO) under-declare revenues, the broadcasters get around a fifth of estimated spend by households and the MultiSystem Operators (who give the signal to the LCOs) get around a tenth. Given that Media Pro will be the countrys largest broadcasting bouquet, with over 68 channels and controlling an estimated 40% of TV viewing, it can negotiate better with the LCOs. Since none can hope to survive without Zee and Starin the past, many would choose to carry either the Star or the Zee bouquets when Colors was freethey will be more inclined to fall in line now. So under-reporting of subscription revenues, estimated at 75-80% of the total of R19,000 crore, should reduce significantly.

How the situation will pan out for the multi-system operators (MSOs) depends on whether they choose to side with the broadcasters or the LCOs. The MSOs apprehend Media Pro might misuse its near monopoly status and are believed to be rallying together, but it would be surprising if Star and Zee tried to squeeze them since it is obvious where the problem lies. Ideally, content costs for MSOs shouldnt go up. The MSOs need to work together with the broadcasters to ensure that both piracy and under-declaration of subscription revenues reduces; after all, they stand to gain as much as the broadcasters.

As far as DTH operators are concerned, they have been in a commanding position so far since revenues that broadcasters earn from DTH subscriptions exceed those that they earn from cable operators. Theoretically, the Media Pro alliance, with its strong bouquet of channels including Star Plus, NDTV 24x7 and Cartoon Network, would now have greater pricing power and so content acquisition costs for DTH operators could go up, but keep in mind that 70-80% of DTH capacity belongs to TataSky and DishSky belongs to Star and Dish to Zee. The challenge for broadcasters lies in being able to get LCOs to report the true number of subscribers. Since digitisation is gaining momentum, the LCOs may as well come to terms with better industry practices. In this context, the government should push through the digitisation Bill so that LCOs dont remain complacent. Should digitisation become mandatory, analysts estimate that in five years time, India could have 150 million digital households so that an ARPU (average revenue per user) of even R200 per month would yield revenues of R36,000 crore a year.