Cable TV

Plea for uniform entertainment duty for the Indian cable industry

Published

23 years ago

December 22, 2002

INTRODUCTION

The National Readership Survey 2001 reveals that cable is currently available in 33 million homes. The reach of television in urban areas is 84.7 % in urban areas/towns with population of one million and above and 32.7 % in rural areas. The Survey further reveals that in urban areas, a saturation point has almost been reached. Most of the growth in the last one-year has been in semi-urban and rural areas.

A key factor to note is that while the growth in cable industry has been only 7.1 % in the last one year, the potential for growth remains high. It must be kept in mind that the total number of television homes is currently estimated at 70 million while the total number of cable homes is 33 million. This means that there are another 37 million homes in the target reach of the cable industry in terms of current estimates.

Viewers in metropolitan cities have the potential to receive approximately 150 TV channels from at least 75 satellites. The importance of television to inform, educate and entertain cannot be overstressed in these troubled times.

For the first five years of the last decade, the cable industry mushroomed and indeed thrived in a non-regulatory atmosphere. In 1995, the Cable Network Regulation Act was brought in to regulate the industry. One immediate impact was the entry of large companies, which consolidated the small operators into becoming franchisees/associates of the multi system operators (MSOs). This led to closure of many customer service centers known as head ends as small operators began to take service from the MSOs. Even so, today there are an estimated 40,000 cable operators.

Why this is so is because all one needs to do to start a cable business is to get registered at the local post office. The rest is a matter of capturing the subscriber and retaining him.

LEVY OF ENTERTAINMENT DUTY
State governments soon recognized the growth of the cable industry and began to tax the cable subscriber through the cable operator. Each state used a different yardstick – some taxed the declared number of cable subscribers, others taxed the cable operators and some taxed the head ends. The rates too varied from Rs 4 per subscriber to Rs 30 per subscriber.

In most states the entertainment duty officer or the commercial taxes officer administers the entertainment duty on the cable industry. Though as in all revenue departments, inspectors are utilized to verify and mop up additional entertainment taxes, there is no systematic database available with the state governments or even the cable industry itself. Post office registration, though compulsory, is not enforced by the states because it forms part of central legislation and the post office has nothing to do with the cable industry. In such a scenario, the concern of the state governments to bring the entire 33 million base of cable subscribers is naturally a Herculean task.

PAY CHANNELS
There is one more factor, which should be kept in mind. In the past 5 years, more and more channels have begun to charge subscribers for the content supplied. Free-to-air channels have become pay channels. Today all the major broadcasters like Star, Sony, Zee and even some Doordarshan channels have become pay channels.

The average cable subscriber in India pays approximately Rs 100 to receive between 60-70 channels. With all major broadcasters turning pay, a normal operator has nothing left over to pay for entertainment duty or his own operating expenses. Hence there is widespread under declaration to the entertainment duty authorities and the pay channels.

An interesting concept being tried out in India by broadcasters is to “bundle” strong and weak channels together and force the operator to provide channels, which are not popular. This is a ruse employed by all broadcasters and leads to resentment of the customer and even the cable operator.

CONDITIONAL ACCESS SYSTEMS

In August 2001,the central government has taken a decision that all pay channels would have to go through the conditional access system by which the customer will decide which channels to see or not see. The government intends to also make it compulsory for all cable channels to be available through conditional access system to obviate piracy concerns of the film industry. This will require legislative amendment of the Cable Act but will be a revolutionary step forward in regulating the industry.

It will also help the state governments to have a better record of cable subscribers to tax them equitably. The cable industry hopes that this will also bring some order in the chaotic pay channel environment, as subscribers will only pay for what they see.

CONCLUSION
In the emerging 2002 scenario, a series of suggestions are given below for consideration of the state governments and the central government:

? Current entertainment duty rates are not uniform and vary from state to state.

? Basis of entertainment duty differs from state to state. Some are as per subscriber, some as per operator and some as per head end.

? Cable operators are agents of the state government. The customers are liable for payment of entertainment duty yet the law makes the operator responsible and not the customer.

? There is no updated database or mechanism to ensure that all subscribers are covered by the relevant entertainment duty leviable.

? There is need to move towards a uniform entertainment duty which fulfills legislative intent but is moderate to be acceptable to the customer/subscriber.
? In fact the cable industry is an infrastructure information provider and does not create any content on which it is currently charged entertainment duty. The broadcasters create or source content and earn crores of rupees from both paying subscribers and advertisers.

? The counter argument put forth by broadcasters to this is that it is not the filmmaker that collects tax but the theatre that screens his film. A valid point but the analogy is skewed in that when a person buys a ticket he is being taxed for a film that he has CHOSEN to see and not for all the films running in the multiplex.

? There is a strong case for changing or enlarging the incidence of entertainment duty to broadcasters.

? This will reduce the burden on the customer.

? The cable industry is willing to assist the government in collecting entertainment duty if it is given some mandatory power to do so like is done for service taxes in some cases.

? The cable industry will welcome legislation to ensure full declaration of customer base to MSOs and large operators by sub-operators. In turn the entire 33 million subscriber base could be taxed in two forms:

? A flat simple rate of Rs 10 for subscribers availing free to air channels.

? A per pay channel rate of Rs 2 for each pay channel availed by the subscriber.

? This would be an equitable and acceptable way of enhancing collection of entertainment duty from the cable subscribers.

ASHOK MANSUKHANI

Chairman, sub-committee on cable industry,
Entertainment Committee, FICCI, New Delhi.

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Cable TV

Den Networks Q3 profit steady despite revenue pressure

Published

2 months ago

January 19, 2026

indiantelevision.com Team

MUMBAI: When margins wobble, liquidity talks and in Q3 FY25-26, cash did most of the talking. Den Networks Limited closed the December quarter with consolidated revenue of Rs.251 crore, marginally higher than the previous quarter but down 4 per cent year-on-year, even as profitability stayed resilient on the back of strong cash reserves and disciplined cost control.

Subscription income softened to Rs.98 crore, slipping 3 per cent sequentially and 14 per cent from last year, while placement and marketing income offered some cheer, rising 15 per cent quarter-on-quarter to Rs.148 crore. Total costs climbed faster than revenue, up 7 per cent QoQ to Rs.238 crore, driven largely by higher content costs and operating expenses. As a result, EBITDA dropped sharply to Rs.13 crore from Rs.19 crore in Q2 and Rs.28 crore a year ago, pulling margins down to 5 per cent.

Yet, the bottom line refused to blink. Profit after tax stood at Rs.40 crore, up 15 per cent sequentially and only marginally lower than last year’s Rs.42 crore. A healthy Rs.57 crore in other income helped cushion operating pressure, keeping profit before tax at Rs.48 crore, broadly stable quarter-on-quarter despite the tougher cost environment.

The real headline-grabber, however, sits on the balance sheet. The company remains debt-free, with cash and cash equivalents swelling to Rs.3,279 crore as of December 31, 2025. Net worth rose to Rs.3,748 crore, while online collections accounted for 97 per cent of total receipts, underscoring strong cash discipline across operations, including subsidiaries.

In short, while Q3 showed signs of operating strain, the financial backbone remains solid. With zero gross debt, steady profits and a formidable cash war chest, the company enters the next quarter with flexibility firmly on its side proving that in uncertain markets, balance sheet strength can be the best growth strategy.

Cable TV

Plugging along as Hathway tunes in steady profits this quarter

Published

2 months ago

January 17, 2026

indiantelevision.com Team

MUMBAI: In a quarter where staying connected mattered more than moving fast, Hathway Cable and Datacom kept its signal steady. The cable and broadband major reported a net profit of Rs 21.7 crore for the December 2025 quarter, marking a clear improvement from Rs 13.6 crore a year earlier, even as pressures persisted in parts of its operating portfolio.

For the quarter ended December 31, 2025, revenue from operations stood largely flat at Rs 536.6 crore, compared with Rs 511.2 crore in the same period last year. Including other income of Rs 21.1 crore, total income rose to Rs 557.7 crore, reflecting incremental gains despite a competitive media and connectivity landscape.

Profitability improved on the back of disciplined cost control and higher contribution from associates. Profit before tax increased to Rs 28.2 crore, up from Rs 19.1 crore in Q3 FY25, aided by Rs 3.9 crore in share of profit from associates and joint ventures. After tax, earnings for the quarter climbed nearly 60 per cent year-on-year.

Over the nine months ended December 31, 2025, Hathway reported a net profit of Rs 71 crore, compared with Rs 57.7 crore in the corresponding period last year. Total income for the nine months came in at Rs 1,677.3 crore, up from Rs 1,599.8 crore, while profit before tax rose to Rs 94.7 crore from Rs 84.2 crore.

A closer look at the segments shows a familiar split story. The cable television business remained under pressure, reporting a segment loss of Rs 11.4 crore for the quarter, though this narrowed sharply from the Rs 16.6 crore loss seen a year ago. In contrast, the broadband business returned to the black, delivering a modest but positive contribution of Rs 4.2 crore, helped by associate income. Dealing in securities continued to be a bright spot, generating Rs 14.7 crore in quarterly profits.

Costs stayed broadly contained. Pay channel costs, the single largest expense, rose to Rs 287.4 crore, while depreciation and amortisation stood at Rs 74 crore. Finance costs remained negligible at Rs 0.2 crore, keeping leverage risks in check.

Hathway’s earnings per share for the quarter improved to Rs 0.12, up from Rs 0.08 a year ago. The company maintained a strong balance sheet, with total assets of Rs 5,302.4 crore and total liabilities of Rs 848.9 crore as of December 31, 2025.

While structural challenges persist in the traditional cable business, the numbers suggest Hathway is slowly recalibrating its mix trimming losses where needed, leaning on associate income, and keeping the broadband engine ticking. For now, the company may not be racing ahead, but it is clearly staying tuned in to profitability.

Cable TV

Signal drop Tejas Networks’ numbers stay patchy in a volatile quarter

Published

2 months ago

January 10, 2026

indiantelevision.com Team

MUMBAI: In telecom, even the strongest signals face interference and Tejas Networks Limited’s latest numbers show just how noisy the airwaves remain. The Tata Group-backed networking firm reported unaudited standalone revenue of Rs 305.72 crore for the quarter ended December 31, 2025, up sequentially from Rs 261.37 crore in the September quarter, but sharply lower compared with the Rs 2,642.05 crore clocked in the year-ago period. The topline recovery, however, was overshadowed by a pre-tax loss of Rs 303.20 crore, widening from a Rs 473.03 crore loss in the previous quarter, and reversing a Rs 211.06 crore profit reported in the December 2024 quarter.

After tax, the company posted a loss of Rs 196.89 crore for Q3 FY26, compared with a loss of Rs 307.17 crore in Q2 FY26 and a profit of Rs 165.42 crore a year earlier. For the nine months ended December 31, 2025, Tejas Networks reported revenue of Rs 769.02 crore and a loss after tax of Rs 697.97 crore, a sharp swing from a Rs 512.67 crore profit in the corresponding nine-month period last year. The numbers reflect a year marked by execution challenges rather than demand collapse.

Costs remained the dominant spoiler. Total expenses for the December quarter stood at Rs 616.50 crore, driven by elevated material costs, employee expenses and provisioning. The company also flagged several one-offs and adjustments: a Rs 9.85 crore provision linked to the implementation of new labour codes, ₹24.35 crore in warranty provisions, and reversals related to inventory obsolescence. Earlier quarters had already absorbed heavy charges tied to contract manufacturing losses, design changes and write-downs, the hangover from which continues to weigh on profitability.

Tejas reiterated that it operates as a single reportable segment focused on telecom and data networking products and services, offering little insulation from sector-wide volatility. While revenue momentum has stabilised sequentially, the contrast with the previous financial year remains stark. For context, the company closed FY25 with audited standalone revenue of Rs 8,915.73 crore and a profit after tax of Rs 450.66 crore, underscoring how sharply the operating environment has shifted in FY26.

The results were reviewed by the audit committee and approved by the board on January 9, 2026, but they leave investors with a familiar question: when does recovery turn structural rather than episodic? For now, Tejas Networks appears to be in reset mode, balancing execution clean-up with cost discipline. In a sector where margins can be as fragile as fibre strands, the next few quarters will matter as much as the signals the company sends to the market.