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Tag: Den Networks

  • DEN Networks to raise $160 million through share sale

    DEN Networks to raise $160 million through share sale

    Mumbai: That India’s cable TV digitization drive in phases is going to soak up a lot of investment – running into a few billion dollars – is well known. Some of the MSOs have been working to stay ahead of their capital requirement curve. Take national MSO DEN Networks founded and led by former TV executive Sameer Manchanda.

    It has a presence in roughly 11 million households in over 150 cities across 13 key states in Delhi, Uttar Pradesh, Karnataka, Maharashtra, Gujarat, Rajasthan, Haryana, Kerala, West Bengal, Jharkhand, Bihar, Madhya Pradesh and Uttarakhand. The MSO has been at the forefront of digitising cable TV nationally since mid-last year and with the next phase of digitization into smaller towns going on and expected to intensify in the next year, it desperately requires cash.

    And it is reaching out to foreign institutional investment to meet that need. It announced on 6 May that it had got board approval to sell equity to raise about $160 million. This was communicated to the stock exchanges on 6 May.

    Part of that will be raised through a preferential equity allotment to Goldman Sachs’ Singapore registered affiliates Broad Street Investments and MBD Bridge Street 2013 Investments for a total amount of $110 million at a issue price of 217.50 per share (face value: Rs 10).

    The allotment is of course subject to shareholder and other regulatory approvals.

    In addition to this, it got the board’s go-ahead for a qualified institutional placement plan to qualified institutional buyers for raising another $50 million at a price of Rs 217.23 per share.

    DEN had got board approval in end March to divest 26 per cent of its paid up share capital.

    An April end extra ordinary general meeting saw it getting shareholder approval for increasing its FII limit. Earlier this year, it had doubled its borrowing powers from Rs 1000 crore.

    The company’s share rose 2.14 per cent at its closing price of Rs 226.75 on the BSE on 6 May.

  • Industry airs views on Phase II digitisation “grace period”

    Industry airs views on Phase II digitisation “grace period”

    MUMBAI: What does the industry think about the government‘s decision to allow a grace period of 15 days for the rollout of phase II digitisation in some cities? Well, we at indiantelevision.com decided to find out by speaking to a cross section of industry to find out.

    Indian Broadcasting Foundation (IBF) president and Multi Screen Media (MSM) CEO Manjit Singh, who is in Kolkata for the first match of the IPL, is clear that “as a broadcaster I would have preferred the government not giving any grace period. But since the ministry is more aware of the ground situation, I will go with its decision.”

    Hinduja Ventures Ltd whole time director Ashok Mansukhani believes that “if the government wanted to give a grace period of 15 days, it should have been after consultation with the MSOs who have been entrusted with the task of majorly implementing digitisation. Where it has been substantially implemented, there was no need to give a grace period. Where deployment is below 20 per cent, discussion could have been held on a longer timeline than 15 days.”

    Mansukhani adds that he would like the digitisation numbers of Phase II which are being released to be revisited for some localities. “There is some dispute about the numbers,” he says.

    He highlights that the objective of digitisation is to end under-declaration by cable TV operators. “If DAS Phase II deployment is uneven then government could have taken a two step process where pay TV channels could have been switched off first and the free to air channels later to allow for a smooth transition,” he says.

    Hathway Cable & Datacom MD & CEO Jagdish Kumar is of the opinion that from his network‘s perspective he would have preferred not to have a grace period at all. “From our perspective, we are well prepared with the ability to deploy set top boxes to almost 90 per cent of our and our joint venture networks,” he says.

    He points out that the lack of initiative on the part broadcasters to sign “digital agreements for phase II towns has been disappointing. We are working with broadcasters to get them moving. Basically, the industry is toying with a fixed fee or cost per subscriber deals.”

    DEN Networks COO M.G. Azhar is of the view that it was good the government has given the grace period keeping the consumers in mind. “Where set top boxes (STBs) have not been deployed effectively, the consumer should not face an analogue blackout,” he says.

    Tata Sky MD & CEO Harit Nagpal has the final word. Speaking to Indiantelevision.com yesterday, he had said that there was “no need for a grace period as the DTH operators are more than equipped to meet the STB demand wherever there is a shortage.”

  • ‘We are net positive in our deals with cable TV networks in the metros’ : IndiaCast Group CEO Anuj Gandhi

    ‘We are net positive in our deals with cable TV networks in the metros’ : IndiaCast Group CEO Anuj Gandhi

    IndiaCast Group CEO Anuj Gandhi is spearheading an effort to extract bigger pay-TV revenues from broadcast-carriage platforms as TV18 founder-promoter Raghav Bahl searches for growth engines that would propel his media empire to the top league of broadcasters like Star India, Zee Entertainment and Multi-Screen Media.

    Known both in the broadcasting as well as the cable TV world as CEO of Den Networks, Gandhi has already turned around TV18’s distribution business in the four digitised markets of Delhi, Mumbai, Kolkata and Chennai. “We will be net positive in our deals with the cable TV networks in the metros,” he says, after sewing the new commercial deals with the multi-system operators (MSOs).

    Gandhi is ready to reap richer harvests for TV18 as India moves towards digital cable TV. “We will be doubling our subscription earnings within three years,” says the man Bahl has spotted to shepherd the growth of IndiaCast.

    Correcting that is no mean achievement. For the full-fiscal ended 31 March 2012, TV18 Group paid carriage fee of Rs 3.5 billion against Rs 3 billion earned as subscription income from TV viewers through broadcast-carriage platforms.

    Hard bargaining over legacy issues including payment of carriage fees have held up agreements between broadcasters and MSOs with just nine days left for the shift to digital delivery of television channels in the four metros of Mumbai, Delhi, Chennai and Kolkata. But Gandhi is confident that there will be no shift in the deadline of 1 November for digitisation in the four metros.

    “We are entering a new era of television history in India,” he insists, with a smile and a twinkle in his eyes.

    In an interview with Indiantelevision.com’s Sibabrata Das, Gandhi talks about broadcasters‘ different nature of commercial deals with direct-to-home (DTH) and cable TV service providers, a drop in carriage fees, the need to correct “legacy loads” and the growth prospects for all the stakeholders in a digitised regime.

    Excerpts:

    Q. How can you say so firmly that there will be no shift in the deadline of 1 November for digitisation in the four metros?
    We are entering a new era of television history in India. The bad news staring at all of us today is losses, distorted business models and bandwidth constraints. If that is going to halt, the turnaround story for all of us will have to evolve around the digitisation script. The good thing is that all the stakeholders realise that hidden value will unlock only if we end the analogue cable regime. The government is also backing digitisation and has taken all the tough decisions. While Mumbai and Delhi are in full gear, we will know about the ground reality in Chennai and Kolkata as we hit the digitisation date.

    Q. But aren’t we just nine days away and all the commercial deals between broadcasters and MSOs are yet to be in place?
    While all of us are sighting a new dawn, we have a lot of legacy issues to correct. And this takes time. But it is only a few deals that are pending, a few knots that have to be tied. I don’t think this by itself will be a strong force to push digitisation behind. We have gone too much ahead to retreat.

    Even DTH had this dark cloud hovering around it in the initial days; Dish TV did not have Star channels when it launched and Tata Sky (a joint venture of Tata Sons and Star India) had to go without Zee channels in the beginning. We will have digitisation by the set date, with or without a few deals.

    Q. Is IndiaCast unable to lock the deal with Den Networks because of historic high carriage fees?
    I can’t comment on any specific deal. But in some cases there is a revenue mismatch between carriage payouts and the subscription earnings of a broadcaster. This may be due to legacy and involves a lot of negotiations to correct. We have done deals with all the other MSOs except Den (Anuj was earlier CEO of Den Networks). We are confident of sewing a deal with them in the next few days.

    Q. What kind of deals are being stitched? Has IndiaCast done more of cost per subscriber (CPS) or fixed fee deals?
    After rounds of negotiations, we have been able to work out most of our deals with MSOs on a CPS basis. But we are not stuck on any single formula. We are also signing fixed fee deals in certain cases.

    ‘There will be no drastic fall in carriage fees. While the TAM towns are rising, the number of channels are also shooting up. But in the digitised markets, we will see a good drop in carriage fees‘
     
    Q. Are CPS deals in IndiaCast’s case easier to ink because subscription revenues have been comparatively lower than the peer networks while carriage payouts have been higher?

    It has been easier to strike CPS deals because we have been late entrants. We are also at an advantage because we are the only major distribution company to have subscription and carriage under one roof. And as we inducted a new team (Anuj Gandhi joined in March 2012) in IndiaCast, the industry knew that we would seek a revenue-carriage correction.

    Q. Are DTH service providers able to do fixed fee deals while cable is moving more towards CPS arrangements?
    We are seeing an interesting trend emerge. DTH has been able to negotiate more fixed fee deals with broadcasters as they have a national satellite footprint. They can bet on their future subscriber growth numbers with some authority. And they benefit from this kind of commercial arrangement as the yield per box comes down in a fixed fee deal.

    Cable networks, on the other hand, are moving towards CPS deals as they address a finite market (city-specific like Delhi or Mumbai or Lucknow) and there is less chance of them growing horizontally (unless acquisitions happen or they compete amongst themselves to grab more territories). Though MSOs want to do fixed fee deals, broadcasters are not comfortable in forecasting the swelling in future cable TV subscriber numbers.

    As we move towards smaller markets involving small-sized cable networks in the second and third phase of digitisation, we would definitely see more CPS deals. These could later evolve into fixed fee deals as cable networks get a fix on what subscriber growth they would be able to register in future.

    Q. TV18 and Network18 on a consolidated basis earned about Rs 3 billion of subscription income while carriage payout was Rs 3.5 billion in FY‘12. Has IndiaCast been able to do net positive deals in these four metros?
    I can’t comment on the financials but we have corrected that legacy and are in a growth phase. We will be net positive in our deals with cable TV networks in the metros.

    Q. How much of the carriage fees the four metros account for?
    For the industry, these four metros would be accounting for about 45 per cent of the total carriage payouts. We would be in line with this trend.

    Q. How much of a carriage fee drop are we seeing in the four digitised markets?
    There will be no drastic fall in carriage fees. There are twin reasons for this. While the TAM (TV ratings agency) towns are rising, the number of channels are also shooting up. And in the digitised markets, we will see a good drop in carriage fees.

    Q. Raghav Bahl had earlier stated that TV18 would have to catch up on the subscription revenue front while the advertising income had reached a level comparable with the competing networks. What sort of pay revenue growth do you forecast?
    The industry will be able to post 20-25 per cent growth in a digitised environment as revenue leakages stop and the pay-TV market gets corrected. IndiaCast would definitely do better than that. We will be doubling our existing subscription revenues within three years. And when we say this, we are not factoring in any new channel that would be added to our distribution bouquet.

    ‘While DTH has been able to negotiate more fixed fee deals with broadcasters, cable networks are moving towards arrangements on a cost per subscriber basis as they address a finite market and there is less chance of them growing horizontally‘
     
    Q. Why TV18 group could capture a comparable advertising revenue after the launch of Colors while the distribution income stayed far behind competing networks?
    Advertising revenues are broadly reflective of the ratings that the shows get. The distribution business, on the other hand, is much more complex and a late entrant will take time to catch up. The challenge is to keep a fine line of balance between subscription and carriage. Growth is also heavily influenced by the ‘legacy numbers’. Digitisation, however, will help correct some of this ‘legacy load’ much faster than what would have been achievable in an analogue cable regime.
     

    Q. The company earns around Rs 300 million from its international content syndication business. What sort of a growth are you forecasting from this segment?

    We will double our revenues from this segment in three years. We will achieve this by expanding our reach and launching in more international markets. Colors already reaches out to 68 countries and we are looking at entering the South African market where we are in talks with the leading DTH operator there.

    We have just launched MTV India in the Middle East. We are planning to take that channel to other markets including the UK (the channel is already there in the US).

    We have also launched a new channel called Rishtey in the UK. The aim is to dig into the fast-growing free-to-air (FTA) market in the UK at a time when the pay-TV growth is shrinking.

    Q. With ETV clocking about Rs 1.1 billion of subscription income in FY‘12, how much of an advantage will the acquisition of these regional-language channels have in multiplying TV18’s consolidated pay revenues?
    ETV will give us a regional footprint, add depth to our distribution strength, help us penetrate the interior markets, and provide negotiating power to ensure that our network channels get carried in the smaller places.

    Q. Has the reworking of the joint venture distribution arrangement with Sun TV Network Ltd helped? Didn‘t TV18 taken the decision of directly handling the distribution of its network channels in the southern states (except Tamil Nadu where Sun distributes) because of the low pay revenues that it used to get despite the JV with Sun?
    Even now we share a good relationship with Sun TV. We distribute the Sun network channels in the Hindi Speaking Market (HSM) while the TV18 channels in Tamil Nadu are distributed by them.

    For the other southern states, we felt that we needed to take direct control of distribution. The fresh deal with Sun has indeed worked well for us.

    Q. Will IndiaCast want to add more channels or follow the OneAlliance model where size doesn’t matter?
    We don’t want to add channels just to get volume growth. We want to have the right mix of channels.

  • ‘Buyout valuations will now be decided in terms of ARPU rather than carriage growth’ : IMCL MD and CEO Ravi Mansukhani

    ‘Buyout valuations will now be decided in terms of ARPU rather than carriage growth’ : IMCL MD and CEO Ravi Mansukhani

    IndusInd Media and Communications Ltd (IMCL), the media subsidiary company of Hinduja Ventures Ltd, plans to raise $100 million, a major chunk of which will be used to fund acquisitions.

     

    Operating its cable TV business under the InCablenet brand, IMCL had earlier planned an initial public offering (IPO) but changed its stance as the newly listed cable TV entities, Den Networks and Hathway Cable & Datacom, dropped in market value.

     

    Even on the acquisition front, IMCL has changed gears. Earlier, the focus was to buy small-sized cable TV networks and expand geographies. Now it targets big-ticket acquisitions, expecting the sector to consolidate as the government chalks out a schedule for digitisation across the country.

     

    Slow on the broadband path, IMCL is experimenting on new technologies where it will not have to entirely overhaul its network to load on broadband capability.

     

    In an interview with Indiantelevision.com’s Sibabrata Das, IMCL managing director and chief executive officer Ravi Mansukhani talks about how the acquisition game is going to move from carriage calculations to valuations based on ARPU (average revenue per user) growth as the cable TV sector transitions into the digital era.

     

    Excerpts:

    Why is IMCL taking so much time in readying its IPO?
    We are in the market to raise $100 million ahead of the IPO and have mandated Deutsche Bank for this. We want to first build a solid valuation base. We believe the value of the top-rung MSOs will get a significant boost once the government fixes up a schedule for digitisation. We want to also expand on our size before we go for a public float.

     

    We have separately raised Rs 1 billion of debt from General Electric. So funding is being taken care of. We are getting ready to move into top gear.

    Have you finalised on how you are going to raise this amount?
    We are weighing various options. We are looking at mezzanine structures. The final structuring will depend on what fund-raising instrument we select.

    Are we going to expect acquisitions or a drive to greater digitisation?
    We plan to use three-fourth of the amount raised for acquiring cable TV networks. We are looking at small and big-ticket acquisitions. We believe there is going to be consolidation in the industry. For digitisation, we have a separate funding plan to meet the capex requirements.

    Why has there been a change in stance as the earlier focus was to buy small-sized cable TV networks and expand geographies?
    We see an opportunity out there as the other leading MSOs like Hathway Cable & Datacom and Den Networks are not on a buying spree. The valuations have dropped and we are ready to make big-ticket acquisitions ahead of the government‘s digitisation schedule. The acquisition focus now will be not on expanding into new geographies but on consolidating and growing in existing operational cities.

    Will the acquisition game change even as the government lays out a roadmap for digitisation across the country?
    The game will definitely change. A few years back, when the pace was set by new entrants such as Den and Digicable, acquisitions were based on carriage calculations and TRP cities were favoured. Now, as digitisation creeps in, buyout valuations will be decided in terms of ARPU growth. So we have decided to consolidate and expand in areas where we already exist like Maharashtra. There is no point in spreading lean.
    “We are in the market to raise $100 mn ahead of the IPO. We want to first build a solid valuation base. We believe the value of the top-rung MSOs will get a significant boost once the govt fixes up a schedule for digitisation. We want to also expand on our size before we go for a public float”

    Do you see MSOs fighting amongst each other once the digitisation programme is announced?
    MSOs would rather consolidate and expand where they are strong; their focus would be on digitising their existing network. MSOs can‘t create a fight today without being attacked; too much is at stake.

    How will MSOs counter the DTH invasion?
    India will remain primarily a cable country. Yes, in a diversified and fragmented market, DTH will have space. But being the incumbent player, cable TV has a distinct advantage. Besides, it is cheaper priced, bandwidth is no issue and it can be interactive. MSOs will also start launching server-based local channels as in the digital era, space will open up for more channels. There will be need for local news and events. DTH can‘t offer these channels.

    How much of IMCL‘s network is digitised?
    We have over half a million digital set-top boxes (STBs) installed. Out of the 28 cities that we operate in, we provide digital services in 17 cities via 10 digital head-ends.

     

    If the government‘s digitisation plan is on stream, we will deploy close to two million additional boxes in Phase 1. We are going to fund our digitisation through lease and vendor financing.

    Why is IMCL‘s broadband story yet to emerge?
    Our focus has not been on broadband in the past because the franchisee operators have been providing it. Though we provide broadband in nine cities, our revenues from this segment stood at just Rs 50-60 million in FY‘11.

     

    We plan to have a strong broadband story once the digital path is properly spelt out. We are currently experimenting on new technologies where we will not have to entirely overhaul our network to load on broadband capability.

     

    We won‘t have a problem building up broadband revenues once we have pushed the digital STBs in. The script will change after the government announces the sunset date for the digitally notified areas. It is companies like You Telecom who will need to grow their cable TV presence in order to provide broadband.

    Hathway has announced it would launch its HD service in June. When are you getting into this segment?
    Our first priority is to offer digital service. We will then graduate to HD. The market is still not ready for it. HD boxes are on the anvil and we will introduce them into the market in the next few months.

    IMCL‘s total income jumped 23 per cent to Rs 4.03 billion in FY‘11. What growth do you estimate in FY‘12 and what is the outlook on carriage income?
    We expect revenue to grow between 20-25 per cent. This will be higher if we raise capital fast and make big-ticket acquisitions.

     

    We saw 18-20 per cent growth in carriage income in FY‘11. We expect strong growth from this stream as more and more channels get launched in the fiscal.