ITV

Tag: DTH Companies

  • FY-2015: Inflection point for DTH companies in India?

    FY-2015: Inflection point for DTH companies in India?

    BENGALURU: Is FY-2015 the inflection point for direct to home (DTH) companies in India? The answer seems yes, if one were to go by the financials declared by three listed operators for the quarter and year ended 31 March, 2015 (Q4-2015 and FY-2015 respectively) – Airtel Digital TV, Dish TV and Videocon d2h. And the players are gung-ho about the future. Subscriber growth and higher ARPUs (Average Revenue Per User) are some of the factors that have brightened the picture for this segment of the carriage industry in fiscal 2015.

     

    Note: 100,00,000 = 100 lakh = 10 million = 1 crore.

     

    This report covers only three of the seven DTH service providers in India since the other four – Reliance Digital TV, Sun Direct (about 97 lakh subscribers as on 31 March, 2015), Tata Sky and DD Free Dish are not listed on the bourses and their financial numbers are not available.

     

    The Numbers

     

    Dish TV

     

    Dish TV’s standalone and consolidated net Total Income from Operations (TIO) in FY-2016 at Rs 2781.64 crore was 10.9 per cent more than the Rs 2508.97 crore in FY-2014. Standalone TIO in Q4- 2015 at Rs 754.72 crore grew 18.5 per cent as compared to the Rs 636.91 crore in the corresponding year ago quarter and was 10.3 per cent more than the Rs 684.26 crore in Q3-2015.

     

    According to Dish TV, the DTH sector is a direct beneficiary of a positive consumer sentiment. The company achieved strong subscriber growth of 1.5 million net subscribers during the year. Fiscal 2015 also saw Dish TV swing to net profit, a first for any DTH company in India.

     

    The biggest among the three in terms of revenue as well subscribers, Dish TV at the close of FY-2015, reported standalone net profit after tax (PAT) of Rs 35.01 crore in Q4-2015 and a standalone PAT of Rs 1.01 crore in FY-2015 as compared to a standalone loss of Rs 154.21 crore in FY-2014. For Q3-2015, Dish TV’s loss was just Rs 2.87 crore as compared to double-digit crore loss numbers in the previous or like-to-like quarters. Dish TV also doubled its subscriber growth to 15 lakh in FY-2015 as compared to the previous year. As on 31 March, 2015, the company reported a net subscriber base of 1.29 crore, having added 4.04 lakh subscribers in the last quarter of 2015.

     

    Dish TV also reported higher ARPU of Rs 179 in Q4-2014 as against Rs 177 in Q3-2015 (1.13 per cent increase in ARPU) and was 5.3 per cent higher than the annual ARPU of Rs 170 reported in Q4-2014.

     

    “As digitization spreads far and wide, we continue to believe that there is sufficient headroom to further explore price differentials between key urban markets and their rural counterparts. All pack prices, for new as well as existing subscribers of Dish TV, have been moved by Rs 10 each in the 42 cities under phase I and II. We are confident that pack price hikes, higher HD uptake, as well as industry level developments such as initiation of packaging in cable will be key contributors to ARPU expansion going forward,” said Dish TV managing director Jawahar Goel.

     

    Post a successful absorption of higher pack prices in Delhi, Mumbai, Pune and Kolkata, Dish TV initiated another price change during the current month. In less than three months since it was first introduced, differential pricing – an industry first from Dish TV was rolled-out in the balance 38 cities covered under DAS phases I and II with effect from midnight on 12 May, 2015.

     

    Last year Dish TV launched a second brand, Zing, in the Indian DTH space. A resounding success, Zing cemented Dish TV’s supremacy in the DAS Phase 3 and 4 markets with custom-made content, hardware and service packages for the regional audience, says the company.

     

    Airtel Digital TV Services

     

    Airtel’s Digital TV Services (DTH segment) revenue grew 19.2 per cent in FY-2015 to Rs 2475.9 crore from Rs 2077.1 crore in FY-2014. The segment reported 11.8 per cent growth in number of subscribers with 100.73 lakh subscribers on 31 March, 2015 as compared to the 90.12 lakh subscribers at the close of the previous year. ARPU in FY-2015 at Rs 214 was five per cent more than the Rs 203 in FY-2014. The segment reported slightly higher monthly churn of one per cent as compared to 0.9 per cent in FY-2014.

     

    The DTH segment reported an operating profit of Rs 8.1 crore in Q4-2015 as compared to an operating loss of Rs 36 crore in the immediate trailing quarter. For FY-2015, Airtel DTH reported a lower operating loss of Rs 158.1 crore, for FY-2014, operating loss was three times more at Rs 481.2 crore.

     

    EBIDTA and EBIDTA margins in FY-2015 at Rs 675.2 crore (27.3 per cent of total revenue) were more than double (2.02 times) the Rs 334.7 crore (16.1 per cent of total revenue) in the previous year.

     

    Videocon d2h

     

    Coupled with higher ARPU for FY-2015 at Rs 196, and Rs 202 in Q4-2015, Videocon d2h reported 32.5 per cent growth in revenue from operations in FY-2015 at Rs 2337.7 crore as compared to the Rs 1764.4 crore in FY-2014. The company’s subscription revenue increased 38.3 per cent in the current year to Rs 2058.1 crore from Rs 1487.7 crore in the previous year.

     

    Videocon d2h says that it was able to push through an inflation linked ARPU increase in February 2015. As a result, Q4-2015 ARPU was Rs 202, up 11.7 per cent from FY-2015.

     

    Videocon d2h closed fiscal 2015 with 101.8 lakh subscribers as compared to 84.4 lakh in the previous year. It claims market leadership in subscriber growth in FY-2015 with 26.4 lakh gross subscribers and 17.4 lakh net subscriber additions. Subscriber churn per month increased fractionally in FY-2015 to 0.8 per cent as compared to 0.76 per cent in the previous year.

     

    The company reported lower net loss in FY-2015 at Rs 272.7 crore as compared to the Rs 319.5 crore in the previous year. Adjusted EBIDTA increased 55.3 per cent in the current year to Rs 609.1 crore (margin 26.1 per cent) from Rs 319.5 crore (margin 34.1 per cent), the company said in its earnings release on NASDAQ.

     

    Videocon d2h CEO Anil Khera said, “The Pay TV segment in India is positioned for extraordinary growth over the next few years with millions of new TV homes being created on account of the strong economic outlook in India as well as the Government of India’s initiative to roll out its digitalization mandate across the country. We believe that 9 to 10 crore homes will be making the switch to digital platforms, which will be available to the DTH and digital cable operators. We are well positioned to benefit from this and we believe we will take the largest share of this opportunity, as we have in the past. With strong economic growth outlook for India, overall media sector is expected to grow in the years to come. We believe this will help grow ARPU, TV penetration and increase HD uptake leading to stronger revenue growth for Pay TV in general and Videocon d2h in particular.”

     

    End points

     

    The last quarter of fiscal 2015 (Q4-2015) has shown better than average results in the case of all the three DTH players examined in this report. PAT in Q4-2015 eliminated the loss Dish TV incurred in the first three quarters of FY-2015. In the case of Airtel DTH segment, EBITDA for Q4-2015 increased to Rs 207.8 crore as compared to Rs 96.7 crore in the corresponding quarter last year. The reported EBITDA margin improved significantly to 32.7 per cent in Q4-2015, as compared to a margin of 17.9 per cent in the corresponding quarter last year.

     

    As mentioned above, Airtel DTH turned EBIT positive to Rs 8.0 crore in the current quarter, as compared to EBIT loss of Rs 110.7 crore in the corresponding quarter of last year. Comparable numbers for Videocon d2h have not been made available since the company debuted on NASDAQ on 1 April, 2015 and has disclosed only a limited amount of information about its annual numbers.

     

    The Indian carriage universe has 16.8 crore households. DTH operators have continued to focus on improving realisations by increasing penetration of HD channels, premium channels and value added services (VAS) according to the FICCI-KPMG Indian Media and Entertainment Industry Report 2015. However, they may have to rework their channel packages to be more relevant and affordable for phases III and IV subscribers. A case in point mentioned above is Dish TV’s sub-brand Zing, which caters to specific linguistic needs of subscribers and offers regional specific packs as a part of all available packs.

     

    Also, all major DTH operators have launched apps for mobiles and tablets through which subscribers can watch live TV for an additional fee and DTH operators have the advantage of monetising these viewers because of their existing payment relationships with their subscribers. 

     

    The FICCI-KPMG 2015 report also says that battle for subscribers in phases III and IV of DAS in India is expected to be more keenly fought between MSOs’ and DTH players. While DTH players managed to get only 20 to 30 per cent of the subscribers converting from analogue to digital in phases I and II, they are in a much better position in phases III and IV due to inherent technology advantage of DTH in sparsely populated areas and also due to their balance sheets being healthier than the MSOs’.

     

    The Ministry of Information and Broadcasting extended the deadlines for phases III and IV to 31 December, 2015 and 31 December, 2016, respectively, and there could be another delay by 12 months according to experts, which means that phase IV rollout could complete only at the end of 2017 or even 2018. The benefits of digitisation in these phases in terms of improved addressability and ARPU is expected to take much longer. At the end of 2019, the FICCI-KPMG report expects digital cable subscriber and DTH subscriber ratio to be 55:45 with 9.4 crore digital cable subscribers and 7.6 crore DTH subscribers.

     

    HITS (Headends in the Sky), if it takes off even in a small way, could affect the fortunes of both the DTH and the cable TV industry. Let’s wait and watch how the Hinduja Group, which has a license to launch HITS and is a major player in the cable TV business, plays this out. Jain TV, the other licensee for HITS, has made a miniscule dent. IPTV is still at less than an infancy stage in the country.

     

    If DTH companies can sustain, innovate in technology and offerings and grow from here, FY-2015, and maybe Q4-2015 could really be the turning point when at least one segment of the carriage business in India has started making money. Only time will tell…

  • Digitisation worked wonders for TV industry, FICCI-KPMG report

    Digitisation worked wonders for TV industry, FICCI-KPMG report

    MUMBAI: The Indian media and entertainment industry grew by about 12 per cent in 2013 amid overall muted growth due to economic slowdown, but digitization of cable TV worked wonders for the television industry, according to a FICCI-KPMG report released ahead of FICCI Frames 2014.

     

    The three-day trade event for the entertainment industry will be held from 12 March, and is expected to be attended by over 2,000 Indian and 600 foreign delegates.

     

    The FICCI-KPMG report said due to the economic slowdown, advertising revenue dependent sectors such as TV and print were impacted on a large scale. The depreciation in the rupee also affected print, cable and DTH companies adversely but helped export oriented sectors such as animation and VFX to some degree. At the same time, this was countered by the impact of continued digitisation of media products and services, and growth in regional media.

     

    Digitisation was moving in the right direction, with the mandatory Digital Access System (DAS) rollout almost complete in Phase II cities. The impact was felt to the extent that carriage fees saw a reduction of 15-20 per cent overall, however the anticipated increase in ARPUs and subscription revenues for broadcasters and MSOs (Multi System Operators) is expected to be realized only over the next 2-3 years.

     

    Other key highlights in 2013 were the inclusion of LC1 (less than class I) markets in TV ratings, the 12 minute advertising cap ruling and the shift from TRP to TVT ratings.

     

    What gained was the film industry by recording a double digit growth, albeit slower than in 2012, thanks to the multiple movies scoring big at the box office collections. Approximately 90-95 per cent movie screens are now digitised in the country, with a shift in focus to tier II and III cities. Going forward, multiplex growth is expected to slow down, in line with the overall delays and future expectations for retail sector and commercial real estate development, impacting box office growth in the short term.

     

    The Print sector continued to buck the global slowdown trend. The sector grew at a CAGR of 8.5 per cent this year to reach INR 243 billion. Regional markets performed exceedingly well on the back of steady advertiser spends, state election impact and new launches. However, with the validity of IRS data called into question by the industry majors, the sector in the short term suffers from the lack of a robust measurement system, critical for decisions on media planning and allocations.

     

    The total internet user base in India grew to approximately 214 million by end of the year with almost 130 million going online using mobile devices. Mobile Internet users dominated the total internet user base capturing an overall share of 61 per cent.

     

    Digital media advertising in India grew faster than any other advertising category. Streaming and download services continued to see growth in the music industry, with the growth in mobiles, in particular smartphones, contributing significantly to increased consumption of music ‘on-the-go’. However, with the continued decline in physical sales, compounded by the significant fall in ringback tone revenues (following the backlash of TRAI guidelines issues in 2012), the sector saw an overall fall in size by 10 per cent in 2013.

     

    Going forward, digital revenues are expected to drive growth in the sector. Further, the vibrant live events sector is expected to continue its role as a catalyst for driving growth in artists’ fan-base, and public performance royalties.

     

    FICCI M&E committee chairman Uday Shankar said 2013 was a challenging year for the media and entertainment sector. He opines: “2013 has been an important year for the media and entertainment sector. It was a year of challenges and significant change. The industry dealt with a host of issues that will lay the foundation for robust growth in the years to come.”

     

    Television saw the implementation of the 10+2 advertising cap, seeding of set top boxes in DAS 1 and II phases was largely completed – setting the stage of revenue growth and expansion in genres. The film sector continued to mature on the back of multiplex expansion and a wide range of content succeeding.

     

    Radio and print continue to defy global trends and await positive regulatory intervention that will take these sectors to greater heights. I am certain that the insights and findings from this report will provide a comprehensive and useful lens for all of us in the industry.

     

    KPMG head of M&E Jehil Thakkar states: “2013 was a year in which many parts of the M&E industry paused and took stock. Focus shifted from top line growth to bottom line growth with companies focusing on operations and efficiency. Inspite of a very challenging macro environment, the industry grew 12 per cent, a far better performance than many other industries. The structural changes taking place in the industry – especially in television and digital, continued to take the industry down the path of fulfilling its potential.”

     

    This year, the report also highlights opportunities that could come from tapping international markets such as the US and Middle East, with a special feature on opportunities in South Africa and Nigeria.

     

    Going forward, there is need for continued positive regulatory intervention, such as implementation of Phase III for the radio sector. In an increasingly digitised media world, the ability to create compelling and targeted content across multiple channels, will be the bedrock for creating differentiation in a cluttered market.

  • Film industry wants entertainment tax to be subsumed in proposed GST

    Film industry wants entertainment tax to be subsumed in proposed GST

    NEW DELHI: The Film Federation of India has appealed to the Government that entertainment tax imposed by states and local bodies should be subsumed in the proposed Goods and Services Tax (GST).

    On its budget proposals to Finance Minister P Chidambaram, the FFI has said that the service tax on performing artistes should also be done away with.

    In the memorandum submitted to the Ministry, the Federation says the condition on filmmakers to fill a form under Section 52A of the Income Tax Act for all payments above Rs 50,000 should be confined to only cash payments.

    The Federation says the sale, distribution or exhibition of cinematographic films, not regarded as royalty under 9(1)(vi) of the Income Tax Act 1961, is nullified as it is not available under the Direct Tax Code 2010. As it is not regarded as royalty, it does not attract the 10 per cent with-holding tax under Section 194J of the Act. An amendment should, therefore, be made to exclude this from the Code.

    The exemption to digital conversion – and supply to cinemas – may be put in the Mega Exemption List.

    The exemption in customs duty provided for certain goods under the ATA Carnet (a uniform law applicable in 71 countries including India) does not include film equipment. As a result, it discourages foreign filmmakers from coming into India to shoot here. This should be amended to include film equipment so that more filmmakers come into India to shoot. This would also encourage the tourism and related industries.

    Many Indian studios are hired by foreign filmmakers for post-production work. But under the Place of Provision of Service Rules 2012, only material brought in for repairs, reconditioning or re-engineering are covered. The Federation says that post-production is also in many ways repairing and reconditioning, the Rules should be amended to cover post-production work undertaken by Indian studios for foreign filmmakers.

    Cinema theatres and digital distribution should not be subjected to service tax for Business Support Services, the Federation has said.

    Similarly, the service tax on renting of immoveable commercial properties should not include cinema houses or multiplexes.

    The services rendered by a digital cinema distributor were earlier exempted from service tax by the CBEC in March 2007. However, the introduction of the negative list-based service tax did not cover this. The industry, therefore, wants that the exemption of service tax in this regard should continue.

    Meanwhile, Dun & Bradstreet Information Services India Pvt. Ltd has in its pre-budget demands sought a unified tax structure rationalising multiple levies can ease compliance and reduce the existing tax burden from the industry. The media & entertainment industry is presently subject to a host of taxes like service tax, VAT, entertainment tax etc.

    It has also sought more clarity on the potential levy of service tax as well as VAT on activation charges and recharge coupon vouchers is expected.

    Moreover, to enhance digitisation of electronic media, the industry expects abolishing/reducing the import duty on set top boxes. This will also result in reduction of capital expenditure for cable / DTH companies.

    At present, the income tax act considers the subscription revenues earned by the foreign telecasting company as royalty or business income. The income from grant of distribution rights is in the nature of business income and not copyright. Hence, such payments should not be considered as royalty.