ITV

Tag: DTH

  • DD’s DTH to expand bouquet to 50 channels in June

    DD’s DTH to expand bouquet to 50 channels in June

    MUMBAI: DD Direct Plus, the direct-to-home (DTH) service of Prasar Bharati, will undergo its first phase of expansion in June this year. As per the plans, the number of TV channels on the DTH platform are being ramped up from 33 to 50 while the radio channels will go up from 12 to 20.

    “DD Direct Plus will increase its strength from 33 channels to 50 channels by the end of June this year. The new channels joining the DTH platform will be from Hindi as well as the regional markets,” Doordarshan director general Navin Kumar tells indiantelevision.com. He, however, did not name the new channels which were hopping on to the DTH offering.

    The private broadcasters joining the DD Direct Plus bouquet will be paying Prasar Bharati annual fees of Rs 10 million, according to Kumar. “Prasar Bharati charges the private broadcasters part of DD Direct Plus annual fees of Rs 10 million and this is applicable to even the new channels joining the DTH platform,” Kumar says.

    In the second phase of expansion, DD Direct Plus will add up a further 50 channels to take the total DTH bouquet to 100 by the end of the year.

    What about offering FM radio stations? There is no development yet on DD Direct Plus’ plan to sign FM radio stations, Kumar says. Under the present policy, FM radio stations can operate only within a particular geographical area and cannot have a pan-India presence. This had come as a stumbling block for Prasar Bharati when it planned to offer space to private FM channels in DD Direct Plus.

  • ‘Zee Telefilms to see ad revenue growth of 12 – 15% in FY07’ : Rajiv Garg – Essel Group CEO of corporate strategy and finance

    ‘Zee Telefilms to see ad revenue growth of 12 – 15% in FY07’ : Rajiv Garg – Essel Group CEO of corporate strategy and finance

    Cable and direct-to-home (DTH) is where Zee Telefilms Ltd (ZTL) chairman Subhash Chandra is planning to put the accelerator on. Wire and Wireless India Ltd (WWIL), the cable outfit, will enjoy an investment of Rs 5 billion to lay out a digital platform, gear up for triple play and expand in value-added services. And to fight Tata Sky in the DTH business, he will pump in Rs 2.5 billion over two years.

    Zee News Ltd. (ZNL), which will have news and regional channels under its umbrella, is looking at a turnover of Rs 2.5 billion this fiscal. The listing of these demerged companies is expected to be in September-October.

    In an interview with Indiantelevision.com’s Sibabrata Das, Essel Group CEO of corporate strategy and finance Rajiv Garg talks about the reasons for the demerger and the expansion plans of these separate entities.

    Why did Zee Telefilms Ltd (ZTL) decide to demerge its businesses into separate entities?
    The driving argument for demerger was that all these businesses had become big in themselves. Huddled together under Zee, they were not given the right strategic focus as the company was very broadcast-oriented. In cable, for instance, we felt that we were not doing justice to its growth potential. Also, in certain lines of activity the government regulations were impinging upon the growth prospects of the company. The idea was to see if we could create that focus and comply with the government guidelines. With so many technological advances taking place, we felt it was the right environment to carry this out. We decided to create independent governing structures and managements, delink cable from broadcasting, and put together certain news-bearing channels into an independent entity.

    Why was the direct-to-home (DTH) business housed in complex structures which did not allow for tax efficiencies?
    The idea was to provide specialist services in specific entities. As the competencies lay in them, the DTH business was spread across three outfits. Integrated Subscriber Management Systems Ltd, for instance, has an expertise in such areas like subscriber billing. Siticable has been negotiating content from the time the cable industry began in India. New Era Entertainment formed the marketing and ad sales arm. The aim was to create a revenue-sharing arrangement with ASC Enterprises Ltd (Ascel), the DTH license holder. When we did this structuring, there was no service tax applicable to the industry which was introduced later. We did not anticipate taxation developments to happen so quickly and cause financial inefficiencies. Besides, demerger will provide clarity of structure and add value to shareholders.

    Since regulation allows for a broadcast cap of 20 per cent, why didn’t ZTL hold stake in the DTH business?
    It would have happened in due course. We were in no hurry as we wanted to present the DTH platform as broadcast neutral. The internal intention was to acquire equity once the key relationships came in.

    What does the demerger process in the DTH business involve?
    In the first stage, Siticable will hive off its cable TV business into Wire and Wireless India Ltd (WWIL). The residual Siticable and its wholly owned subsidiary New Era Entertainment Network Ltd will then merge with Ascel, thus consolidating all the DTH operations under one company. Zee Telefilms shareholders will get 23 shares of Ascel for every 10 shares held.

    How did you arrive at this exchange ratio and why did you prescribe for a subsequent cancellation of shares?
    It is the independent valuer (Deloitte Haskin & Sells) who came up with this ratio. As for cancelling three of every four shares held in Ascel, this is to bring back the capital base to the pre-merger level. The paid-up equity of Ascel would have bloated to around Rs 1.66 billion after the merger, up from the base of Rs 411 million. This would have been too large an equity for a company of this size. So we wanted to compress the capital base. We could have given a predetermined base, but didn’t know the ratio the valuer would arrive at.
    ‘DTH revenues will touch Rs 8 billion in FY08 as subscribers rise to 3.15 million and ARPU to Rs 310‘

    Zee’s operating revenues from the DTH line of business was Rs 818 million in FY06 while losses stood at Rs 790 million. What is the investment plan and how do you see subscribers and average revenue per user (ARPU) size up over the next two years?
    The net expense for DTH operations so far is Rs 3.8 billion. We are planning to pump in a further Rs 2.5 billion over the next two years. But we are sitting on a dynamic model and if Tata Sky and us are aggressively competing, there is a possibility of the subsidy amount further increasing. It is a factor of what strategies we adopt to develop our subscriber base. By the end of FY06, we reached close to one million subscribers. We project a gross revenue of Rs 3.2 billion in FY07 on a subscriber base of 2.4 million and an ARPU of Rs 250 (up from Rs 190) mainly because of the launch of value-added services. And in FY08, we see ourselves growing to a revenue of Rs 8 billion as subscribers rise to 3.15 million and ARPU to Rs 310.

    When do you expect to sign up with Sony and how do you see content growing?
    We expect Sony to happen within a month. Gradually, the content kitty is filling up. We are also looking at creating new DTH channels. Our plan is to expand to 200 channels.

    Will transponder space be a limitation?
    We will have to find space. We may have NSS when Doordarshan’s DD Direct vacates the satellite to move to Insat 4B. We are also talking to Isro (Indian Space Research Organisation) to launch a dedicated satellite for us.

    Are your Korean set-top vendors planning to set up a manufacturing facility in India?
    I don’t think it is viable at this stage. The volumes are too small for us to ask our STB vendors to manufacture in India. When we scale up to five million (boxes a year), then it may be a feasible project.

    Which do you think will attract investors first, the DTH or cable company?
    Both have attractive growth paths. We are looking at a mix of debt and funding coming from strategic or private equity investors.

    Are you looking at a small dilution initially of up to say 26 per cent?
    It all depends on what is the offer. Yes, if you initially dilute a small stake you have the advantage of discovering value as the company grows. But we have a flexible approach and it all depends on how lucrative the proposal is.

    Have you started talking to investors?
    We have been approached by many, but nothing is imminent yet.
    Will WWIL infuse massive capital towards digitisation of cable and triple play?
    We know the cable business has a lot of undiscovered value and will be giving it a big push. WWIL has a business plan which would take in an investment of Rs 5 billion over three years to drive digitisation, broadband and triple play rollout. It is a classic example of how the focus has been lacking and we have not taken advantage of the technology advances. We are looking at a million digital cable subscribers in the first year as we bundle service and hardware together in some form of subsidy. We also plan to make the network available to telecom operators for voice. Valuation of the cable business can only go up as the industry is badly suppressed. Conditional access system (CAS), digitisation and triple play will liberate the industry and growth in revenues can be rapid.

    How much debt you will raise to fund the expansion?
    We are looking at a debt-equity ratio of 1:1. The net worth of the company currently is not that strong to support that size of debt. We are, after all, planning to pump in Rs 5 billion to expand the business.

    What was the need for restructuring Zee News again?
    The restructuring started a couple of years ago when the uplinking guidelines were changed. Since we had a substantial foreign holding in ZTL, broadcasting of news and news-bearing channels were placed on a separate footing. Gradually as a response we shifted news gathering and uplinking to a separate company, Zee News Ltd, which was in compliance with the guidelines.

    But in the last few months, we have been mutilating this model as we found that there is a lot of strategic gap or clarity between the thinking of the producer (Zee News), the distributor (Zee Telefilms) and the team that exploits the commercial rights (Zee Telefilms) to such channels. So we thought we would close the gap and put everything in an entirely separate entity. All strategic decisions should be taken in an integrated manner by one team – be it production, news gathering, programme slotting, distribution or commercial exploitation.

    So what were the strategic gaps?
    The differences sprung because there was a revenue sharing arrangement between the two, but I can’t give you the minute details. It is not a good idea tactically to unite even if both of them are part of the same family.

    Zee news and regional channels had a combined turnover of Rs 2 billion in FY06. Were regional channels brought under Zee News Ltd (ZNL) because they could add to the company’s topline growth?
    The main reason for this kind of arrangement is that they are news-bearing channels; the regional channels have a strong component of current affairs and news programming. One of the consequences of this combination, of course, can be fattening of the topline. We are projecting a revenue of Rs 2.5 billion in FY07 and Rs 2.9 billion in FY08.

    As part of the restructuring, 137 ZNL shares will fetch 100 shares in ZTL. But with the total foreign shareholding in ZTL at 54.69 per cent, how does ZNL fall within the regulatory cap of 26 per cent?
    ZTL chairman Subhash Chandra will be transferring his foreign holdings (22.77 per cent is foreign promoters holding in ZTL) to an investment company in India. Also, foreign institutional investors (FIIs) will be given preference shares to bring the cap under limit (FIIs hold 31.51 per cent in ZTL).

    When are you planning the launch of Tamil and Malayalam language channels? How much are the new southern channel launches consuming as investments?
    The two channels should see launch in the current fiscal and in FY08. Along with the Kannada launch, the total investments would be in the region of Rs 350 million.

    With the demerger, won’t the topline of core Zee Telefilms see an erosion?
    Even after physically transferring the topline out, there is enough of a mandate to register growth. We have the number two and three (Zee Cinema and Zee TV) channels in the country. If they continue to focus on the products they have, their growth path is mandated. The flagship channel, Zee TV, is seeing a surge in ratings and ad rates.

    For core ZTL (after demerged businesses), we expect an advertising revenue growth of 12-15 per cent in FY07. While international business will sustain its 10-12 per cent growth (adding of channels and gain from Middle East), domestic subscription will stay steady. Overall, the core ZTL (after demerged businesses) will see a growth of 10 per cent in the current financial year.

    Will the bottomline look healthy after hiving off the loss-making businesses?
    The pullout is of minor loss-making businesses. The impact will largely even out as Zee News and the regional channels were profit-making. Still, there will be some positive outcome.

    How will Zee Sports play out on ZTL’s bottomline, particularly after bagging at a whopping price of $219.15 rights to 25 offshore cricket matches over five years?
    Zee Sports is at a development stage and there will be investments made for the long term development of the channel. There is a particular sequence in which we have to pay and the outgo for the first year will be $5.04 million per match. That will give us reasonable time to drag on the investments and build the channel. Besides, we will be bidding for other major sports properties including the ICC World Cup which is coming up for grabs.
  • MTV2 plans to launch in India

    MTV2 plans to launch in India

    MUMBAI: MTV Networks India is expanding its bouquet of channels. The latest to plan an entry into India is MTV2, a channel from the Viacom stable which has a mix of music videos, long form music programmes and a line-up of irreverent, lifestyle and cross platform programming focused on youth and pop culture.

    MTV2 has registered for downlink licence. The other channels in the family which are already operating in India are MTV, Nick and Vh1.

    “We have applied for downlink licence for MTV2. This is in line with our plans to increase the MTV Networks franchise in India,” says MTV Networks India spokesperson.

    As for whether MTV2 would be specifically for direct-to-home (DTH) or be made available on cable TV networks as well, the spokesperson declined to provide further details. “It is too pre-mature to elaborate on our plans at this juncture,” he said.

    That the company was looking at expanding its operations in India was stated earlier by former MTV Networks Asia Pacific president Frank Brown.

    In an interview with Indiantelevision.com, he had said, “We are looking at a lot of ideas, including some potential channels for DTH. We are eyeing the launch of new genres of channels. We would like to explore some original channels in India and then probably use it as a test case for launching in other markets.”

  • Ahead of deadline, 41 TV channels apply for downlinking in India

    Ahead of deadline, 41 TV channels apply for downlinking in India

    NEW DELHI: Talk about cutting it close. With just a day remaining (10 May 5:00 pm to be exact) for the deadline to adhere to downlink norms, 41 television channels have applied for registration in India.

    “Around 40 channels have submitted their applications for registration in India,” the Press Trust of India quoted an an official in the Information and Broadcasting Ministry as saying.
    PTI quoted the I&B official as saying that the channels seeking registration include the Star Group, Sony, Zee, Discovery, Anil Planet, Cartoon Network, CNN, Pogo, MTV, Channel V, Toon Disney, Hallmark, HBO, Ten Sports, Channel News Asia and Times Now

    Those yet to send in their applications include Fashion TV, ESPN-Star Sports and BBC, the report adds.

    Speaking to Indiantelevision.com on the matter yesterday, a BBC spokesperson had said, ”BBC World is aware of the timetable set out by the Indian government for completion of all formalities of registration under the new down linking guidelines issued on 11 November 2005. In compliance with the timetable, BBC World has prepared its application and will submit the same within the 10 May deadline set.”

    The government, meanwhile, clarified that all those channels that have applied for landing rights on or before 11 May 2006 could continue to be carried on cable networks till the channels’ are denied the right.

    “A cable operator may continue to carry or include in his cable service any television broadcast or channel, which has made an application for registration to the central government on or before the date of commencement of the notification, for a period of six months from the date of such commencement or till such registration has been granted or refused, whichever is earlier,” a government statement posted on the site of I&B
    ministry said.

    The statement also said that amendments to the Cable Television Network Rules 1994 and DTH guidelines will be notified separately and issued on 11 May 2006.

    Those channels that had been granted permission for uplinking from India before 2 December 2005 shall be treated as “registered” television channels and can be carried or included in the cable service. The full list is available under Codes & Guidelines section at mib.nic.in.

    Yesterday, a senior government official had admitted to Indiantelevision.com that the number of applicants seeking landing rights in the country is still “very low” compared to doubts and queries being raised. “This is surprising
    considering the deadline is 10 May,” the official added.

    The government issued an ultimatum last week that those channels not fulfilling all the downlink criteria by 10 May 2006 would be denied landing rights.

    The I&B ministry also posted on its website communications sent to the Indian Broadcasting Foundation, Star Group, Time Warner and a lawyer. The missive made it clear that the deadline of 10 May stays.

    The lobbying against the downlink norms as a whole and partly is understandable. The moment a television company sets up a permanent establishment (PE) in India, as per downlink norms, its tax liabilities in India would go up drastically. Rather, more the revenues collected in India, higher would be the tax component.

    Recently, Economic Times reiterated this fact in a report also. “After unveiling the downlinking policy for satellite television channels, the government is set to re-examine the tax treatment of revenues earned by foreign TV channels (FTCs). These companies earn advertising revenues from ad agencies, sponsors, and subscription revenues from cable operators.

    “The task force on emerging issues in non-resident taxation, constituted by the finance ministry, is understood to have made an attempt to bring greater clarity and certainty in the tax treatment of FTCs. This, in turn, may enable India to get a larger share of the pie. Going by the recommendations,
    FTCs will be liable to pay tax in India if they have a permanent
    establishment (PE) here. Alternatively, a dependent agent who has the authority to conclude contracts, also constitutes a PE,” the newspaper said.

    Before 2001, foreign TV channels used to pay taxes on a presumptive basis on their advertisement revenues earned in India, which ranged between 35-40 per cent.

  • Weston launches DTH ready TV ‘SAT 20’

    MUMBAI: Consumer electronics company Weston has launched SAT-20, a Direct to Home (DTH) ready colour television targeted at millions of Indian households having no cable or satellite connection.
     

    SAT 20 is a 51 cm TV having an inbuilt satellite receiver can help a consumer view free to air 37 TV Channels including 17 Doordarshan Channels and 17 Radio channels including two FM channels. SAT 20 is priced at Rs 7790. It carries two-year warranty and has 256 programme and also a child lock facility.

     

    The product is available across the length and Breadth of the country through Weston‘s strong 1700 dealer network. It is targeted at remote hill areas, rural India, defense establishments, remote schools and other educational institutes, states an official release.
     

    “SAT 20 is a relief from cable bills .The advantage of this CTV is that even at the remotest of the corners in the country a customer will have the advantage of accessing his/her favorite channels available on the free to air channels. A initiative which will keep the masses in tune with the latest programming in this World,” says Weston MD Sunil Vachani.

     

    “Weston‘s SAT 20 TV incorporates a DTH decoder with television hardware & developed a common software to enable the control of normal television and DTH function with the same remote and does not need a separate set top box,” adds Weston VP Marketing Sunil Sethi.

     

    “SAT 20 is yet another innovation from Weston that is aimed specifically towards millions of consumers in India who do not have access to cable and satellite networks, particularly in the non-metro and remote areas. Known for its technology innovation, Weston has developed this technology at its own R&D facility,” says Sethi.
  • Weston launches DTH ready TV ‘SAT 20’

    Weston launches DTH ready TV ‘SAT 20’

    MUMBAI: Consumer electronics company Weston has launched SAT-20, a Direct to Home (DTH) ready colour television targeted at millions of Indian households having no cable or satellite connection.

    SAT 20 is a 51 cm TV having an inbuilt satellite receiver can help a consumer view free to air 37 TV Channels including 17 Doordarshan Channels and 17 Radio channels including two FM channels. SAT 20 is priced at Rs 7790. It carries two-year warranty and has 256 programme and also a child lock facility.

    The product is available across the length and Breadth of the country through Weston’s strong 1700 dealer network. It is targeted at remote hill areas, rural India, defense establishments, remote schools and other educational institutes, states an official release.

    “SAT 20 is a relief from cable bills .The advantage of this CTV is that even at the remotest of the corners in the country a customer will have the advantage of accessing his/her favorite channels available on the free to air channels. A initiative which will keep the masses in tune with the latest programming in this World,” says Weston MD Sunil Vachani.

    “Weston’s SAT 20 TV incorporates a DTH decoder with television hardware & developed a common software to enable the control of normal television and DTH function with the same remote and does not need a separate set top box,” adds Weston VP Marketing Sunil Sethi.

    “SAT 20 is yet another innovation from Weston that is aimed specifically towards millions of consumers in India who do not have access to cable and satellite networks, particularly in the non-metro and remote areas. Known for its technology innovation, Weston has developed this technology at its own R&D facility,” says Sethi.

  • NDS to deploy full end to end system to Romania’s DTH platform Boom TV

    MUMBAI: News Corporation‘s NDS Group has announced that a leading digital satellite pay-TV broadcaster in Romania, DTH Television Group has contracted NDS to deploy a full end-to-end system including NDS VideoGuard conditional access, MediaHighway middleware and EPG on their newly launched digital pay-TV platform, Boom TV. NDS is the provider of technology solutions for digital pay-TV.

    The platform had launched in May to homes in Romania. The NDS VideoGuard will protect all content delivered to new digital subscribers.

     

    DTH Television Group chose the full end-to-end system to secure their premium subscription content and will also take advantage of new services offered by NDS, including interactive TV applications, informs an official release.

    NDS Group chairman and CEO Dr Abe Peled said, “We‘re delighted that DTH Television Group has selected our proven solutions for their new service, Boom TV. This is an important contract for NDS as Romania, which has a population of over 40 million, is a significant TV market with the highest TV viewing figures in Europe by a wide margin. It also signals our expansion into the high-growth Eastern European broadcasting market, which we will continue to develop over the coming months and years.”

     

    Boom TV CEO Isaac Waldman said, “NDS is an important partner in being able to offer our subscribers enhanced TV services to make their viewing experience more entertaining.”

  • Sun TV to bank on pay revenues and radio biz for growth

    Since Kalanithi Maran started his media business 13 years back, he has been fighting against one rival: himself. Now, after years of staying almost unchallenged in the southern region, he is setting himself up for battle in newer markets.

    He has an expanded war chest of Rs 6.03 billion which he raised through an initial public offering (IPO) of Sun TV Ltd (STL) to pledge his new bet on private FM broadcasting. Also in the pipeline is a direct-to-home (DTH) service through Sun Direct TV, a privately held company.

    Holding 90 per cent stake in STL, Maran is worth Rs 78.28 billion. And the market cap of STL has hit Rs 86.98 billion in a brief span of two weeks, enjoying a 44 per cent premium over its IPO price. In media business, only Subhash Chandra‘s Zee Telefilms has a higher market cap with Rs 110.9 billion.

    Indiantelevision.com takes a close look at the ambitious plans Maran has to grow his media empire and the challenges that lie ahead of him as he heads a listed company.

    Concern for topline growth

    At question is Maran‘s ability to counter slow growth from his traditional revenue lines – advertising sales and broadcast fees. To squeeze more out of matured channels who enjoy a very high level of audience share can turn out to be a challenging task.

    Ad revenues have stayed flat for two years, sitting at Rs 1.55 billion in FY04 and Rs 1.56 billion in FY05. Broadcast fee (time slots that Sun sells to content producers on its channels) has also seen small change, going up from Rs 458 million to Rs 495 million during this period.

    Maran has attacked this somewhat in FY06. Advertising income was up 24.7 per cent to Rs 889 million in the first half of the fiscal, as against Rs 713 million a year ago. This was the period when Sun‘s combined audience share for all its Tamil channels (Sun TV, Sun News, KTV and Sun Music) went up from 60 per cent in FY05 to 70 per cent in the first half of FY06. In Kerala, the company‘s aggregate audience from its Malayalam channels (Surya TV and Kiran TV) rose from 29 per cent to 34 per cent during this period.

    The growth could escalate for the year-period (Sun has not yet announced its FY06 results), fuelled by a rate increase for Sun TV channel by seven per cent in September 2005. This is the first rate hike the channel has come up with in the last three years.

    Analysts also expect Surya TV to put up a better show in FY06, estimating its revenues to touch Rs 450 million. The Malayalam channel, facing stiff competition from Asianet, was raking in close to Rs 300 million. Other channels like KTV have also the potential to stimulate marginal growth.

    But several content producers and marketing agents associated with Sun network feel the potential to exploit more ad revenues from existing channels is limited. “With such a dominating viewership, Sun has been commercially exploiting its slots to the optimum. There is very little scope to raise ad or auction slot rates. This is particularly true of Sun TV, the Tamil flagship channel. And in case of Surya TV, the main Malayalam channel, Maran has to take into consideration the presence of Asianet as a strong competitor,” they say on request of anonymity.

    For speeding the growth engine, Maran has a multi-pronged strategy. In the short run, he expects pay-TV revenues to climb significantly once he takes flagship channels Sun TV and Surya TV pay. And in the medium-term period, the radio operations should be able to generate substantial cash flows to drive the company‘s topline growth. Also adding to the kitty will be the three yet-to-be launched channels and rise in international revenues with new alliances in overseas markets.

    “A master tactician, Maran has protected himself adequately from any slowdown in growth. Topline growth can see faster growth if Sun gets into movie production as well. Pay revenues will also fatten Sun‘s profitability,” an analyst in a leading equity firm says.

    A drag on the company‘s profitability, Maran has hived off his cable distribution business ahead of the IPO. Kal Cable, which operates under the SCV brand, was separated from 1 April 2005. In FY2005, SCV‘s revenues stood at Rs 156 million while costs were at Rs 301 million. The FY06 results will, thus, exclude the financial performance of Kal Cable.

    A result of this: net profit has surged to Rs 614 million in the first half of FY06, up from Rs 322 million a year ago. Rich profits have always been the strength of STL. On a turnover of Rs 2.9 billion for FY05, net profit stood at Rs 778 million. In fact, net profit as a percentage of total income has averaged 27.6 per cent over the past five financial years.

    “STL, the dominant broadcaster in the South Indian languages of Tamil and Malayalam, enjoys a phenomenal net profit. With a slot auction model for the main channels, programming expenses are in any case low,” says an analyst at a brokering firm.

    So how do the revenues pile up? Several estimates by analysts are available, ranging from Rs 7.5 billion to Rs 8.4 billion by FY08. Conservative estimates put it at a little over Rs 6 billion. Net income is also estimated to jump to over Rs three billion in FY08.

    A lot of these projections, however, will depend on how much growth takes place from pay-TV revenues and on the success of Maran‘s FM radio expansion.

    Sun to ramp up pay revenues

    Keeping flagship channels Sun TV and Surya TV free-to-air, STL has clocked pay-TV revenues well below its potential. In FY05, it stood at Rs 398 million, up from Rs 325 million a year ago.

    Maran wants to change all this by turning Sun TV and Surya TV into pay channels. Currently, it has three pay channels – KTV, Sun News and Sun Music. But in Chennai which is a conditional access system (CAS) market where consumers can view pay channels through a set-top box (STB), all these pay channels are free-to-air.

    Sun is yet to ramp up its pay-TV revenues. Analysts estimate revenues from pay-TV to go up progressively from Rs 500 million in FY06 to Rs 1.1 billion in FY07 and Rs 1.7 billion in FY08. This calculation is based on Sun TV going pay in the middle of this year and Surya TV converting from the free-to-air mode later in the year.

    “There is going to be a definite and substantial upside for Sun TV Ltd‘s pay revenues. Sun can scale up its pay-TV revenues by converting flagship and new niche channels to pay mode. The number of cable households, paying subscribers and pay channel rates are also expected to go up,” an analyst says.

    Sun TV, which is expected to be priced at Rs 15-20, is expected to ramp up STL‘s current 2.8 million paying subscriber base. Taking Surya TV pay, however, will be a difficult task if Asianet decides to stay free-to-air.

    STL‘s pay revenues will also come from its content contracts with direct-to-home (DTH) operators. Revenue from DTH consumers is estimated at Rs 260 million, putting the company‘s subscription revenues in the neighbourhood of Rs two billion by FY08 at the optimum level.

     

    Radio to tune in growth

    FM radio will be Maran‘s first media vehicle to have a national footprint, taking him outside the southern language market. He will operate 46 stations across the country through Sun TV Ltd‘s two subsidiaries, Kal Radio and South Asia FM.

    The investment required: over Rs 3.3 billion. Kal and South Asia FM will, in fact, require an approximate of Rs 1.83 billion towards acquisition of broadcasting equipement (FM transmitters, FM antennas, payment of common infrastructure), setting up of local offices and radio studios.

    But Maran realises this is where his big leap in revenues for Sun TV Ltd will come from. Though profitable, the revenues from the four operating stations are small. In Tirunelveli, for instance, Sun earned revenues of Rs 28 million in FY05 and Rs 13 million in the first half of FY06. And in Coimbatore, the income stood at Rs 56 million and Rs 32 million during this period.

    Some analysts, however, expect radio operations to contribute to 20 per cent of Sun‘s total revenues by FY08, compared to around five per cent in FY05. Sun‘s radio revenues are expected to leapfrog from Rs 147 million in FY05 to Rs 1.97 billion in FY08. In the southern language markets, Sun has the advantage of dominating ownership of movie rights which it can leverage for its radio business. But it remains to be seen how successful he can be in new markets outside the southern region.

    The structure that Maran has outlined for FM radio looks somewhat like this: Kal Radio (where Sun TV owns 89 per cent) will operate in the southern language states, while South Asia FM (Sun has 94.91 per cent equity) will take up stations beyond the Southern markets.

    Maran has not bid in Delhi, Mumbai and Kolkata, leading to speculation in the market that he may have some understanding with Astro (Sun has a JV with Astro for launching language channels). These are the cities where Red FM, which was acquired by a consortium of NDTV, Value Labs and Astro from Living Media Group‘s Radio Today, operates. But no official confirmation is available on this and it may be a matter of pure coincidence.

    Maran‘s plan is to consolidate the radio assets. The existing licenses of the four operational radio stations are, thus, being transferred to Kal Radio. While Suryan FM has licenses and operates in Chennai, Coimbatore and Tirunelveli. Udaya TV Pvt Ltd. runs Vishaka FM in Visakhapatnam.

    Analysts say Sun‘s design to operate the FM radio business through subsidiaries is to separate radio from other segment revenues for licence fee computation (4 per cent of gross revenues). Besides, Sun will have the flexibility to rope in a joint venture partner.

    Sun‘s ownership of rights of a vast number of films in various South Indian languages will provide it with a unique advantage to grow its radio revenues and earnings strongly over the next few years.

    Flexing muscles for cable distribution in South India

    Maran may be the king of content but he realises the importance of having distribution in his winning mix. Which is why he wanted to acquire Indian Cable Net (formerly RPG Netcom), the largest multi-system operator (MSO) in Kolkata, ahead of launching Bengali channel Surjo.

    Maran was so confident of the deal sailing through that in an earlier interview with Indiantelevision.com he admitted he was “on the verge of closing it.” But, as events rolled out, Subhash Chandra beat him to it and Siticable snapped up Indian Cable Net. Surjo‘s launch was shelved and the media king of the south is yet to gat a foothold into the northern market.

    No major investments have been made into the cable business for over a year. Maran did try to expand GCV‘s presence in Hyderabad but without much success. He even explored talks with Siticable to work together in that market but nothing conclusive came up. Sources say Siticable, which doesn‘t have signals from Star and Sony, is finalising plans on how to revive its network independently as it has lost market share in the city to Hathway Cable & Datacom. Maran will, thus, have to come out with a different formula even as he nurses ambitions to spread GCV‘s tentacles across Andhra Pradesh.

    In Tamil Nadu, the story is entirely different. SCV dominates cable TV operations, so much so that chief minister Jayalalitha introduced legislation in the state assembly that would allow the state to acquire and take over bigger cable TV networks in Tamil Nadu, including MSOs and optical transport systems. Though controversial, a lot of how things shape up will depend on who wins the assembly elections.

    Control of the distribution chain has put Maran in a unique position in Chennai, a conditional access system (CAS) market. The low offtake of set-top boxes (STBs) has meant that CAS has more or less been killed in this market. Sun has indirectly benefited by the virtual blackout of all the English-language channels like Star World, Star Movies and HBO. Hindi channels, in any case, did not have much of viewing in this southern-language market.

    “All the other channels have lost their business models here. Sun with its strong language content channels have become more powerful in this market,” the head of a large broadcasting company says.

    In a corporate restructuring, Sun has terminated its cable TV distribution agreement with Kal Cable from 1 April 2005. The reason: cable was losing money. “Unlike MSOs operating in the Hindi belt, SCV will have very less carriage fee. For digital to get a push, Sun TV has to go pay in the Chennai market,” says an analyst.

    Gearing up for DTH

    It is a slice of the business many players are keen to lay their hands on. In India, it doesn‘t matter if you run cable TV or IPTV operations. DTH promises to bring about addressability and better quality of service in a distribution chain that has been dominated by an unorganised cable TV industry.

    Maran hopes to kickstart DTH operations this year even as Insat 4C launches in July. Having booked space on the satellite, he is negotiating with the Indian Space Research Organisation (Isro) for eight Ku-band transponders. Initially, he had asked for five transponders on the satellite which could later be ramped up to nine.

    Sun Direct will join the race after Tata Sky launches its service. Already in existence are Dish TV and Doordarshan‘s DD Direct Plus, which offers subscribers free-to-air (FTA) channels. Soon to follow will be Anil Ambani‘s Blue Magic service, which has also booked space for its own DTH plans.

    So how will Maran stand out in this crowded market? He may come out with a specific south language package, keeping the pricing low. Along with this basic bundle, he can add sports and the other language channels to consumers who want more. Tata Sky and Dish TV as national players will find it difficult to compete in a target-specific market. Even if they match the pricing, they may not be in a position to offer all the south channels due to lack of transponder space.

    For broadening the menu to South Indian audiences, Maran will have to create more niche channels. Also necessary is to have Sun TV and Surya TV as pay channels by then. For those subscribers he fails to tap in DTH, he will try to retain through his cable network. But whatever DTH plans he has, no information is coming out from the company.

    Finding favour in the stock market

    Some analysts feel STL is an expensive buy with the stock price quoting at around Rs 1260 per share. But there are several indicators one should consider before taking a final view.

    a) There is a scarcity premium on the stock. With Maran offloading just 10 per cent stake, there is a chase among buyers.

    b) Sun enjoys a clear leadership position and there is no credible competitor emerging to challenge this status. Asianet is a strong contender but only in the Malayalam market. Maran is adequately protected with his breadth of channels. He has also developed extensive programming assets and holds rights for 2,650 movies (60 per cent are Tamils and 40 per cent Malayalam). He is in an ideal position to exploit content across all platforms including DTH.

    c) There is a growth trajectory in radio and pay-TV business. The success in these two areas is crucial to STL‘s future earnings and valuations.

    d) Profitability is the most attractive element in Maran‘s business and this is likely to continue

    e) Launch of kids and documentary channels will further add to STL‘s topline growth. Maran is in talks with Hungama TV for partnership in the kids space. While he will take care of the distribution infrastructure, the programming and other support for the southern version of the channel with initial focus in Tamil language will be handled by Hungama TV.

    f) Maran can also create a slew of channels for DTH which will allow him to increase bandwidth.

    g) These fresh investments run the risk of facing failure in the marketplace. But investors are currently betting on Sun more for its strategic than growth value.

    h) Maran has the flexibility to do a private placement and get in a strategic investor. The Foreign Investment Promotion Board (FIPB), in fact, has formally cleared STL‘s application for issue of preferential allotment of shares to foreign investors. No allotment has been made so far.

    i) Sun can also expand internationally through a $25 million joint venture agreement with Malaysia‘s Astro All Asia Network. The JV plans to collaborate in content creation for filmed and other entertainment products in Indian languages including Tamil, Telugu, Kannada, Malayalam, Hindi and Bengali for distribution to international markets.

    j) The market expects Maran to merge Gemini and Udaya at some stage with STL. But these are speculations and could prove to be wrong. Incidentally, Maran consolidated his ownership position by buying out entire stakes of Sharad Kumar and Dayalu Ammal (wife of DMK president M Karunanidhi). In Gemini and Udaya, he still has minor partners.

    k) When actor-cum-politician Sarath Kumar quit DMK to join AIADMK, speculation was rife that wife Radhika would walk her production house Radaan Mediaworks out of Sun TV. Since Radaan is the leading producer for Sun network with popular shows like Chithi and currently Chelvi, this would have an impact on STL. Nothing has happened so far and Radaan has not started making shows for Jaya TV. If it does, then it can‘t make content for Sun as Maran has a policy that disllows production houses from making shows for rival broadcasters. Will that be a severe blow for Sun? Analysts feel broadcast platforms have far higher long term strengths than production houses, particularly when competing channels are so far behind.

    Sun’s IPO may set the trend in the South

    Sun‘s IPO may have a ripple effect in the southern region, inspiring several broadcasting companies to tap the market.

    A strong case in point could be Asianet, though it has not expressed its intent to get listed so far. But Hyderabad-based Maa TV, which has been struggling to raise funds, is considering taking this route. Even Raj TV is closely observing the market trend.

    “We realise we have to add up channels so that we grow to some size. For our expansion, we require funds. We have been trying to raise private equity but have failed. We may plan for an IPO,” says a senior company executive.

    South-based listed companies like Radaan, Telephoto Entertainment and Pentamedia have actually spoilt the market with their poor financial performance after the IPO. A healthy company like Sun can open up the capital market for other players to step in.

    The problem is that companies of the size of Maa TV may not attract investor confidence unless they work out better business models. And those like Raj TV may not want to change the way they run their closely held business.

    But a transition in culture may well be on the way. Media organisations will have to keep pace with the changing times if they have to grow and flourish.

  • Dish moves court against Star

    Dish moves court against Star

    NEW DELHI: Court cases are buzzing all over the place in the media sector as deadlines for various guidelines, including adhering to downlink norms, near.

    In its first direct salvo against the Hong Kong-based Star Group, the Subhash Chandra-promoted ASC Enterprises, owners of the Dish TV DTH service in India, has moved the disputes tribunal against the former’s reluctance to make available Star channels to its platform.

    “It is respectfully submitted that the present petition has been filed due to the refusal on the part of the respondent (Star Group through Star India) to supply its bouquet one channels to the petitioner on reasonable and non-discriminatory terms,” the petition states.

    Filed today at the Telecom Disputes Redressal and Settlement Tribunal (TDSAT), the ASC petition adds, “The unreasonableness on the part of the respondent is evident from the fact that the respondent has laid down impracticable and unreasonable terms and conditions for supply of its bouquet one channels.”

    Contacted by indiantelevision.com, a Star India spokesperson said, “Negotiations are on with Dish TV. Beyond that we cannot comment as we have not heard from TDSAT yet.”

    The petition has been filed as Telecom Regulatory Authority of India (TRAI) in an order has mandated that all content should be made available to all delivery platforms on a non-discriminatory basis.

    Justifying its action of approaching the TDSAT, the petition seeks “appropriate directions against the acts of omission and commission” of Star, including its failure to provide on request the signals of the channels of its first bouquet “on reasonable and non-discriminatory terms.”

    Bouquet one of Star consists of channels like Star Plus, Star Movies, Star News, Star World, Star Gold, Channel [V], National Geographic Channel, The History Channel and Vijay TV.

    The second bouquet — the formation of which was necessitated owing to certain directions from the sector regulator in an effort to control cable TV prices — comprises Star One, Hungama, The Disney Channel and Toon Disney.

    What is interesting is that the Chandra company has decided to take on one time ally-turned-competitor with a vengeance.

    The petition not only states that discussions with Star were initiated by Dish TV in December 2005, but also insinuates that the delay in concluding a commercial agreement is deliberate as the respondent is a joint venture partner in another DTH service, Tata Sky, proposing to start operations later this year.

    Interestingly, Dish TV has won a favourable direction from TDSAT in a similar case involving MTV.

    Discovery-Sony distribution joint venture One Alliance, which comprises MTV and sibling channel Nick, is said to be close to striking a deal with Dish TV for its channels that include the likes of SET, MAX, Discovery and AXN.

  • Sahara, DD ad sales revenues for England series gross Rs 2 billion

    Sahara, DD ad sales revenues for England series gross Rs 2 billion

    MUMBAI: The first chapter of Nimbus’ boss Harish Thawani’s audacious gamble with the India cricket story is over with a battered English side glad to be back in the cooler climes of Old Blighty and the Indians getting some well deserved rest before they head out to the Caribbean.

    For Thawani however, the rollercoaster he’s been on since his Nimbus Communications swung the telecast rights to India cricket for the next four years with a bank-breaking $ 612.18 million composite bid has barely begun. The India-England tour — the first of ten international series (and four domestic cricket seasons) that constitutes the deal — is over and the calculators are out tallying the revenue numbers.

    Indiantelevision.com’s discussions on the matter with media buyers indicate that the series, which involved three Tests and six ODIs (one was washed out), has generated about Rs 2003 million in ad sales from national broadcaster Doordarshan and Sahara One. Going by these calculations, DD accounted for Rs 987 million while Sahara One mopped up Rs 1016 million.

    But what is of critical importance to Nimbus is really how much it is able to net from this series. Indiantelevision.com estimates show the ad sales revenue picture for this series looking something like this: Nimbus’ Net income from DD is Rs 630 million (deducting 25% share to DD and 15% agency commission) and for Sahara it is Rs 864 million. That makes a total of just under Rs 1500 million ($ 35 million).

    Considering that Nimbus’ bid for the India territory rights was a whopping $ 504.09 million, there’s a huge mountain still that Thawani’s privately held Mumbai sports management company has left to climb to clear the profit threshold.

    THAWANI’S GAMEPLAN

    Having said that, and going by a recent report in Forbes, Thawani is already in the clear on the international territory rights (Nimbus’ bid here broke down as $ 108.09 million). The report says that Nimbus has sold BCCI’s telecast rights internationally for $130 million. The jury’s still out on that one though, with some industry observers calculating that Nimbus could not have made more than $ 89 million from the sale of international rights.

    As for the India part, everything points to Nimbus launching its own sports channel before the end of the year and for this the market expectation is that Thawani will soon be announcing another round of funding for this purpose.

    Thawani claims that investors are currently valuing Nimbus at $400 million to $500 million, which would mean that Nimbus has tripled in valuation terms in less than a year. It was last August that UK-based private equity and venture fund 3i acquired around 33 per cent stake in Nimbus for $45.50 million (approx Rs 1.97 billion).

    In conclusion, what is the downside in this gamble (for Thawani and any investor who wants to buy into his vision) and what could be the upside. That is really what will have guided Thawani in making what still remains a hugely difficult play to pull off. As the head of a broadcast concern told Indiantelevision.com, the current thinking is that there is just no way anyone can make more than $ 550 million from this deal. So at the outset itself, Nimbus is looking at a $ 62 million hit on its investment, or $ 15.5 million per year spread over four years.

    But there is the upside as well, which is that with all the new broadcast delivery platforms that are opening (DTH, IPTV, mobile TV) and if all the constellations of a booming economy, a brilliantly performing team and the kind of possibilities that a young on-the-go populace provide are in consonance, then $ 800 million might well be within reach.

    Before jumping to conclusions either way, it might be worth remembering a certain Kunal Dasgupta and his now well documented masterstroke of a gamble on the ICC cricket rights in 2002 for a then unheard of $ 208 million. There is no one who today does not see the SET India CEO’s bid as a really inspired play.

    A potential loss of $ 62 million versus a best case gain of $ 200 million. Which way the dice falls by the time 2010 comes around will determine whether Thawani is ultimately acknowledged as a visionary or someone whose go for broke gamble went bust. Unsurprisingly, there are many a respected industry stalwart who believe that if anyone can pull this off, it is the fashionably bald head honcho of Nimbus.