Television

"Preferably CAS rollout should be into July 2004" : Peter Mukerjea Star India chief executive officer

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Star India CEO Peter Mukerjea these days rues the fact that he is not getting enough time for golf and, thus, relaxation and exercise. Shuttling between Mumbai and Delhi, most of Mukerjea's time is spent in meetings - be it marketing, ad sales, DTH, Star News' restructuring or conditional access system (CAS). The last two certainly topping the agenda.

But, it seems, that Mukerjea doesn't mind the hectic lifestyle or living in hotel rooms for all practical purposes. Brimming with a viewpoint on most issues related to the industry, he is ever ready to discuss them. Provided he has time enough for that.

But we, at indiantelevision, also don't give up easily. After having chased him for months for an appointment for an interview, Anjan Mitra caught up with him in Delhi's Oberoi hotel few days back for a short while. As a seemingly hungry Mukerjea ordered some snack and a glass of fresh juice to satisfy his hunger, he answered questions, mostly related to the increasingly-becoming-controversial CAS; in between munching the paneer tikka; and attending to business calls on his cell.

Excerpts:

Why are some broadcasters lobbying against implementation of CAS?



Are they? I don't think that there is any lobbying against CAS. What probably the broadcasters, at least some of them may be trying to do, is to get their viewpoints on CAS across to the government.

But this "viewpoint" is amounting to criticising the government for having thrust CAS down the gullet of the country and, it seems no efforts are being spread to stall its implementation. Your comments?



The broadcasters are not criticising the government, but only trying to say that the implementation at this stage and the way it is being sought to be done will result in chaos. The broadcasters that you are referring to are just trying to avoid the chaos and confusion.

Tell us for once and for all, is Star India for or against CAS?



Both. In principle, we, at Star, feel that CAS will benefit the industry and the government has taken a right decision. What we are probably opposed to is the way it is being sought to be implemented without taking the industry's views into consideration.

That is why we have been humbly saying that at the moment India is not ready for CAS and its rollout needs to be deferred and tested out in a city, especially in view of the shortage of set-top boxes that would be needed by consumers to access pay channels.

Hypothetically speaking, if the government agrees to defer CAS rollout by another six months to early next year, what is the guarantee that the broadcasters would not start putting forth the same complaints again around November-December 2003 ?



I'd prefer that CAS rollout is deferred to 14 July 2004. But to answer your question, at least this extension would give the industry some more time to negotiate deals and get things in place.

It has taken us almost six months time to arrive at a broad consensus that conditional access is an inevitability and how it would work in a post addressable cable regime with various tiers of cable TV services where everybody would get his due.

But the rough edges need to be smoothened out, all stakeholders need to be brought on to the common platform, their signatures obtained on the dotted line before we should start talking about CAS implementation. Now, for all this some more time is needed.

"The tiering system that we are talking about is the basic tier; over that would be the basic 'pay' tier to be followed by the 'premium pay' tier"

Let us take one issue at a time. What is this tiering system that you are talking about and who all agree to this?



The tiering system that we are talking about is the basic tier, over that would be the basic 'pay' tier to be followed by the 'premium pay' tier.

Now, for instance, if the basic tier of free to air channels, having 100 per cent viewership and reach, is available for Rs 72 (exclusive of local taxes) per month; the basic pay service consisting of five channels (Star Plus, Zee TV, Sony, Star Sports and ESPN) and having a viewership demand of 80 per cent may be made available for Rs 100 (exclusive of local taxes) per month. All other channels like AXN, Star Gold, Zee MGM, HBO, NGC, Discovery, etc. can be made available at, say, Rs 35 per month.

Along with such a system, the cable operators will also have individual pricing of each pay channel that can be sold to the viewer if he wants it that way. But the tiering will ensure that the monthly cable outgo for a consumer is also not much more than his existing outflows. Most broadcasters agree with this formula.

This is purely a broadcasters' game, why involve other segments of the industry and cause a delay in CAS rollout?



The cable industry would be an important ally where MSOs (multi system operators) and cable operators would have a crucial role to play in bringing about transparency too.

After the tiering system, we can go in for grading of the distribution margin too. Here, depending on the quantum of declaration of the subscriber base, the distribution margin can be worked out.

For example, if the declaration from the cable op is 90 per cent, then he'll get 40 per cent distribution margin that will decrease in proportion to the under-declaration. If a cable op declares just 30 per cent of his subscriber base, then the commission given to him may be just 18 per cent.

Now, for such a system to be in place, every stakeholder of the industry has to sign on a common agreement and this would include the likes of Star, Sony, Zee, the MSOs and cable ops. For this to happen some more time is needed.

So, who all agrees to this grand plan? ESPN-Star Sports, Star and Sony?



They certainly do agree to such a plan. Even Zee does not disagree totally. Mr. Subhash Chandra feels that such a scenario is likely to evolve a year later, while we feel that the industry should start off with such parameters. That is why we feel some more time should be given by the government before CAS is rolled out.

"Even if the boxes cost cheap when bought, as Zee is saying, by the time they reach the consumer with various duties and taxes levied on them in India, the price would have gone up substantially"

Coming to the issue of STBs, there are people who say adequate number of boxes would be made available by 14 July. So, what are your fears?



Of course some boxes would be made available, but at what cost? Since the boxes would have to be imported, they would ultimately reach the customer at a high price.

Costly STBs is something that Star and Sony are saying, not others like Zee, which feels cheap boxes can be made available. Do you feel that Zee is lying ?



Even if the boxes cost cheap when bought, as Zee is saying, by the time they reach the consumer with various duties and taxes levied on them in India , the price would have gone up substantially. Yes, the consumer can get cheap boxes, if somebody is subsidising the boxes.

So, why aren't the broadcasters subsidizing the STBs initially ?



The low return on investment would not make it a prudent business decision at the moment.

The broadcasters don't want to subsidise anything, but want that for an ideal law to be in place, the government should defer its implementation. Sounds a bit unreasonable, isn't it?



Isn't it unreasonable for others to say that the broadcasters should lose revenue while something is experimented with ? If the experiment has to be carried out, then it should be done in one city. That should sound reasonable.

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