James Murdoch slams cable ops over underdeclaration; Swaraj says conditional access coming

The second edition of the annual global convention on the business of entertainment - Ficci Frames (Films Radio Audio-visuals Music Events and Shows) 2002, kicked off today at the Renaissance Convention Centre, Powai, in Mumbai, with two figures crucial to broadcasting in India taking strikingly opposing stances in their presentations.

James Murdoch, chairman & CEO, Star Group, set an extremely combative tone in his keynote address when he went hammer and tongs at the cable industry over the vexing issue of underdeclaration while saying: The problem is not that there is a middleman (the cable op) but that he is making a mess of it. Murdoch stated that the demand by the cable industry to introduce conditional access systems was more an exercise in obfuscation so as to maintain status quo rather than because of any real concern for the consumer. He also made an impassioned plea for easing up by the government on DTH broadcast in the country so a to introduce a more competitive environment in the broadcast sector.

Union information and broadcasting minister Sushma Swaraj in her inaugural address however, gave little on most of the issues that Murdoch raised. Swaraj expressed concern at the kind of rates that consumers were being asked to pay. To quote Swaraj: area of concern relates to the rates which the consumer has been asked to pay for viewing cable television. I need not go into the issue of who is right and who is wrong. Surely all stake holders have a point of view which is justified. However, as policy makers we have to ultimately be answerable to the multitude of consumers. The rates at which prices of cable viewing has galloped is certainly a cause for worry. We have been toying with the idea of introducing a conditional access system which is mandatory for pay TV viewing. The committee which was constituted for this addressability issue has to give final touches to its recommendations. The objective should be that all stake holders get their legitimate due and the consumer also does not suffer.

In this conference, I hope some time can be devoted to the addressability aspects, especially the pricing, technology and availability of set top boxes.

 Swaraj made no reference to DTH in her speech at all.

Earlier in his presentation, Murdoch, while reiterating the Star Groups long term commitment to India, pointed out the root of growth in the entertainment business is the vibrancy of Indias creative community. Murdoch said that this creativity was being impeded due to the massive underdeclaration by cable operators which made it difficult to pump back monies into programming. Citing examples outside India, Murdoch said broadcasters get 35 to 40 per cent of total subscription revenues and in turn 30 per cent of this was pumped back into programming.

In India, the broadcaster earned only 5 per cent of subscription revenues due to underdeclaration by cable ops to the tune of 85 per cent on an average.

Murdoch said underdeclaration was locking up a good Rs 20,000 million at the operator level and termed this as outright theft of copyright that needed to be stamped out.

Referring to the stand by the cable industry that a conditional access system regime would take care of this problem, and till such time as it was introduced rates should be held at present levels, Murdoch said this was a delaying tactic which was working on the hope that the issue would get entangled in bureaucratic red tape. Furthering the argument, Murdoch said it was still to be fixed who would pay for the set tops that would have to be distributed to consumers.

The only way forward, Murdoch said, was for 100 per cent declaration to become the norm in the industry. In return, broadcasters should be willing to sit down and thrash out related issues and an arrangement that was fair to all could be introduced.

The government to needs to step in, otherwise there can be no resolution to this problem was Murdochs conclusion. Murdoch also made a plea for a relaxation of the DTH policy, saying a fully digitalized service would be a potent incentive to improve services.

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