Cable TV

Siticable's revival hinges on HITS

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For over a year, Essel Group additional vice chairman and head of Siticable Network Ltd. Jawahar Goel has been busy lobbying hard for a mandated form of conditional access system (CAS).

Getting in the digital Headend-in-the-Sky (HITS) model to distribute pay TV signals in a CAS environment is central to Siticable?s revival strategy. This will enable the multi system operator (MSO) to avoid investment in upgrading its over 68 head-ends spread across 38 cities in the country. Also, and more importantly, it will provide control over its network which operates through joint venture partners.

"Unlike InCablenet and Hathway Cable & Datacom, Siticable runs its operations through joint venture partners. While Siticable owns the head-end assets, the JV partners are responsible for providing services to the local cable operators. It is the JV partner that has distributor agreements with LCOs. The HITS service will give Siticable more control which it badly needs," says a media analyst.

Siticable may have a hybrid model in plan - a local analogue system, a digital cable TV service and HITS. But, as Goel says, "My best model is HITS."

Unlike the other big MSOs, Siticable is not looking at driving new areas of business unless the regulatory picture becomes clearer. The network will not roll out its digital cable TV service now but wait for the government?s recommendations. Nor is it pushing for Internet over cable. "We have to wait to know how the government wants us to do business. We also realise telecom companies are entering into broadband business. We are evaluating whether there is room for multiplying infrastructure," says Goel.

There are other issues that are drawing Goel?s attention. In Hyderabad and Bangalore, Siticable has over the years lost a sizeable chunk of its business to rival MSOs. Regaining ground is the challenge Goel faces today.

"In Hyderabad, we have a revival plan," he says. Goel, however, is unwilling to disclose his game plan. But he admits he will appoint new cable operators.

Goel blames the pay-TV broadcasters for creating the rot in Hyderabad. Star India and Sony Entertainment Television (SET) India, he says, have worked out a minimum guarantee (MG) model with Hathway Cable & Datacom. This, he feels, has allowed them to muscle their way for growth from subscription.

In Bangalore, Star and Sony have a similar arrangement with InCablenet. "Broadcasters are giving MGs to various cable operators who have money and muscle. This is not smoothening the distribution business," he says.

It is in Bangalore that Goel faced his worst problems this year. The pay channel bouquets of Star and Sony-Discovery were out of the Siticable Network for several months. The reason: Siticable had not cleared its dues. Finally, a settlement was arrived at.

Goel is no novice in this game. "When cable operators are leaving you and broadcasters are still demanding more money in an operation where you can?t survive, the best strategy is to remain shut. Crash your cable TV price to subscribers. Broadcasters will listen to you and your rivals will have to unite," says Goel.

That can spoil the market and make everybody bleed. But Goel calls it a cleansing process. "In the distribution business, might is right. The industry is a push-and-pull market. There are no ground rules. Nothing is permanent in this industry," he says.

That is true for Siticable as much as it is for the other MSOs. In Chennai, for instance, Siticable?s headend was stalled due to political reasons. Then Sun Network?s Sumangli Cable Vision forced its way in. Goel did not want to speak on such developments.

Not too long ago, Siticable was ruling the country and was considered to be a "very lucrative asset" for parent company Zee Telefilms Ltd (ZTL). Since then, it has slipped even in the MSO-market of Mumbai. Substantial investments have not been made.

But for the last three years, Siticable has somehow held ground. Today, it has presence in pockets of Mumbai like Matunga, Mulund, and Ghatkopar. And in Delhi, the plan for a centralised control room is to get more power over the joint venture partners.

Goel?s focus is to hold on to Siticable?s existing territory, make the operations viable and grow vertically. "There is no point in having horizontal growth till CAS happens. Adding more operators is not fun."

Digitalisation, Goel feels, is bound to happen in the next four years. And distribution margins will evolve across the three value chains - MSOs, broadcasters, and last mile operators - even without CAS.

A few years ago HSBC had valued Siticable at $1.9 billion. In the present circumstances, MSOs can no longer command that kind of valuations. Says Goel, "Without regulations, there can be no valuation. But once that happens, as the oldest and biggest MSO we will command the highest value."

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