'Cable TV sector sees rapid consolidation and new competition in 2008'

‘Cable TV sector sees rapid consolidation and new competition in 2008‘

Hathway Cable & Datacom MD & CEO K Jayaraman
Cable TV companies have attracted private equity funding and used it for consolidation and digitalisation. But tight liquidity credit markets, intense competition to woo local cable operators, and rise in cost structures present a challenging 2009, says Hathway Cable & Datacom MD & CEO K Jayaraman

2008 marked the emergence of new multi-system operators (MSOs) with pan India ambitions. This resulted in intense competition to woo the local cable operators. The year also marked subtantial private equity/mezannine funding to some of the existing and new MSOs. Some estimates say that the combined inflows during the year could have reached about Rs 7 billion.

The substantial equity inflows resulted in furthering rapid consolidation of the industry with the independent cable operators (ICOs) partnering or entering into joint ventures with the larger MSOs. In fact some estimates put that almost 40 per cent of the total C&S (cable & satellite) homes could be the cumulative universe under the umbrella of the larger MSOs.

A welcome fall out of the rapid consolidation and equity flow was the intensive pace of digital cable tv roll out. Incremental voluntary digital cable during the year could have touched one million, based on rough estimates.

But this was again restricted to selective MSOs. Customers who opted for digital cable enjoyed 150 plus channels at the same price as of analogue. The digital boxes were also subsidised deeply by the MSOs. Digital cable was able to effectively combat the competition from satellite despite the latter companies having huge funding and high decibal advertisements. While the fob prices of cable digital boxes fell, the gain was lost due to 20 per cent rupee depreciation during the year.

The year also saw spiraling salary costs in the cable TV companies, with each one outdoing the other, even as subscription income lagged. The raged optimism arising out of projected placement fees and new capital infusion fuelled the salary costs and other overheads too.

Sadly towards the last quarter of the calendar year due to a combination of global meltdown and zero liquidity in the Indian banking system, the companies were sent scurrying for cover and control over these costs. While it may not be easy to cut these fixed costs, the situation can result in further profitability pressure for unorthodox business models in the year 2009.

The intense competition to woo the local cable operators (LCOs) sucked a lot of funding and, therefore, the roll out of value added services like broadband through cable etc suffered, barring a few whose inherent business model comprise these services too.

While the year saw rapid consolidation and new competition, sadly the core subscription business was forgotten. Subscription income from LCOs have dipped for the industry as a whole, except for business model where last mile also co-existed, as the chase for territory and placement fees gained predominance. Business models and enterprise valuations were being built around these non-conventional parameters. Cost structures increased rapidly including pay channel costs even as the LCOs dodged the MSOs.

The last quarter meltdown and liquidity crisis, coupled with slowing down of advertisement income for the channels, did send ominous signals to the MSOs with non conventional parameters. Pressure had started building rather quickly, but the difficult signs are being ignored.

Overall, the year ended on a sombre mood with a more challenging year 2009 in the offing.

Latest Reads

MIPCOM 2016 sets new records

CANNES: Record attendances at MIPJunior and MIPCOM, more World Premiere TV and International Screenings than ever, a remarkable Japan Country of Honour programme, a Personality of the Year, Shonda Rhimes, who packed delegates into her keynote interview and a tour de force opening keynote from Sony...

Specials Event Coverage Mipcom
BidSlate offers film buyers, content-owners negotiation platform

What if filmmakers didn’t have to rely solely on film markets and sales agents to sell content? And international film buyers had continuous access to a 24/7 international marketplace populated by an ever-growing catalog of content?

Specials Event Coverage Mipcom
Two popular BMX content creators join XTreme video multi-platform network

XTreme Video, the leading Multi-Platform Network (MPN) for extreme athletes and creators with over 200 million views each month and more than 50 million social followers, today announced the addition of two of YouTube’s top BMX creators, KinkBMX and Boqer123, to the XTreme Video network. Heading...

Specials Event Coverage Mipcom
INsight-Flare to produce reality competition 'The Line'

INsight TV has commissioned yet another new original format in Ultra HD, partnering with Flare Media to produce the reality competition The Line.

Specials Event Coverage Mipcom
FremantleMedia brings 'Familiar Taste' to MIPCOM

FremantleMedia is bringing a brand new title to MIPCOM 2016, which promises to leave viewers feeling warm inside. Familiar Taste sees well-known faces thanking those people who have had a major impact on their lives by sharing with them a surprise meal they have cooked themselves.

Specials Event Coverage Mipcom
MIPCOM: Beta Film delivers interactive TV-event 'The Verdict' throughout Europe

The interactive TV-event The Verdict continues its roll-out throughout Europe and will be simultaneously broadcast in six countries with additional territories to follow. The MOOVIE production by Oliver Berben (“Shades of Guilt”, “Hotel Adlon – A Family Saga”) will be screened in Germany, Austria,...

Specials Event Coverage Mipcom
'Inside the Masters of Dirt' on INsight TV to have non-scripted reality series in ultra-HD

INsight TV has commissioned a new, non-scripted reality series Inside the Masters of Dirt with XTreme Video, which follows the crew that produces the popular freestyle motocross arena show of the same name. Featuring fearless leaders in extreme motorsports, XTreme Video will be the first to present...

Specials Event Coverage Mipcom
MIPCOM: Cyber Group Studios signs deals with broadcasters, digital platforms

On the heels of MIPCOM Junior, Paris-based producer and distributor Cyber Group Studios continues to establish a strong presence worldwide by signing new agreements with buyers including major broadcasters and digital platforms for more than ten series of its catalogue. Deals cover players such as...

Specials Event Coverage Mipcom
Bloomberg Media Distribution signs Hollywood Reporter, Billboard, El Financiero, STAT as partners

Bloomberg Media Distribution today announced a partnership with a raft of premium publishers to provide business, technology, entertainment, music, lifestyle and health news to global audiences. Launched at MIPCOM, Bloomberg Media Distribution will distribute The Hollywood Reporter, Billboard, El...

Specials Event Coverage Mipcom

Latest News

Load More

Sign up for our Newsletter

subscribe for latest stories