MUMBAI: The Indian distribution industry is a complicated one and plagued with issues.
In the fourth round of Chrome Dii (Distribution Investments Index), the Chrome Data Analytics & Media has revealed carriage fee numbers across cities, thus giving a semblance to the much unorganised distribution industry.
The study highlights that the carriage fees paid to the multi system operators (MSOs) and the local cable operators (LCOs) have sky rocketed year on year due to the limited bandwidth on the analogue platform. But post digitisation, there has been a substantial correction owing to the opening of analogue bandwidth bottleneck.
“Dii has emerged as a powerful tool used by most broadcasters for internal audits and renegotiations. This also helps them in channelising and rationalising their carriage fee spends. Dii clubbed with the sub-base, gives them the return on investments across cable networks in 450+ cities of India. It takes into account the footprint of individual cable networks and co-relates the same to the average carriage fee spend for a particular band/frequency on that particular network. It gives the region-wise, market-wise and MSO-wise carriage fee spends further broken down to individual cable operators across the country,” says media veteran and Chrome Data Analytics and Media executive director Jeffrey Crasto.
The audit company’s CEO and founder Pankaj Krishna adds, “Digitisation was expected to be a harbinger of correction leading to nullification of carriage fees. As per TRAI, they had anticipated the Chrome Dii to come down to Re 1, however though there has been a significant drop; it has not come down to Re 1 – as compared to R3, Dii has come down from Rs 11.6 to Rs 7.2. Broadcasters have always faced huge challenges towards drawing benchmarks and rationalising of carriage fee spends which continue to hound them- therefore Chrome Dii R4, the objective of which is to simply facilitate business planning on the back of content affinity, market segmentation and industry benchmarks - the key to optimise distribution investments. Having run a channel myself, I understand the importance of access to key information – The Distribution Investments Index leaves no room for ambiguity in carriage fee investment decisions across every possible carriage fee deal”
Chrome Dii, has been worked out on basis of the deals done by broadcasters over the last one year, with information gathered from across various sources including broadcasters as well as distribution platforms. After eliminating high variance deals, an average of six solo deals per cable network were studied for their investments for S band and UHF. For the digital scenario, Chrome Dii indicates a benchmark carriage to be available on the Basic Tier i.e. channels under BST (Mandated FTA channels) along with the first tier of pay channels. The study is inclusive of both new launches/new deals done in the last one year and existing deals expiring in January/April 2014.
Chrome Dii R4 reveals that north India emerged as the costliest region with a whopping Rs 13.63 crore (Dii R3 Rs 16.7 crore) for a 100 per cent availability across Basic + S band for new launches and Rs 10.43 crore (Dii R3 Rs13.3 crore) for renewals of existing deals whereas central India was the lowest with Rs 1.62 crore (Dii R3 Rs 3.11 crore) and Rs 1.27 crore (Dii R3 Rs 2.73 crore) for Basic + S band for new launches and renewing existing deals, respectively.
Chrome Dii R4, which this year was pre-subscribed by 11 leading TV networks, also reveals that if the Dii (cost per contact for the Television channels) is studied, the data shows the cost (renewals, S-band) per contact (household) is the highest in west India with an average of 11.1 followed by the north and central India at 8. The national average for renewals stands at 7.2.
Some interesting facts according to Chrome Dii R4 –
1.To cite an example as per the above data, comparing how much a Hindi News channel would spend for a 75% HSM availability as per Dii R4 as compared to Dii R3 – it would pay 75% of (23.37 minus 3.89) = Rs. 14.61 Crores as per Dii R4 whereas it would have paid Rs. 19.57 Crores as per Dii R3 – a saving of over 26%! But has the overall pie reduced, not really! As there has been an increase in network bandwidth, hence the number of takers has increased.
2.Out of a total universe of 47mn C&S HHs in Class I India, Chrome Dii study tracks 38mn homes and balance 9mn are DTH (approx)
3.North emerged as the costliest region with Rs. 13.63 Crores for 100% availability across Basic + S Band and Rs. 10.81 Crores for 100% availability across Basic + UHF for New Launches. Renewals of existing deals for Rs. 10.43 Crores for Basic + S Band and Rs. 8.54 Crores for Basic + UHF.
4. The study also provides a benchmark for carriage fee efficiency w.r.to the Investment indices i.e. Chrome Dii i.e. Cost per Contact. Chrome reveals that the Dii (renewals, S-band, household) is the highest in West India with an average of Rs 11.1 followed by the North & Central at Rs 8. The national average for renewals stands at Rs 7.2
5. In terms of highest Chrome Dii, West was followed by North, Central, East and South.
6.The gap between Dii for Existing and New Launches has reduced over the years owing to digitization and increase in bandwidth of the networks.
7.Further, the gap between Dii for S Band and UHF has also reduced due to digitization
8.Chrome Dii for a New Launch in Central and East India has halved.
9.Top 8 deals as per Chrome Dii R4 – (ranging upto 3 Cr )
a.DEN UP CORPORATE DEAL
b.FASTWAY PUNJAB COPORATE DEAL
c.GTPL AHMEDABAD CORPORATE DEAL
d.HATHWAY CENTRAL CORPORATE DEAL
e.DEN NORTH CORPORATE DEAL
f.SCV CHENNAI DEAL
g.IN CABLE CENTRAL CORPORATE DEAL
h.HATHWAY BANGALORE CORPORATE DEAL
10.Most expensive Deals – Cost per contact (MSOs) – (ranging 18 to 42 against a national average of 7.2 )
a.All in Consultant UP Deal
b.Hathway CG Corporate Deal
c.DEN Mumbai Satellite Deal
11.Most expensive Deal (Independents)(maybe owning to the posh locality it caters to)
a.7 Star Juhu (West Region)
12.Regional MSOs garner higher CPC – E.g Asianet in South region, Fastway in North region
13.DEN commands the highest Dii amongst National MSOs, followed by Digi Cable and GTPL