Cable TV

Cable TV Seeking its place under the Indian sun

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The Cable TV sector in India continued to grow in 2000. Estimates are that penetration rose to between 32-34 million in the calendar year from 28-odd million at the end of last year. The figures are expected to rise further by end this fiscal as sales of TV sets are pretty robust. Revenues for the industry are estimated at about Rs 35,000 million, of which about Rs 33,000 million is by way of cable TV subscription; the remainder is accounted for by advertising. The number of cable TV operators having their own headends shrank from about 30,000-odd to about 22,000-odd, according to indiantelevision.com estimates.



The year‘s biggest event was the re-entry of global media baron Rupert Murdoch into the cable TV sector when he took a 26 per cent equity stake in the Rajan Raheja owned Hathway Cable & Datacom at a cost anywhere between $40 million and $60 million. Earlier, he had sold out his 50 per cent holding in Zee TV‘s Siticable back to the company. Hathway Cable has a claimed subscriber base of around a million or so, but the figures that are being bandied about are 2.5 million.



Almost matching that in significance was the further consolidation and expansion of the DMK-backed and Sun TV promoted MSO Sumangali Cable Vision (SCV) in Chennai. The network has more or less wiped out other cable TV operators - MSOs or independents - in the southern city and is hungry for expansion. SCV‘s spread has assured Sun TV promoter Kalanithi Maran eternal and preferential carriage of his Tamil channels in the city. One can be sure that SCV will spread to other southern cities and states as Maran‘s maw is not easily sated. There were other attempts by established players to enter the cable TV business: consumer electronics company BPL, Dainik Bhaskar, Rajasthan Patrika, Titagarh Paper Mills - all took shots. BPL fled quickly. The latter are still trying.



The biggest non-event of the year was the promise of convergence and the big valuation brouhaha by cable TV companies. The convergence mantra began the year with a deafening sound and ended with barely a whimper. Almost every single cable TV MSO announced that it was upgrading its network to fibre optic to be able to offer Net and broadband access. Siticable said it would wire up 100 cities for convergence. InCable said that it would do the same to less than half that number. Hathway said it would invest Rs5,000 million in broadband, a story Murdoch fancied . InCable made a few noises announcing an unbelievable valuation of Rs 68,000 odd million for its cable TV network - a figure much too removed from reality - on the back of Intel‘s 49 per cent investment in one of its sister companies. Ditto with Sitcable which valued itself first at $5 billion, then at $3.5 billion and was finally given a sticker price of $1.9 billion by HSBC.



Other private independent operators in Mumbai, Surat, Delhi, Pune, Bangalore, Jaipur, Ahmedabad, Nagpur also rode the Internet delivery hype train. Some of them actually started their services. But as the year ended cable TV internet access was spreading tentatively into India‘s major metros as entry level costs were still too high to encourage mass consumption. Another problem is the poor infrastructure and bandwidth availablity from the only international bandwidth provider in India - VSNL. The bandwidth pipe that the government owned VSNL is providing to its customers is simply not robust enough to ensure rapid downloads that cable TV Internet promises.

 

Other private independent operators in Mumbai, Surat, Delhi, Pune, Bangalore, Jaipur, Ahmedabad, Nagpur also rode the Internet delivery hype train. Some of them actually started their services. But as the year ended cable TV internet access was spreading tentatively into India‘s major metros as entry level costs were still too high to encourage mass consumption. Another problem is the poor infrastructure and bandwidth availablity from the only international bandwidth provider in India - VSNL. The bandwidth pipe that the government owned VSNL is providing to its customers is simply not robust enough to ensure rapid downloads that cable TV Internet promises.



In their core business, that of delivery of cable TV broadcast signals, cable TV operators had their hands full. Zee Telefilms launched its bouquet of channels,
One of the major events of the year was the emergence of Sun TV promoter Kalanithi Maran‘s Sumangali Cable Vision in south India

which included regional language services and started charging cable TV operators for it. Star TV had already launched its bouquet earlier and it extended that by bringing in more of its channels under its basic subscription package. Premium services such as HBO, Nickelodeon, among many others started charging basic fees from cable TV operators. Estimates are that of every Rs 100 that a cable TV operator collects from his subs, he has to pay out Rs 60-70 to the telecast rights holder, pay TV programmers, in entertainment tax, etc. The scenario was exactly the reverse just about half a decade earlier, when he was pocketing a major chunk of his income. This clearly makes for an explosive situation and something has to give - and so far it has been the pay TV programmers who have been getting the short shrift by not being paid all their dues by cable TV ops.



The government is hoping to change that now that two of its channels DD Sports and DD News have gone pay and are being distributed by Modi Entertainment Network. Cable TV ops have been refusing to cough up the carriage fees to Modi Entertainment and they even blacked out DD Sports in Delhi as a mark of protest.



The government retaliated in early October. Soon after taking office, Information and Broadcasting Minister Sushma Swaraj hurled a bombshell: she said that the government was considering making addressability compulsory for cable TV operators. This raised the ire of cable TV ops who asked why should they bell the cat. Already, Indian cable TV ops were seething from the warnings her predecessor Arun Jaitley had uttered when he had unwittingly made them responsible for any advertising or programming violation committed on any channel carried on their networks.



Jaitley later retracted that statement but a lot of bad blood had already been spilt. To the cable TV operators‘ relief, Swaraj has done little to follow up on her "addressability" statement in the form of a government order. Like so many other government pronouncements, this too seem to be in the realm of a threat, as the year ends, rather than one which has to be acted upon. .

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