Broadcasters in minimum guarantee deals with cable ops to drive growth

MUMBAI: Broadcasters are using the might of the big cable networks to drive revenue growth from subscription business in a price regulated and highly fragmented cable TV market.

Exclusive deals are being struck with individual operators for distribution of their channels in different territories on a minimum guaranteed amount. The trend has particularly caught on after the price freeze on subscription rates imposed by the Telecom Regulatory Authority of India (Trai) since 26 December, 2003.

Star India has entered into a series of agreements with the big operators over the last few months. "We have done such deals in Bhopal, Indore, Jalandhar and some other towns in north India. This is helping us grow and clean up the mess in those markets where the territory of the different cable operators is not defined," says Star India executive vice-president of distribution Tony D'Silva.

Sony-Discovery's One Alliance has already worked out an exclusive arrangement with InCablenet in Bangalore. And both Star and Sony have signed with Hathway Cable & Datacom to distribute their bouquet of channels in Hyderabad. The Kolkata-based RPG also has a similar deal in place for both networks.

According to the arrangement, the operator pays a minimum guaranteed amount to the broadcaster while being given exclusive authority to distribute the bouquet of channels in a particular territory. This allows the broadcaster to increase subscriber declarations and squeeze more revenues in difficult markets.

Star, in fact, claims to have seen a 10-12 per cent growth in subscription revenue last year. This is despite not being able to increase rates, as stipulated by Trai. "We have managed to grow in non-metro markets. Our subscription revenue rose 10-12 per cent last year," says D'Silva.

Star is the most aggressive broadcaster to carry out such deals. "They are using this strategy heavily in the northern region of the country. They are in a position to do so because of their strong content lineup," says a cable operator.

The practice of "minimum guarantee" deals is seen by small cable operators as a drive to create monopolies. While pay TV broadcasters are able to boost subscription revenues in a difficult environment, cable networks have the potential of improving collections from the ground and consolidating operations. "The privileged operator can switch off the feed of rival networks, if necessary. The broadcaster is able to divide the operators and create monopolies in certain markets that suit his business interests," says a local cable operator.

There were cases earlier also where broadcasters used to have operators as the distributors of their channels. But what is new is the minimum guarantee amount and the scale in which these operations are being carried out. "It is like having the highest bidder as your exclusive distributor. The operator who is chosen is a dominant player in that market," says a senior official in a leading broadcasting company.

Not everybody thinks it is a bad practice. "Broadcasters can offer security to the operators by assuring them of the feed. The operators, in turn, can use this to drive in more subscriber declarations and realise better recoveries from the system," says the head of a multi system operator.

Latest Reads
M&E industry appreciate film, Digital India-focussed interim budget 2019

The government today announced the interim budget for 2019 in the parliament and has been gaining a lot of praise from the people for its pro-poor and pro-middle class approach.

Resources Legal and Policies
GST council brings down TV set price to 18% slab

At the 31st Goods and Service Tax (GST) council meeting, GST rates on several items have been decided to be brought down from the top 28 per cent slab. Among the items that have been brought down from the 28 per cent slab to 18 per cent include monitors and television up to screen size of 32 inches...

Resources Technology suppliers
Amazon qualifies Mybox's AVS provider with set-top-box solution

MyBox Technologies, a Hero Electronix venture, specializing in the research and development and manufacturing of set-top boxes, has announced that it is now an Alexa Voice Service (AVS) solution provider and has collaborated with Amazon.

Resources Technology suppliers
After consistent rise, DTH subscribers fall in Jan-Mar quarter

After a consistent upward trend, total active DTH pay-TV subscribers in India dropped slightly during the January-March quarter this year. The overall active subscriber numbers dropped to 67.53 million from 67.56 million.

Resources DTH
Blackmagic Design makes presence felt at Broadcast Asia

MUMBAI: It's that time of the year again - where the leaders of the industry present the newest and most innovative technologies for film, television and digital advertising under one roof. It's Broadcast Asia time. All the world's leading broadcasters have descended on Singapore to keep pace with...

Resources Technology suppliers
PVR & IMAX forge 5 year theatre deal in India

At a business briefing to Canadian Prime Minister Justin Trudeau during his first official trip to India, IMAX Corporation and PVR Cinemas announced an agreement for five new IMAX theatres.

Resources Studios
Chilaka's roller coaster ride from engineering to animation

MUMBAI: Who would have thought that the person holding a master’s degree in computer science from a prestigious US University would commit to the lesser known field of animation and return to his homeland. And yet today, Rajiv Chilaka stands redeemed for a choice he made nearly 17 years ago.

Resources Studios
Film Writers’ Association gets new name, logo; new direction

Keeping pace with the changes in media and its consumption, the Indian Film Writers Association has donned a new avatar.

Resources forums
CASBAA Announces Thirteen-Strong Board of Directors

MUMBAI: Since its inception in 1991, CASBAA has welcomed an ever-growing group of members, showcasing the diverse industries and areas that make up Asia Pacific Broadcasting. Now, following its AGM on 29 October, CASBAA has announced its most extensive group of Directors to date, with many of the...

Resources forums

Sign up for our Newsletter

subscribe for latest stories