As TV viewers from four metros are getting ready for digital cable TV, some issues like diverse pricing for STBs and channel packages being charged by MSOs are creeping up. In addition, there is no clarity about revenues and cost sharing between LCOs and MSOs
With the government and players in the cable TV industry forcefully marching ahead with the digitization of cable TV signals, it seems that from 1st November onwards viewers in the four metros—Mumbai, Delhi, Kolkata and Chennai—would not get any analog signals on their TV sets. However, while the government is claiming a high rate of installation of set top boxes (STBs) in the four metros, there is no parity on price of STB or information on whether the pricing declared by multi-system operators (MSOs) or broadcasters would remain the same.
Several local cable operators (LCOs), who would continue to provide last mile connectivity between TV channels and customers, are complaining about the difference in pricing and revenue share. STB pricing in Mumbai is higher compared with other three metros. In Mumbai, LCOs are charging Rs1,000-Rs1,500 per STB, whereas in Delhi and Kolkata the price is lower at Rs800-Rs1,000. Earlier in August, the MSO Alliance of four major operators like Siti Cable, In Cable, Digicable, Hathway, and DEN Networks came out with an offer to provide STBs at a standard price of Rs799 each. But the scheme was only for a month.
The information and broadcasting (I&B) ministry has said that as per the stipulation by the Telecom Regulatory Authority of India (TRAI), the basic service tier (BST) consisting of at least 100 channels should be offered for Rs100 and MSOs were expected to uphold this direction.
However, none of the four major national level MSOs, except WWIL have come out with the basic package of Rs100. . WWIL offers a ‘Janata’ package of 118 channels at Rs100 per month. At present monthly pricing in the analog environment varies from Rs130 in Dharavi (Mumbai) to Rs300 in Kalkaji (Delhi).
“While the subscribers will be able to exercise their choice post digitization, many of them are still likely to subscribe to ‘packages’ as they would be more cost effective as compared to the a la carte pricing. In addition, price increases are likely to be taken to offset higher tax incidence like service tax, entertainment tax and content cost post digitization. Our interactions with MSOs and LCOs indicate that price hike post digitization is likely to be blamed on the government policy action,” said Motilal Oswal Securities in a research note.
The Cable Television Networks (Regulation) Amendment Bill, 2011, was passed for the complete digitisation of cable TV in the country by the end of 2014, in four phases. The first phase involves the metros of Delhi, Chennai, Mumbai and Kolkata and makes it mandatory for customers to install the STBs in order to receive encrypted digital signals from the broadcaster through cable operators.
LCOs have also been crying foul about revenue sharing; interconnect agreements between them and MSOs. West Delhi Cable Operators Association, in a letter to Ambika Soni, I&B minister, has complained about opaqueness in revenue sharing and other issues. According to the association, MSOs are not giving the copy of the agreement between them, which does not have details of revenues sharing, carriage fees and no pricing for consumer is mentioned in the agreement.
“All MSOs are taking advance payments from LCOs but giving STBs on instalments or at ‘no ownership’ basis to subscribers. Even after giving lakhs of rupees neither the LCO nor the subscriber owns the STBs. The subscriber activation forms mention the amount (paid toward STB) as activation charges,” the association said in the letter.
While the government had earlier fixed a deadline of third week of August for contracts with MSOs to be in place, many of them are still likely to be in the negotiation stage. Distributors continue to sign fixed-fee deals with MSOs (similar contracts are prevalent with DTH operators as well) even in a digitised environment. The Cable Operators Federation of India (COFI) said it believes that fixed-fee contracts undermine the broadcasters’ argument of “under declaration” as there will be no per subscriber payment even in a digitised environment.
COFI also mentioned that transition from analog to digital took almost a decade in the US even after a subsidy was provided by the government. Still, about 15% of the subscribers in the US continue to receive signals in the analog mode. As compared to this, India has undertaken a humungous task of converting about 80 million analog subscribers to digital within a span of three years.
“While we agree that deadlines are challenging, we also note that most of the industry participants are already building in delays in the digitization progress, especially beyond phase I,” said the brokerage.
According to data from the I&B ministry, overall 77% cable TV digitisation has already been achieved in the four metros. City-wise data shows that the achievement of cable digitisation in Mumbai is 99%, followed by Kolkata (73%), Delhi (66%) and Chennai (59%). Taking into consideration, the progress made by DTH in this sector, the level of digitisation goes up to 84% in four metros, the ministry said.
City wise data for metro cities can be seen in the Table below.
Meanwhile, as per media reports, following pressure from various broadcasting and advertising associations, TAM will cease releasing its pan-India TV ratings data for nine weeks from 7th October to 8th December. Possible disruption in TV signals in analog cable households, which form a bulk of TAM’s sample size, close to the Phase 1 digitisation deadline has led to the data suspension.
Looking at the preparations by the government and MSOs for launching digital cable TV services in the four metros, this time there may not be any extension for the 31st October deadline. However, with the chaos regarding STB pricing and channel packages, several customers expect the government, MSOs and LCOs to provide some clarity in these issues before stopping the analog TV signals across four metros.
A close below 5,645 on the Nifty may see the benchmark slipping further whereas a close above 5,700 would be mildly bullish
The volatile market closed marginally higher on buying support towards the end of the trading session. The Sensex and the Nifty wait for fresh signals, but a close below 5,645 may pull the Nifty further down. On the other hand, a close above 5,700 would be mildly bullish. The National Stock Exchange (NSE) saw a volume of 68.09 crore shares and an advance decline ratio of 713:960.
Strong earnings reports from US companies on Tuesday supported the positive opening of the domestic market today. Better-than-expected earnings from Johnson & Johnson and Goldman Sachs helped the US indices log gains of 1% overnight. Reflecting the positive trend in the US, the Asian pack was in the green in morning trade today.
Back home, the Nifty opened 33 points higher at 5,681 and the Sensex resumed trade at 18,668, a rise of 90 points over its previous close. Buying in realty and IT stocks supported initial gains.
The upmove helped the benchmarks hit their intraday highs in initial trade itself with the Nifty going up to 5,684 and the Sensex climbing to 18,705. However, profit booking in blue chips soon saw the indices paring their gains.
The market continued its gradual downward journey amid sharp volatility which saw the indices fluctuate on both sides of their previous close.
While the local market notched early gains on support from the US and Asia, a flat opening of the European benchmarks ahead of a crucial two-day meeting of European leaders that begins on Thursday to decide on the bailouts to Spain and Greece, resulted in the Indian market giving up its gains.
The domestic benchmarks slipped to their lows at around 1.30pm. At the lows, the Nifty fell to 5,634 and the Sensex went back to 18,535. The market made feeble efforts to emerge into the green but selling pressure kept the indices down.
A fresh bout of buying in select stock towards the close of trade helped the market close marginally higher. The Nifty rose 12 points (0.22%) to 5,660 and the Sensex finished trade at 18,611, up 33 points (0.18%) over its previous close.
The broader indices reported a mixed close today; the BSE Mid-cap index shed 0.04% while the BSE Small-cap index gained 0.30%.
The sectoral gainers were led by BSE Consumer Durables (up 0.63%); BSE Capital Goods (up 0.60%); BSE Auto (up 0.50%); BSE Power (up0.43%) and BSE Healthcare (up 0.40%). The losers were BSE Realty (down 0.62%); BSE Oil & Gas (down 0.53%); BSE Metal (down 0.19%); BSE IT (down 0.10%) and BSE PSU (down 0.04%).
Eighteen of the 30 stocks on the Sensex closed in the positive. The key gainers were Tata Power (up 2.12%); HDFC (up 1.22%); BHEL, Larsen & Toubro (up 1.02% each) and Tata Motors (up 0.99%). The main losers were GAIL India (down 1.98%); TCS (down 1.05%); Reliance Industries (down 0.97%); Sun Pharma (down 0.86%) and State Bank of India (down 0.64%).
The top two A Group gainers on the BSE were—Torrent Pharma (up 4.78%) and Dish TV India (up 4.68%).
The top two A Group losers on the BSE were—Jain Irrigation (down 4.15%) and IRB Infrastructure Developers (down 3.97%).
The top two B Group gainers on the BSE were—Aarvee Denims (up 20%) and Dr Agarwal’s Eye Hospital (19.96%).
The top two B Group losers on the BSE were—Bio-green Papers (down 10.87%) and KM Sugar Mills (down 10.78%).
Out of the 50 stocks listed on the Nifty, 28 stocks settled in the positive. The top gainers were Lupin (up 2.93%); Tata Power (up 2.06%); Cairn India (up 1.72%); Ranbaxy Laboratories (up 1.64%) and L&T (up 1.51%). The major losers were DLF (down 3.51%); Ambuja Cement (down 2.67%); GAIL (down 1.96%); ACC (down 1.37%) and RIL (down 1.15%).
Markets in Asia closed mostly firm as optimism from corporate earning reports from the US supported investors’ risk appetite. Global ratings agency Moody’s decision to keep Spain investment grade rating intact also helped the upmove.
The Shanghai Composite gained 0.32%; the Hang Seng surged 0.99%; the Jakarta Composite rose 0.20%; the KLSE Composite advanced 0.43%; the Nikkei 225 climbed 1.21% and the Seoul Composite settled 0.70% higher. On the other hand, the Straits Times shed 0.04% and the Taiwan Weighted lost 0.09%.
At the time of writing, the European markets which witnessed a flat opening, were with gains of around half a percent and the US stock futures were flat to positive.
Back home, foreign institutional investors were net sellers of shares amounting to Rs 204.18 crore on Tuesday while domestic institutional investors were net buyers of equities aggregating Rs595.40 crore.
Kamat Hotels India, the hospitality chain which runs The Orchid Hotel, has drawn up a restructuring plan that involves hiving of three land parcels and adopting the franchisee route for expansion. The move comes even as lenders are considering restructuring the Mumbai-based company’s debt aggregating Rs435 crore. The stock gained 1.42% to close at Rs128.30 on the NSE.
The HCL Technologies scrip today declined 0.68% to close at Rs580.55 on the NSE. The company this morning posted 78.1% jump in net profit at Rs884.8 crore for the first quarter ended 30th September 30 compared to Rs496.7 crore in the July-September quarter of 2011.
Geojit BNP Paribas' consolidated revenues rose 4% to Rs66.2 crore during the second quarter of the current fiscal from Rs63.57 crore in the same quarter of the previous fiscal. The net profit increased to Rs45.31 crore from Rs6.05 crore. The PBT and exceptional item rose to Rs18.52 crore from Rs10.44 crore, a jump of 77%. The stock closed 2.54% lower at Rs23 on the NSE.
Kejriwal said, while DLF-Robert Vadra are looting farmers in Haryana, Gadkari and NCP combine are looting farmers in Maharashtra
Social activist Arving Kejriwal on Wednesday alleged that Nitin Gadkari, the president of Bharatiya Janata Party (BJP) received undue favours from the Maharashtra government in allocation of farm land. Gadkari was allotted about 100 acres of farm land by the then minister Ajit Pawar, alleged Kejriwal.
Accusing Gadkari of being in league with Congress-NCP government in Maharahstra, to get undue favours and keeping quiet as quid pro quo on issues affecting people, Kejriwal said the BJP president has used politics to build his business empire. According to him, Gadkari owns a big business empire in Maharashtra that consist five power plants and two sugar companies.
Meanwhile, Gadkari today called on President Pranab Mukherjee and congratulated him on assuming the top post. "After Pranab Mukherjee became President, I had to congratulate him. I congratulated him and held some discussions. I have old personal relations with him. It was a courtesy visit. It had nothing to do with politics," Gadkari told reporters after coming out of Rashtrapati Bhawan.