Will ZEE's bouquet price work in a CAS environment?

By , agencyfaqs! | In | April 08, 2003
The number three network has announced a new bouquet price effective post the expiry of the July 14, 2003, deadline on the rollout of CAS. What are the ramifications?

April 2, 2003, was a crucial day in the ZEE calendar. It was the day the number three network announced a new bouquet price effective post July 14, 2003 - the last day of the deadline imposed by the I&B Ministry on the rollout of Conditional Access Systems (CAS).

According to a company statement, the new price of the entire bouquet would stand at Rs 55, with individual channels available on a la carte basis, implying that each would have a separate price tag to it. Though this price list wasn't released on that day (ZEE insiders point out that the price list will be available "closer to the deadline date"), Subhash Chandra, chairman and managing director, ZEE Telefilms Ltd (ZTL), said in a written communiqué, "Rs 55 will be the maximum retail price for the ZEE-Turner bouquet. 50 per cent of this consumer price will be retained by the distribution chain including MSOs (multi-system operators) and cable operators, while some amount could be passed to viewers (by cable operators), if so desired."

If this announcement came as a surprise to many, analysts concur that it was in the offing, considering ZEE has been in the forefront of championing the cause of CAS. "Conditional Access can become a reality in the near future only if broadcasters co-operate," re-iterates a senior media planner based in Mumbai. "Some broadcasters are keen to see it die a natural death, which is precisely what ZEE would like to avoid."

Though ZEE officials were unavailable for comment, analysts are of the opinion that this action "will spurt some reaction from competition". "ZEE is hoping to set the ball rolling," states an industry observer. "So far, each party in the value chain has been waiting for the other group to react. This action will propel the industry to take the second step, which will be well-thought out, at least as far as rival broadcasters go."

A closer look at the value chain will highlight the impact of ZEE's decision. Broadcasters who are crucial in the link between consumer and cable operator have been dragging their feet owing to the uncertainty involved with Conditional Access Systems. Cable operators, on the other hand, have been insisting on the bouquet price without which they claim that the entire exercise is futile. Set-top box or STB manufacturers have indicated that without an order placed by cable operators, production of boxes is unviable and, above all, pointless.

"Thus, with ZEE announcing its bouquet price, at least a Star or Sony will be under pressure to reveal their scheme of things," states a planner with a Top Ten agency. "Once that is out, MSOs will be spurred to pump in money. This, in turn, will result in the placing of orders for set-top boxes, which would mean its production and manufacture. This again, would have a ripple effect, causing those MSOs/cable operators who have been fence sitters to jump on to the bandwagon. With the fence sitters casting their lot with the rest, those broadcasters who have been biding their time will eventually fall in line."

For all its noble intentions, a couple of analysts remain unimpressed with ZEE's bouquet price. Says Sandip Tarkas, president, South Asia, Media Planning Group, "The price is too steep. In my opinion, leaving aside a Star, perhaps all other bouquets will cease to exist in a CAS environment. Further, market forces will determine the eventual price."

If sources in the know are to be believed, the ZEE-Turner bouquet, which stands at Rs 50 today, is actually available at a discounted price of Rs 12. "Taking into account the CAS effect, its bouquet price could shoot up to Rs 15 or Rs 16 with the maximum limit being Rs 20, not-to-forget that declaration will be higher as compared to the current scenario," points out a TV media analyst. "In my opinion, the aim of coming out with the bouquet price is to not only get the market in a reactive mode but to also be prepared at the same time," he adds. © 2003 agencyfaqs!

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