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CAS: The price of going pay
Even as broadcasters seem to fall in line with the implementation of CAS on July 15, the spotlight has moved to the pricing structure to be adopted by them, especially by mass players, who continue to hold their cards close to their chests
May 21 was a significant day for CAS proponents. At the crucial CAS task force meeting held on this day in the capital, it was unanimously decided that the July 14 deadline, stipulated by the Government as the final day before the dawning of a conditional access regime in the four metros of Mumbai, Delhi, Kolkata and Chennai, would be "adhered to".
At a time when uncertainty has been building up regarding the actual implementation of the all-important deadline date, this decision, at least in part, has put niggling doubts to rest. Further, the broadcasting body, especially pay TV players, STAR, ZEE and ESPN, "indicated that all their channels would remain pay".
Sources in the industry say STAR CEO Peter Mukerjea has indicated that his network would arrive at a decision regarding the pricing of the group's channels in three to four weeks. With the leader in the Hindi general entertainment space (an important genre in mainstream entertainment) - and, if industry sources are to be believed, a player that has not been too thrilled with CAS - finally falling in line, how long will it be before others (read Sony) follow suit?
Incidentally, ZEE, the third player in the Hindi general entertainment space and a broadcaster which has been pro-CAS since the early days of the concept, set the ball rolling two months ago, with the announcement of its new bouquet price of Rs 55 in a post-CAS regime. It was announced that channels within the ZEE bouquet would be available on a la carte basis, but significantly, no individual pricing of channels was released. ZEE insiders had pointed out that the price list would be available, "closer to the deadline date". With STAR indicating it would arrive at its pricing decision in a few weeks, the action has indeed shifted to the fag end of the stipulated time period.
As an industry insider opines, "The trigger for any network to announce anything significant would be when STAR decides on its pricing mechanism. ZEE and Sony are playing the wait and watch game, till STAR arrives at a decision."
In such a scenario, what are the likely possibilities the No1 network may explore?
"STAR will drastically reduce the pricing of its mass channels, namely, STAR Plus, STAR Gold and STAR News," says an executive with a free-to-air channel who is closely monitoring the situation. "Considering that there is uncertainly about the availability of boxes, the aim will be to keep its presence alive in those households that would eventually avail of the boxes in the initial phase. CAS will immediately curtail reach and the network will have to bear the losses in the weeks following the rollout. But, as the months wear on, consumer pull could result in greater demand for boxes, implying that STAR's economical pricing for its mass channels will come in handy in terms of increasing its presence in C&S households, especially in the metros of Mumbai and Delhi where viewership of pay channels is significantly higher," he adds.
Jasmin Sohrabji, senior vice-president, MediaCom has a different viewpoint, "The factor to bear in mind is that every channel has to have a price, but they needn't have an equal price. We believe that each bouquet will use its lead channel to drive up price, while the second-line channels would be available at a nominal rate."
A senior media analyst clued in to CAS developments over the last few months has a similar line of thought, "Hard bundling (of channels) is illegal, but price bundling hasn't been restricted. STAR could very well take advantage of this and incentivise the buying process, making it attractive to buy across the network rather than buying a standalone channel."
Despite assertions by pay TV broadcasters including STAR about remaining pay, a section of the television fraternity, is inclined to believe that the leader in the Hindi general entertainment space will go free-to-air. "On the face of it, everybody seems to be toeing the line, but in reality, most broadcasters are keen to see the deadline date deferred," says an industry observer. "Don't forget, CAS will upset the steady flow of viewership and advertising revenue, especially in the case of STAR, whose ratio of advertising to subscription stands at 80:20. Currently, the entire network including STAR Vijay corners about 18 per cent of the market, in terms of advertising revenue. If the lead channel goes free-to-air, they could corner about 30 to 35 per cent of ad spends, which is significant." © 2003 agencyfaqs!