Cable operators could lose the war as quality free-to-air channels go pay
Television wars will never be the same again.
agencyfaqs! has learnt that one of Hindi television's major free-to-air channels SABe TV could combine with pay network Zee Television Limited (ZTL) to offer a joint bouquet of pay channels. The Sri Adhikari Brothers Television Network (SABTNL) will distribute its Hindi entertainment channel SABe TV along with Zee. According to sources, this is part of a broader move to offer a bouquet that can rival the STAR Plus package.
Analysts say that this could be the beginning of a consolidation of channels that rival STAR Plus, with a few of the other standalone channels coming together to offer a combined package. agencyfaqs! spoke to all the four top channel networks as well as a couple of niche channels for a confirmation on this development. Though SABe TV was willing to confirm that negotiations were on currently, senior Zee officials refused to comment on the issue. But as Raj Nayak, executive vice-president, sales and marketing, STAR India, puts it, "The way the industry is moving, and the way every network wants to make their bouquet stronger, alliances will be the norm."
If successful, the Zee-SABe combine will be a powerful rival to the STAR bouquet. It would also mean that the current tussle between cable operators and pay channels would be put to rest quite conclusively. However, right now, some of the major issues that have to be thrashed out in the talks are generic to the pay-for-all bouquet system that is the norm in India, unlike the pay-for-the-channel-you-watch system that is the norm in many other parts of the world.
From an industry viewpoint, the bouquet system has high potential for future conflict. Among the potential flashpoints: the break up of subscriber fees and what must be done if one or the other channel sees a sudden rise in the popularity of its programmmes but remains the lesser partner in the agreement. While agreements are signed on the existing ranking, the Indian television industry is so dynamic that channels that seemed dug in for a long time, can suddenly be toppled, and lesser channels zoom up to the top. In this likely scenario, the break up of subscription revenue as drawn up in the agreement, becomes a point of friction.
For cable operators, the implication of such a tie-up is enormous. The sudden dearth of free-to-air quality programming will mean that their major weapon in the current war -their ability to boycott pay television channels - will vanish as consumers demand better programming.
To put things in perspective, cable operators have been bitterly contesting the move by television channels to go pay, claiming that the increased rates charged by pay television companies will make their business unprofitable. Cable operator tactics in the war, which include blacking out signals of pay TV channels, have crucially depended on alternative free-to-air programming. Thus, if even the quality free-to-air channels become pay, then the cable operators will come under enormous pressure to accept pay television. For them, the war will end.
In the long run, this would mean that the current system of small-scale cable operators will give way to a professionally managed consolidated system of cable operations with a few major players. For the consumer, this could mean subscription fees in tune with international standards, or at least substantially higher than the Rs 125 to Rs 200 per month charged now.
Ironically, the talks are on even as a task force appointed by India's Information & Broadcasting Ministry has recommended that the government make it mandatory for consumers to pay only for the television channels they watch, and not for a catch-all bouquet of several channels as is the system now. The I&B task force on the cable and broadcasting industry was set up in September last year after bitter complaints of the various industry players against each other.
According to the estimates of the I&B Ministry, cable networks currently reach 35 million households (IRS 2001 Round 1), and at an average of Rs 125 per month per subscriber, this industry is estimated to generate close to Rs 5,500 crore annually. Many free-to-air channels, especially the ones that have been doing very well like the Hindi news channel Aaj Tak are also expected to turn pay soon.
If the tie-up goes through, the television industry in India would change forever. Â© 2002 agencyfaqs!