In the Cable Television Networks (Regulation) Amendment
Bill 2011, it is stated that the mandatory digitisation process
should be completed by 2014. How will this affect the
broadcasting industry in India?
VC: The cable digitisation process will
bring a great deal of transparency to the industry. Of the
total US$6 billion subscription revenues collected today by
cable and satellite platforms, broadcasters only receive 10% of
this: digitisation with increased transparency is expected to
increase this pie to between 30% and 40%.
For television broadcasters, digitisation is expected to
bring a substantial reduction in the yearly amounts paid as
carriage fees. For news broadcasters in particular, this change
will be significant as carriage fees account for between 30%
and 40% of their overall costs and severely impacts their
profitability and leverage to invest in content without
worrying about ratings.
Broadcasters, platforms and advertisers will all know the
total number of people watching a particular channel or a
particular programme. This will help to establish who the clear
leaders are in a particular market and bring about true
efficiency in advertising spend and subscription revenue
Presently, due to under-reporting of subscribers by local
cable operators, there is a great deal of tax evasion on varied
fronts (income tax, sales tax, service tax, entertainment tax).
With digitisation, the government will benefit from a manifold
increase on all fronts as the information will be clearly
transparent and visible to all.
Niche international broadcasters, who were unable to enter
India due to the prohibitive cost of entry and limited
bandwidth availability, will now be able to run sustainable
businesses in the country by reaching out to their target
Subscribers will benefit from the availability of low cost,
efficient broadband and an enhanced television viewing
experience through new services such as video on demand,
personalised recording, pay-per-view and HD services.
Cable MSOs, who were dependent on carriage fees as their
primary source of income due to under-declaration by the last
mile operators, will now have multiple sources of revenue.
The monthly average cable bill per subscriber is US$3, which
is not too different from the 1990s or early 2000s. This will
increase and can be expected to double over the next two years.
And it will go higher subsequently on the back of value added
services and demand for niche content. This will lead to
increased top lines and bottom lines, higher valuations for all
industry players and consequently higher tax revenues for the
To what extent is this a positive development for foreign
investors who plan to invest in India's television
AJ: It is definitely a favourable change as
they can invest across all segments. Broadcasters will report
lower costs in the short term, due to reduction in carriage
fees, and higher revenues in the long run on the back of
increased subscriber numbers.
Cable and DTH platforms will be able to increase their ARPUs
on the back of value added services. They will also benefit
from higher subscriber declarations, greater control of the
last mile and increased cable penetration in India.
International broadcasters not in the Indian market can plan
for entry in the next couple of years due to significant
reductions in the cost of entry, and more demand for niche
content as the market matures.
Finally, the increased tax collections will also enhance the
image of cable in the eyes of the government as a legitimate
industry that will have a key role in making the population
more informed and knowledgeable.
What are the biggest concerns in the television industry
VC: The biggest concern is the successful
implementation of the regulations. This is dependent on a lot
of factors, such as clarity on the regulations, readiness of
all industry players, financial incentives such as foreign
investment, and adherence to timelines.
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