Sporting events are giving DTH events a big push

POWER INTERVIEW

JAWAHAR Goel is an industry veteran who is familiar with the broadcasting terrain like very few people in this country. As the helmsman of market leader Dish TV in the DTH segment which is growing at a fast clip, the combative Goel is now spearheading the company's second phase of frenetic growth. Many believe that the DTH space is a mug’s game in India, given the excessive subsidy support that has to be given by the operators to the business. But as digitization of cable takes place along with the parallel switch over from analog, the advent of new DTH operators will hopefully deepen and widen the market. At the same time, as more and more households get fed up of the service provided by the neighbourhood cable operator, the DTH platform steps into the breach as a viable and organised alternative.Goel is also the president of the Indian Broadcasting Foundation, which takes up various issues relating to the broadcasting industry at various fora. He is an active member on the board of various committees set up by the ministry of information and broadcasting, which takes care of several critical matters relating to the industry. In an extensive conversation with Sandeep Bamzai, he outlines the imperatives before him in the new financial year and the relevance of big ticket sporting events as driver fro his industry segment. Excerpts:The new year 2010-11 is in many ways like manna from the heavens for the broadcast and allied industries given that there is back to back sporting action from now up to the World Cup next February. Empirical evidence seems to suggest that there is a tremendous pick up in the DTH business due to this…Yes, absolutely, we have seen excellent traction this year. In February, the DTH industry added 600,000 subscribers, while earlier in January we logged 750,000 new subs; but it is the ongoing month which has surprised one and all. The DTH industry expects to post its best ever numbers – 1.1 million new subscribers. Actually, non stop domestic international cricket season with India doing well was pretty much the tipping point and this has been taken to the next level of competency by IPL in March. So, sporting events are definitely giving DTH a big push. You must understand that cable quality remains a concern around India and DTH has appeared on the scene as a game changer. There are also issues with MSOs on payment when big sporting events come along. This is a constant and in many ways DTH has broken this monopoly that cable operators and MSOs had on urban agglomerates. It is estimated that bickering over tariffs results in a one per cent per day loss to MSOs.Where does the DTH industry stand at this point in time, give us a perspective?All told there are 21 million subscribers with Dish which had first mover advantage leading with 7 million subs. Sun is at number two because of its aggressive pricing, but now their numbers are beginning to plateau as they don’t pay the broadcasters well enough. Greater financial transparency has emerged as a consequence of DTH’s entry. As more and more households switch from analog cable to DTH for better viewing pleasure, 2010-11 may well be the defining year. I reckon this is a sunrise sector from here on.

Why do you say that, after all the subsidy burden because of the cap on pricing by TRAI remains the biggest deterrent for growth.My estimate is that the next financial year should see at least 10 to 11 million subscribers being added by the Indian DTH industry. The advent of HD TV due to the Commonwealth Games will also give this business a big leg up. The following year should see an additional 11 to 12 million subs. Once we reach a solid number like 40 million by say December 2011, then we are significant player, rivaling C & S homes and terrestrial homes as a segment. Broadcasters too will be able to amortize their capital expenditure and there will be a double play out of analog and DTH for better declaration of financial numbers. The problem with cable is the lack of financial transparency in terms of accounting practices.It is said that all six operators are me too, nobody offers differentiated content and the must provide clause proves to be a damper…Let me give you a perspective about Dish TV and the industry first. While industry added eight million subs in FY10E, Dish TV will maintain its incremental market share of 22% of net additions and should add 2.5 million subs in FY11E. (Industry analysts reckon that ARPU will be Rs 137 for FY10E and Rs 145 for FY11E). Top 100 towns have 30% of the total subs base of Dish TV and RoI (Rest of India) has 70%. (Analysts also aver that Dish TV is well funded for FY11E capex (Rs 2500 per sub) and from 2QFY11E it will become cash positive thus funding incremental capex needs through internal accruals.) Content cost will be 45% of subscription revenue in FY10E and will come down to 36% of subscription revenue in FY11E. (Further, analysts maintain that Rs 2.83 billion has been returned to Zee, and while current gross debt is Rs 9 billion, net debt in Rs 0. Most importantly, Dish TV is expected to turn PAT positive in FY12E.) Yes, there is a must provide clause for broadcasters. Any DTH operator has to provide it on a non discriminatory basis. I would like to offer an analogy of telecom in this case. All telecom providers provide voice capability, so what is it that acts as a differentiator - branding, pricing and obviously service standards. But increasingly platform is also a differentiator, for how much satellite capacity is available with the operator is going to be crucial. In specific areas where linguistic minorities and new age wagers reside, they want to watch more of their own milieu. So, I will need to give more UP dedicated channels or Marathi dedicated content; times have changed. People's tastes and preferences too. Dish TV is looking to add 3 million new subs in the next financial year and in a six player market, aim for a secular 22 to 25 per cent of all new net additions.Against this backdrop, on 30 March, the broadcasters alliance has a meeting with the I & B minister Ambika Soni minister, what is on the agenda?Well, two important issues are slated for discussion and deliberation - we need to evolve consensus on TAM ratings where industry is required to form a robust rating system. All the stakeholders have to arrive at an agreement. We need to create an industry measurement body in which all the stakeholders - broadcasters, DTH providers, content production houses et al participate. Similarly it is vital to set up a Broadcast Regulatory Authority independent of TRAI which has overarching powers to decide on broadcasting and content related issues. TRAI unfortunately is handling only carriage issues. Obscenity and other content related issues now require an independent regulator who understands the nuances and dynamics of a vibrant broadcast fraternity.