May 5, 2000|
The changing screen of cable television
The cable television industry has inadvertently turned out to be one of the most liberalised in recent times. A part of the reason is that businesses did not wait for government regulations to be put in place. Thus the cable lines have no right of way i.e. they are not legal unlike the telephone line or the electricity wires coming into our homes.
For the final customer this has hardly mattered. Cable TV has taken of in a big way in the country with India emerging as the third largest market (after the USA and China) with almost 25 million households out of a total television owning population of almost 70 million households. The industry has been growing at almost 25% per annum and with almost six million television sets being sold annually (including three million black and white television sets) this growth rate is expected to sustain in the foreseeable future.
Cable subscribers on an average pay Rs 100–125 per month and get to watch almost 70–80 channels including a host of pay channels such as ESPN, Star News and CNBC. This is one of the lowest rates the world over. The industry has been extremely fragmented and its only the last two year’s that have seen some sort of consolidation with Multi System Operators (MSOs) such as INCablenet and Siticable emerging. These have entered into franchisee agreements with the local cable operators.
With total revenues in the range of over Rs 30 bn currently the industry seems to be sitting pretty. However, the situation is ripe for change.
Globally, almost 70% of a broadcaster’s revenue accrues from subscriber fees and only 30% from advertisements. In India the cable operators understate their subscribers and thereby underpay the channel owners. If set top boxes take off in the country over the next year the cable operator would become only a distributor rather than a gatekeeper. This is because user addressability could allow broadcasters to determine how many customers are buying their product and how much revenues accrue from them. The broadcaster would do the deal directly; the cable operator would become a mere distributor who gets a commission out of that.
Alternatively, the emerging convergence of television, the personal computer and the telephone have forced far more organised players in the cable business. Zee’s entry into the cable business is an indication of that. Again international trends are an eye opener. AT & T the long distance telecom operator in the USA took over TCI, the top player in the cable industry (Microsoft with its stake in AT & T is also an indirect beneficiary). Similarly, in the UK the take over of Cable & Wireless by NTL, the US based communications company has led to the consolidation between the telecom and the cable industry. While such consolidation could take some time to happen in India, the cable operators could themselves offer Internet service on cable.
A 2 Mbps line from VSNL along with upgrading of the cables reaching the customers home would costs around Rs 5 m to Rs 6 m and give around 2000 connections. Add the other infrastructural costs and the total cost for providing the internet facility could work out to Rs 10 m. Even if a third of the connections are activated and the operator charges them around Rs 1,500 per month, he could theoretically break even.
More Views on News
Aug 14, 2017
The management believes that GST will aid the advertising spends in the long-run.
Apr 26, 2017
Should you subscribe to the IPO of S Chand and Company Limited?
Jun 21, 2017
Should one subscribe to the IPO of GTPL Hathway Ltd?
Aug 1, 2016
Zee Entertainment has announced its results for the first quarter of the financial year 2016-17 (1QFY17). The company has reported 18.5% YoY growth in sales and a 13.7% YoY growth in profit after tax.
Feb 3, 2016
Zee Entertainment has announced the third quarter results of financial year 2015-2016 (3QFY16). While the topline grew by 17% YoY, bottomline fell 11% YoY during the quarter.
More Views on News
Aug 7, 2017
The data tells us quite a different story from the one the government is trying to project.
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 7, 2017
Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407