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India’s prime cable TV companies in merger talks

Bapun Raz

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Four leading multi system operators (MSOs) in India
- Digicable Networks (India), Hathway Cable and
Data Com, InusInd Media and Communications
(InCable), and DEN Networks – are in merger talks
to create one major cable TV network, according to
Live Mint. Deutsche Bank and Ernst and Young have reportedly been appointed by the four MSOs to provide a feasibility report on the proposed consolidation, which would see a single operation accounting for about a third of India’s cable TV market. A corporate structure for this mega MSO is yet to be agreed upon, and lawyers are reportedly still assessing regulatory issues for the proposed merger. Between them, the four companies currently provide cable TV services to around 40 million of India’s 116 million cable TV homes, according to figures from TAM Media Research. As well as increased competition from direct to home (DTH) satellite TV platforms, the cable industry is facing increased pressure on carriage fees in India, following the recent merger of the distribution businesses of Star India and Zee Entertainment Enterprises, forming a new company called Media Pro. Another carriage consolidation, between Sun18 and MSM Discovery is also recently rumoured to be in the pipeline. The move towards greater consolidation in India’s carriage industry is to challenge the Indian cable industry’s hold on pay-TV subscription revenue. “Currently, 80-85% of subscription revenue resides with cable operators. There is a need to reset this as broadcasters aren’t getting their fair share,” explained Gurjeev Singh, chief operating officer of Media Pro. Last year India’s pay-TV subscription revenue amounted to INR 19,400 crore, of which just 20% went to broadcasters, according to the consultancy KPMG India. The MSO alliance has been expected as they “would try and keep up with consolidation on the broadcaster’s side” to be able to better negotiate subscription and placement rates, Nikhil Vora, managing director of IDFC Securities, told Live Mint. In India’s fragmented cable industry - which includes almost 500 MSOs and 60,000 last mile cable operators (LCOs) - most of the often undeclared subscription revenue goes to the LCOs. The consolidation between the large MSOs could provide a more equitable business model, said Mr Vora. The union of MSOs will benefit all stakeholders in the business, Gurjeev Singh, chief operating officer of Media Pro, told Live Mint. “I hope that digitisation will be one of their key priorities,” he said. LCOs, however, are reported to be concerned that they will be squeezed between the large broadcasters and allied MSOs. Roop Sharma, president of the Cable Operators Federation of India
is quoted by Live Mint as saying: “The only ones caught in the middle of this power struggle are last- mile operators and, as a result, the consumer.”


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