- Mar 22, 2011
DTH companies will now have to pay 42 per cent of the cable price charged by broadcasters vis-a-vis 35 per cent as mooted by TRAI. Content costs account for almost 40 per cent of the overall costs for DTH companies and a further increase could translate into margin pressures. But DTH companies are not too worried as the cost has not reached a previous cap of 50 per cent.
"We welcome the decision of the Supreme Court. It has taken a middle path. Some say that it is an increase from 35 per cent to 42 per cent but I feel it has been ruled in our favour as it is an 8 per cent decrease compared to the 50 per cent charge previously," said Anil Khera, CEO of Videocon D2H.
DTH operators believe that there will be no immediate impact of the decision as the Supreme Court states that agreements between DTH operators and broadcasters which are already in place shall prevail. And most DTH companies have already negotiated mid-term deals with broadcasters.
"Of course it is a cost increase for the DTH companies but the stock market has over reacted as there will not be an impact in the long term as most companies have deals existing with broadcasters," said Beraam Gazdar, director research at Mapre Securities.
While DTH companies argue that they are not on a level playing field with analogue cable which are accused of under reporting 80 per cent subscribers, broadcasters are unwilling to give in to lower rates for DTH. All eyes will be on the final order of the Supreme Court to end the tussle between DTH operators and broadcasters.
Read more at: http://profit.ndtv.com/news/show/dth-operators-to-pay-higher-rates-for-content-following-sc-order-149962?cp