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Broadcaster earnings to see a sharp rise as digitisation takes off

TV18 (CNBC-TV18, CNBC-Awaaz, Colors, MTV) to reap rich dividends.

 
PRLog - July 26, 2012 - Digitization of television broadcast is the next big game changer for the TV industry in India, ensuring enhanced quality of pictures and service delivery and more importantly promising a quantum jump in subscription revenue for multi-channel networks such as TV18 and others. Even as spending on advertisement spots would continue to provide substantial revenue for TV broadcasters, digital transmission through set-top boxes unleashes a big opportunity to increase incomes for Indian broadcasters in line with global standards.
Television viewership has seen explosive growth in India over the past two decades, vaulting the cable TV industry to the No. 3 spot in the world behind China and the US. However, large-scale under-reporting of cable-enabled households by operators has been a major millstone around the necks of broadcasters, severely hampering their subscription revenue. The analog cable networks have also been hobbled by overloads with the massive leap in TV channels and offerings.
Today, more than 600 TV channels are beamed into homes round-the-clock, offering a heady mix of soap operas, music, dance, fashion, films, realty game shows, news and sports. By rolling out the mandatory Digital Addressable System (DAS), the technology allows for carrying up to 999 channels and gives the TV broadcasting industry a better share of the distribution pie. It is estimated that the last-mile cable operator pockets a whopping Rs.160 billion out of the Rs.200 billion paid by viewers, leaving a meagre Rs.40 billion for broadcasters, the Times of India reported in April.
Clearly, digitization would sharply boost the earnings of companies such as TV18, which operates news channels like CNBC-TV18, CNBC-Awaaz, CNN-IBN, IBN-7, IBN-Lokmat, and whose joint venture with Viacom offers a portfolio of popular entertainment channels – Colors, MTV, Sonic, Comedy Central, VH1 and Nick – and Viacom18 Motion Pictures, the group’s filmed entertainment business. Earnings from these relatively new offerings, along with the History TV18 channel launched in tie-up with A&E Networks, are set to jump with rising viewership drawing in higher advertisement and subscription revenue.  
More than 148 million homes now have a TV in India, according to Pioneer Investcorp that tracks the cable and satellite industry, a big leap from about 88 million homes in 2000. While nearly every household in countries like the United States, Europe, Japan and other developed nations have a TV, in India, it would take many years more to achieve that landmark, underscoring the tremendous prospect for further growth of the industry in this country.
Little surprise, subscription revenues are projected to be the key growth driver for the Indian television industry in the coming years. This would be helped both by higher pay-TV homes as well as increased subscription rates, thanks to new distribution platforms like direct-to-home (DTH) and internet protocol television (IPTV)
The number of DTH subscribers jumped 62 per cent in 2010/11, and the government’s aim is for full digitisation across the country by the end of 2014. Undoubtedly, this would greatly enhance the financial health of broadcasters like TV18 Group. With the changes underway, India is forecast to become Asia’s most lucrative pay-TV market by 2015.
India has the potential to jump to the top spot in the TV industry as economic growth accelerates, boosting incomes in the nation of more than 1.3 billion people. Cable networks are the only provider of entertainment to large swathes of the population, and long-running sagas have become a staple diet for folks in both the cities and in the hinterland.
Any breakdown in broadcast of their favourite soap opera usually draws howls of protest from agitated housewives and senior citizens, who are otherwise known to show little interest in other matters. The response time of network operators to fix glitches are also quick because of the public pressure, and stands out in striking contrast to the laidback attitude of government agencies or public utilities. This highlights the power of the “idiot box”, the offerings on it and the dead-beat viewers.
Lastly, networks like TV18 with access to deep-pockets would have a decisive edge over smaller firms and newer entrants after an economic slowdown dented advertisement spending and hurt broadcasters across the board. The next big opportunity for companies is internet television, which is currently at a nascent stage in India.
With broadband connectivity expanding rapidly, the prospects are immense. The TV18 group could become a major player in this segment, thanks to its 27 channel strong national and regional network after the proposed acquisition of ETV.

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