It is a great time to be the head of a direct-to-home (DTH) company. Of India’s 142 million TV homes, 43 million already have DTH. As mandatory digitisation kicks in on July 1 this year in the four metros, bets are, the cable industry will not be able to meet all the demand. So DTH operators will benefit from a surge in sales. R C Venkateish is the chief executive of India’s largest DTH firm, the Rs 1,437-crore Dish TV. It is part of the Rs 5,038-crore Zee Group, led by Subhash Chandra. He spoke to Vanita Kohli-Khandekar on the issue and opportunities that digitisation presents for Dish and DTH. Edited excerpts.
What is the big difference between the CAS attempt in 2002 and this one?
When CAS came in, there was an unequal environment. It was only in December 2003 that the Telecom Regulatory Authority of India (Trai) was appointed as a broadcast regulator. Till then, it was the Wild West. The cable operators charged whatever. And broadcasters didn’t want digitisation. Post regulation, a lot of things got streamlined. The tariff got set, etc. Then there was an explosion of channels. Till 2003, carriage was not a problem. Now carriage fee threatens smaller broadcasters. It is a question of survival. Therefore, many of the new, small and niche broadcasters support DAS (digital addressable systems).
How do you think it is going?
The intention is very noble but it doesn’t seem to be backed by anything tangible. The whole digitisation thing will cost Rs 20,000-25,000 crore. At the end of it, the primary beneficiary is the government which would make Rs 5,000-6,000 crore in taxes. Yet, this budget did not addressed any of the problems of the players driving digitisation — DTH.
The taxation has increased. There is license fee plus state and central taxes. This is ultimately an infrastructure business. How is this industry going to raise Rs 25,000 crore. All the DTH operators combine have already sunk in Rs 20,000 crore. It is a bleeding industry and the only guy making money is the guy ducking the taxes (the cable operator). There are just over 70 days to go and there is no tariff order (from Trai). So, it seems that it will be chaotic.
Why is the tariff order critical? Why can’t boxes be seeded without it?
The three key players in the cable eco-system — the operators, MSOs and broadcasters — have an adversarial relationship. It is a win-lose relationship, it can never be a win-win. The tariff order was supposed to decide on the split of revenues between the three players. That will establish some equilibrium. If the operator collects Rs 200 how will it be split up. Till that is clear, how do you order the boxes. If an MSO will get 10 per cent of revenue share then he can’t order a million boxes. He will be out of business. Also, remember that every time an order is passed, there is a lot discussion, argument and litigation. So the process takes time.
What is Dish TV’s expectation and preparedness?
There are seven million non-digital homes in the four metros. Our (the DTH operators in general) expectation is that half of these will come to DTH. The rest will be digital cable. DTH is used to this scale. We (the industry) did 13 million homes in 2012, 10 million in 2011. We have the entire machinery, across the country, to meet demand. Dish’s market share is bout 26 per cent. So, if we get a share of the 3.5 million that is in line with that, it will be just under a million homes. In any case, we are adding between two-three million every year, so this will be over and above that. It is a decent bump.
Transparency aside, how does digitisation change the texture of the business?
Today, the whole playing field is highly skewed towards the large players. Smaller, niche guys have to pay Rs 120-150 crore a year in carriage fee. With digital, there will be no constraint. So, it will help create a level playing field for niche and specialised channels.