The Rajan Raheja-owned multi system operator (MSO) Hathway Services has stopped its cable operations in Chennai.
The MSO, which had a 10 per cent share of the city's cable TV market, stated that Sumangali Cable Vision (SCV), a network owned by Union minister Dayanidhi Maran and his brother Kalanidhi Maran of the Sun TV group, had left the MSO with no choice but to close operations.
SCV is an MSO offering services on the conditional access system (CAS) in Chennai. Hathway was its only rival. There are around 4-5 lakh subscribers in the city, with more than 1,000 cable operators, according to industry representatives.
Attempts to get SCV’s response were not successful.
Lakshmanan, who looks after Hathway's Chennai operations, refused to comment. Hathway representatives in Mumbai were also unavailable for comments despite several attempts by Business Standard to contact them.
However, employees who were working at Hathway's Chennai office confirmed the development. "It has been decided to close down operations," they said. They said their services had been interrupted by SCV operators across the city cutting Hathway's cables continuously.
More From This Section
"In the last two months, cables were cut in over 350 places and, most of the times when we approached the police, we did not get any proper response," they said.
Across the city, Hathway had issued over 50,000 free set-top boxes (STBs) last year worth over Rs 50 crore. Now, the sources said, all that money has gone to waste. "Over 650 operators had left our network, fearing cutting of cables by miscreants. The environment was not conducive for continuing business," they added.
A spokesperson of Cable TV Urimayalaargal Sangam, an association of the cable operators, confirmed the development. He added the company failed due to mismanagement and aggressive investment in STBs and promotional offers of free boxes.
An MSO gets only 20 per cent of the pay channel fees charged from subscribers. Hence, the profit margin is very low. So, while investing, the company should also be wary of the business prospects, the spokesperson added.
With Hathway stopping operations in Chennai, SCV is expected to have a monopoly. SCV, a division of Sumangali Publications Ltd, which owns a major chunk of the Sun TV network, has a market share of 90 per cent in the city.
Hathway had managed to penetrate the city's cable TV market during the days of a falling out between the Maran brothers and their uncle, Chief Minister Karunanidhi's family. At the time, Hathway had used the offer of free STBs to promote its services.
At the same time, the DMK Government had also started an MSO called Arasu Cable Network, which everyone thought would take over the entire cable TV industry, including SCV and Hathway.
But, after a patch-up between the two families, the takeover plan was not initiated and Hathway began to face resistance from SCV.