Cable operators face CAS crunch

Broadcasters to see 30% drop in subscription revenue.

Raju Rao, a south Mumbai cable operator, is having sleepless nights. The introduction of Conditional Access System (CAS) on January 1 has more than halved his monthly income.

Keeping him company is the big boy in sport broadcasting, ESPN-Star Sports. Says R C Venkateish, managing director of the sport channel, "Our subscription revenues will be hit by 30 per cent as compared with the pre-CAS era, even though the problem of cable operators under-declaring their income will be over."

Even Star, the country's leading satellite TV channel, is worried. Says a senior executive on condition of anonymity, "We've lost 1 to 1.5 per cent of revenues due to CAS."

Asish Kaul, vice-president, Zee group, predicts that subscription revenues, which constitute 55 per cent of the channel's income, will drop by 30 to 35 per cent in the next three to four years.

The mandatory roll-out of CAS in Delhi, Mumbai and Kolkata (it rolled out a year ago in Chennai) may be bad news for cable operators and broadcasters for the time being, but subscribers are not complaining.

Thanks to an order from the Telecom Regulatory Authority, which is also the regulator for TV broadcasting, the subscription per channel is now down to Rs 5.

Thus, while households paid monthly subscriptions of Rs 250-275 earlier, they now pay less than half that sum given that they typically subscribe to 10 or 15 channels. For the sports bouquet, this means an earning of Rs 10 for two channels, against Rs 35-37 earlier.

Cable operators say the problem is compounded because they do not sell enough set top boxes. In the first month, only 4,00,000 households bought set top boxes, which is only 20 per cent of the 2 million households in the CAS areas of the three metros that can access pay channels.

Says Roop Sharma, a south Delhi cable operator, "People are not ready to take boxes at all; they are happy seeing free-to-air channels for which we get paid Rs 77 per month."