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As the spat between content aggregator IndiaCast UTV and direct-to-home service provider Dish TV continues, the former has made it clear that paying carriage fees is not an option. Dish TV on the other hand insists that what it is asking for is legitimate fees for extra services provided by it to carry channels from the IndiaCast bouquet.
Anuj Gandhi, group CEO, IndiaCast asserts, “Carriage fee is a phenomena that came up in the era of analogue television. At that time, there was a problem of bandwidth and thus operators charged a carriage and placement fee to broadcasters. Now with digitisation, that problem is not there. However slowly, but surely, carriage fees are coming down in the cable digital space as well. Paying carriage fees to DTH providers will mean taking two steps back for the industry. I do not feel that if we go off their platform, we will be much affected.”
Dish TV and IndiaCast UTV had a reference interconnect offer agreement till 31 December 2013. Under this agreement, which is mandated by the Telecom Regulatory Authority of India, the DTH operator has to carry the channels from the aggregator on an ala-carte basis without any carriage fee. In return, the operator will pay the aggregator content cost only for the channels that the customers have subscribed to and not on a bouquet basis.
RC Venkatesh, CEO, Dish TV says, “We are not charging carriage for standard conditions. All we are saying is that if they want a particular placement or want to be included in a specific pack, then they will have to pay us extra. Their channels are available on our platform on Ala-carte basis even now. We are open to negotiations of deals as well. If we are not able to, then we shall take their channels on RIO basis. It suits my business model also (to have them on Ala-carte basis).”
According to a report by India Infoline Institutional Securities, content providers (broadcasters/aggregators) pay nearly Rs 23 billion in carriage fees to the 10 leading multi system operators (MSOs) of the country (as of FY13). This is significantly higher than the Rs 1.6 billion they pay to the six DTH players. In comparison, the MSO's pay Rs 22 billion in content cost to the content providers while DTH players pay Rs 24 billion.
An analyst who preferred to remain unnamed says that while broadcasters pay hefty carriage fees to digital cable operators, they are reluctant to do the same with DTH operators. “There are two points to note here. The subscriber base of digital cable operators is twice that of DTH operators. Also, as a habit, they have not been paying high carriage fees to DTH players and it is difficult to change that mindset,” he says.
Gaurav Gandhi, group COO, IndiaCast agrees and says, “Dish’s problem is to do with a stagnant subscriber base & below par ARPU and they believe that carriage income can help them overcome this hurdle. The fact is that Dish has a miniscule contribution to the overall ratings which is now apparent because inspite of all disruptions they have caused to our channels, our ratings are not impacted at all. Where is the question of paying them any carriage?”
According to industry sources, Dish has promised its investors that it will improve its EBITDA in the coming quarters. The incremental EBITDA sources inform will come from cutting down content cost and increase income through carriage fees. The company's EBITDA was Rs 135.5 crore for the quarter ended 31 December 2013.
Dish TV also announced that it will be releasing reach figures for channels on its platform from February. “We have an efficient subscriber management system in place, and we shall be releasing the channel reach figures to all parties interested from next month. It will be free of charge at first and depending on the the response, we may monetise it,” says Venkatesh.
