Thursday, April 14, 2016

TRAI on Reference Interconnect Offers

Mr. RS Sharma, the Chairman of TRAI, highlighted that the broad principles on which TRAI’s orders are based are: (1) transparency and non-discrimination for all stakeholders, (2) consumer protection and (3) ensuring growth of the sector. He said that in Telecom, the principle of net neutrality is broadly defined as ‘pipes being agnostic to content’. In this context, the TRAI asked all stakeholders to ponder if a similar principle could be applied to the Media sector where ‘content could be made agnostic to the pipe’.

Broadcasters want price forbearance at the wholesale level; however, genre-based price caps are acceptable to them. They refuted that discounts on RIO rates are to the extent of ~90% and highlighted that weighted average discount is far lower. Most of the broadcasters want carriage/placement charges to be regulated/abolished or subsumed within the RIO. Broadcasters do not want HD and niche channel pricing to be regulated. They wanted TRAI to mandate prepaid billing at the consumer level.

MSOs are against price forbearance at the wholesale level as they believe that consumer interests will be impacted. MSOs highlighted that HD channels are priced at multiple times that of SD pricing and this has to be regulated. They favour ‘integrated model’ of pricing of content under which the broadcaster can declare the retail pricing of its channels and the MSO declares the price for distribution services. MSOs believe that the existing carriage regulation is working well and should be left unaltered. MSOs also urged TRAI to mandate compulsory prepaid billing at the consumer level.

Tuesday, March 15, 2016

Hathway Cable & Datacom - Maximize Digital Gains

After rolling out prepaid billing and packing for its primary subscribers, Hathway has now launched packaging for its secondary subscribers under “Hathway connect”. The company has launched 2 commercial packs (INR330 – all channels except English bouquet and INR425 for all channels). Currently, it is at pilot phase and only launched in Bangalore. The company awaits feedback on the packs, post which it will roll out the packs in entire Phase I and II markets. As compared to Den Networks, Hathway has higher primary subscriber base, well entrenched broadband operations and has seeded the highest number of boxes amongst MSOs. 

Hathway is the best placed MSO to capitalise on the digitisation opportunity. Currently, the company’s digital subscriber base stands at 9.6mn. Also, we like the company’s strategy of increasing investment in the high-margin broadband business, which has started to yield returns.

Sunday, March 06, 2016

DTH Business Report healthy Numbers - Airtel / Videocon

Both Videocon DTH and Airtel DTH reported healthy quarterly numbers over the last couple of days. We look at the metrics and some read-through for Indian cable/satellite space, including Dish.

VDTH added 0.43m subs in the December quarter, increasing net subs by ~15% yoy. The comparable number for Airtel DTH was 0.53m subs, increasing net subs by ~13% yoy. While both VDTH and Airtel
DTH also benefited by sequentially lower churn, underlying momentum in the market remains strong - we expect Dish to add 0.40m subscribers in the quarter.

The trend on ARPUs remains healthy (VDTH: ~8% yoy, Airtel DTH: ~7% yoy) - this is a result of price
hikes taken in the recent past, HD adoption (trends do vary from quarter to quarter though) and increasing value added services. For Dish TV, we model in ~5% increase in ARPUs for FY16 yoy.

With attractive content deals and operating leverage continuing to play, the sector continues to deliver good EBITDA margin expansion. Both VDTH (~390 bps yoy) and Airtel DTH (~600 bps yoy) reported healthy margin expansion resulting in EBITDA growing ~42%/45% yoy respectively.

Tuesday, February 23, 2016

Sun TV Vs Regional Channels Ratings

A quick update on ratings of Sun TV Vs other Regional Channels

Tamil. Sun TV’s ratings have come off by about 10% over the past 3 weeks and it is at about 4.5-5X that of Star Vijay as against 5.5-6X earlier. That said, on an average, Sun TV's ratings are ~5X that of Star’s Vijay TV under BARC as against 3X TAM. The Movie channel KTV's ratings have also improved under BARC.

Telugu. Gemini TV has been pushed to a distant #4 position under BARC from #2 under TAM. Further, the quality of ratings is weaker, both in terms of urban/rural mix and composition (movies/non-movies). Gemini TV’s viewership share in the top four Telugu GECs has come down to 19% in the past two weeks as against an average of 21.4% since mid Oct 2015.

Kannada. Udaya TV has been pushed to #2-4 position under BARC from strong #1 under TAM. Colors Kannada is a clear #1 in a 4-player Kannada general entertainment genre. Further, the quality of ratings is weak both in terms of urban/rural mix and composition (movies/non-movies). Udaya TV’s viewership share in the top four Kannada GECs has come down to 17% in the past two weeks as against an average of 20% since mid Oct 2015.

Malayalam. Surya TV's position has dropped to #4 position in the four-player Malayalam GEC market dominated by Asianet. Flowers TV, a new GEC launched in 2015 has consistently surpassed Surya TV to settle at #3 spot. Surya TV’s share is down to single digits in the top four Malayalam GECs.

Monday, February 22, 2016

Sun TV Network & OTT Play

Sun owns perpetual rights for Television, digital and others platforms (in-flight entertainment) for most of its content. It has signed content deals with a few OTT players which include YuppTV and HOOQ among others. The management indicated that it usually enters into a minimum guarantee fixed fee contract
for six to12 months following which it moves to per subscriber basis. The management indicated that talks are underway for content contracts with Reliance Jio


Sun management indicated that negotiations with media agencies and advertisers are underway and ad revenue gains pertaining to improved viewership share under BARC will start from 1QFY17. We believe a part of the upside from potential increase in yields in Tamil Nadu will be offset by weak ratings in other markets.

Sun management indicated that it has signed content contracts with a few MSOs in phase III markets of Karnataka and Kerala. The benefits will start from March 2016 quarter even though modest. That said, the pace of digitization in phase III is slow, given temporary court stays in most states.