Press Release

Star, MSOs and the RIO deals

12 November 2014

Leading national multi-system operators (MSOs) have agreed to put seven Star India channels in their basic pack offering for subscribers while upgrading the others to higher-priced bundles, setting in motion an experiment to drive packaging and raise cable TV bills.

Triggering the change is a deal that they have signed with Star to source television channels at a la carte rates, with discounts being offered after guaranteeing a minimum level of penetration, channels subscribed and logical channel number (LCN).
Hathway Cable & Datacom, DEN Networks and Siti Cable are offering Star Plus, Life OK, Star Gold, Movies OK and Star Gold as part of their base pack to offer maximum reach to these channels. While NGC is also in this bundle, the MSOs can change the mix by pairing Star’s regional-language channels in different territories.
The base pack channels will vary depending on markets. In markets like West Bengal, Maharashtra, Karnataka and Kerala, the base pack will have Star’s regional channels such as Star Jalsha and Jalsha Movies, Star Pravah, Suvarna and Suvarna Plus, Asianet, Asianet Plus and Asianet Movies respectively.
“These three MSOs have signed the amended RIO (reference interconnect agreement). They are carrying seven Star India channels on the base pack,” a source familiar with the development said.
The second-tier pack will have two Star Sports channels, including Star Cricket. The other Star Sports channels, English entertainment and infotainment channels will comprise the third pay pack.
Unlike Hathway, DEN and Siti, Hinduja Group-owned MSO IndusInd Media & Communications Ltd (IMCL) has opted for four Star channels for the base pack for Mumbai. The rest of the channels will be available on a la carte, the source informed.
However, in Delhi the MSO has opted for the standard seven channels for the base pack. Similarly, in Kolkata its subsidiary Advance Multisystem Broadband Communication (AMBC) has opted for seven channels for the base pack.
According to another source, some smaller MSOs have opted for only two channels as part of the incentive scheme, while the remaining channels are on a la carte.
MSOs are also working out a fourth premium-tiered package. Though DEN has three tiers, it may create another upper-end tier that will have Star’s premium sports content like the EPL. Other niche channels can form part of this bouquet, said an industry source. For MSOs, the content cost would climb. “The cost-per-subscriber (CPS) could range between Rs 30 and 33 for those who are taking the seven Star channels in the base pack, depending on the penetration they achieve,” the source added. MSOs will have to recover the rise in content costs from their linked cable operators. “Besides rise in content costs, MSOs will have to abandon carriage fees. In such a case, it is crucial for them to collect monies from their local cable operators (LCOs). Billing and packaging will have to happen. The LCOs will have to co-operate,” a media analyst at a broking firm said.
The MSOs are looking to hike the price of their packages. “DEN, for instance, may increase the price of each of its packs by Rs 30–40. This means that DEN’s base pack could go up to Rs 220 (plus taxes) a month. But they (MSOs) will have to collect this extra amount from the LCOs, after parting with some revenue share with them,” the source said.
Will Star’s RIO deals with MSOs force the industry to move to billing, packaging and higher ARPU in digital addressable system (DAS) areas? The LCO becomes an important piece in this story. Nobody also knows how the cable TV subscriber will react to these changes even as direct-to-home (DTH) operators wait.
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