Star Sports recently initiated a criminal proceeding against the leading MSO of Gujarat, Gujarat Telelink Private Limited (GTPL) Hathway. Star Sports has lodged eight FIRs against the MSO, alleging ‘pirated serving’ of the signals of the broadcaster during India – West Indies test series.
“Despite repeated reminders and requests for payment of our outstanding dues, GTPL did not pay heed. We were constrained to issue a disconnection notice to GTPL as well as a public notice in accordance with the TRAI regulations on October 19, 2013. Even thereafter, GTPL refused to budge. We were forced to switch off their signals. After the switch-off, instead of seeking our signals lawfully by resolving all outstanding issues with us, GTPL indulged in blatant piracy of our signals, forcing us to initiate criminal action against them,” said Vijay Rajput, COO, Star Sports India, in a statement issued in this context.
On the other hand, Shaji Mathews, CEO, GTPL said, “We have a huge network in Gujarat and therefore, started the process of digitisation early. In Phase III, we want to convert as many as analogue signals to digital. We sent a notice regarding this to Star Sports. Rather than reacting to it, Star Sports issued a counter notice to us on October 17 over pending subscription revenues. Negotiations were carried out and initially the channel had agreed to the terms discussed. It later retracted from the agreement. It has advertising revenues at stake and that is the basic reason why it is reacting in such a manner.”
He further added, “LCOs can take the signals from wherever they want. We have been unnecessarily dragged.”
The fallout has again opened the Pandora’s Box over issues in the channel distribution industry. Has the broadcaster – distributor – MSO conflict intensified post digitisation?
Since digitisation has set into pace, industry is going through a lot of developments. The number of petitions among cable operators, broadcasters and MSOs has almost tripled in the last six months in the TDSAT.
TRAI had recently issued a consultation papers to check malpractices in the area of distribution. As per TRAI consultation paper dated August 6, 2013, content aggregators that have large bouquet of channels negotiate badly with MSOs and ask them to comply with their own customised rates. On the other hand, the regulator had also raised the issue from the other side. In a consultation paper issued on June 3, 2013, the regulator had highlighted that MSOs having substantial presence in certain markets dominate the content aggregators and ask them to comply with a certain set rate.
Experts believe that the regulator needs to act swiftly as post completion of digitization, such instances will intensify and more conflicts between MSOs and broadcasters might come into play as everybody has their vested interest at stake.
Rajesh Kaul, President, The One Alliance, which has the distribution signals of the MSM Group, Discovery and the Times Group said, “The whole idea of digitisation was for the broadcasters to see increase in subscription revenues and decrease in the carriage fees. A year has passed since the broadcasters had toned down their expectations, hoping for MSOs to get a RoI on their investments. But now it is high time that the broadcasters start expecting returns from the MSOs. If things don’t fall in place, it is likely that more petitions will be filed in the TDSAT court.”
Senior stakeholders we spoke to shared that the “un-organised mechanism” with which the distribution industry works is the root cause of all the problems. In most of the cases, there is no reality in place when it comes to pricing. “Channels place their prices based on the competitor’s price. There is no correlation of the pricing structure on the basis of demand,” said Mathews.
On the other hand, broadcasters have repeatedly said that the MSOs do not declare the actual numbers of their subscribers. “At the grass-root, we have no idea on what the subscription numbers are. The pace of returns from digitisation is slow, and we are yet to see substantial benefits out of it,” said a senior personal of a channel, who wished to not be quoted.
Earlier dispute between Hathway Cable and MSM resulted in the blockage of signals of the channel in the key markets of the cable network. The dispute was resolved, but with the Star Sports and GTPL fallout the conflict in the distribution space is likely to grow. However, many sources believe that this is just a phase the industry will pass by.