Subscription revenues increase, carriage fees remain stagnant post DAS Phase II

As DAS Phase II covers more cities, two major networks have also seen a significant increase in their subscription revenues, which is reflected in their earnings report of the first quarter of 2013-14.

According to earnings report of Q1 2014, published by public media companies ZEE and Network 18, it is learnt that the two companies have posted a substantial increase in those sections of their balance sheets which were next to obsolete prior to digitisation.

Earnings report of Network18 shows that revenue from distribution has grown by almost 148 per cent YoY.  While earnings through Indiacast (distribution arm of Network18) in Q1 2013 for the network was Rs 0, the 2014 results for the same quarter showed channel garnering Rs 147.9 crore. However, earnings for the network in Q4 2013 were Rs 150.9 crore.

ZEE, on the other hand, saw a growth of 16.5 per cent in the subscription revenues YoY in Q1 2014, out of which 74 per cent was domestic subscription and the remaining was international. Subscription revenue for ZEE was Rs 4241 million for the quarter ending June 30, 2013 as compared to Rs 3641 million for the same quarter the previous year.

Is there a reduction in carriage fees?

Can increase in subscription revenues be attributed to decrease in carriage fees? Industry sources mention that post digitisation channels have been witnessing a significant increase in revenues from subscription and distribution. But the increase in subscription revenues may not be directly linked to decrease in carriage fees.

MK Anand, MD, Disney UTV said, “I cannot comment on the results of other channels but a substantial increase in subscription revenues post digitisation is attributed to an increase in subscriber numbers. Low carriage fee is still a distant dream.”

Business Head of a GEC, on condition of anonymity, said, “Reduction in carriage fees is miniscule; the gain in revenues is attributed to increase in subscription revenues post digitisation because people now have set top boxes. So we have witnessed an increase in the number of subscribers. Even in the households that have set top boxes, there are customers who have not filled customer verification form yet, and hence there is no absolute clarity on numbers. But subscription revenues have gained post DAS. As far as carriage fee is concerned, MSOs are still earning their fair share first and our share will slowly fall in. Perceiving that there is a reduction in carriage fees would be a blunder at this stage.”

Although in an earlier interaction with exchange4media, Man Jit Singh, CEO, MSM Networks had mentioned that broadcasters have started witnessing a 20 per cent reduction in the carriage fees. But most of the channels we spoke to are still vocal about no reduction in carriage fees. Though most channels (unlisted) refuse to talk on the numbers on record, the earnings statement of the listed companies reveal that digitisation has started generating numbers.

Most other major networks such as STAR, Sony, etc. are unlisted, but it is learnt from sources that these networks may have also garnered significant subscription revenues.

Source: http://cablequest.org/news/digitization-news/item/2927-subscription-revenues-increase,-carriage-fees-remain-stagnant-post-das-phase-ii.htmlSource: http://cablequest.org/news/digitization-news/item/2927-subscription-revenues-increase,-carriage-fees-remain-stagnant-post-das-phase-ii.html