Star India’s Hike in Distribution Deal Puts Pressure On MSOs

Having IPL in its kitty, Star India had asked DPOs (Distribution Platform Operators) to increase the rates for the annual deal. The broadcaster demanded a 40-50 per cent hike but closed the deals in the range of a 10-20 per cent raise. Now that all the deals with DPOs are locked, the questions that arise are: From where this money will come? And who will bear the cost? The Multiple System Operators (MSO) say that they cannot charge consumers more, therefore the money either will come from the pockets of DPOs or they will recover it from other channels.

Hyderabad based Sky Vision MD, RS Raju said, “The burden will come on MSOs. Consumers will not pay a raised amount. Also now that Star has closed the deals between a 10-20 per cent hikes, it will be difficult for other broadcasters to negotiate on their annual deal, which will happen now, in the month of April. For others, the deal can be closed at less than 10 percent raise.”
On similar lines, a senior executive of a National MSO said, “MSOs cannot increase price for consumers whenever they feel like it. The regulation doesn’t allow them to increase the rates within six months. In the cable industry, MSOs are not in a position to increase much on ground because of competition coming from DTH. However, Local Cable Operators (LCO) can increase the rates between Rs 10-20, but not more than that.”

Star signed the deals in December and January with every player before the IPL matches. With major MSOs, deals were closed at 10 -15 per cent. “This is something we have to bear because consumers are already paying Rs 350 and we cannot charge more from them. The burden will be taken by the MSOs, also, we can’t even put pressure on LCOs. This will impact on other broadcaster’s deals as well.

It may be recalled that Dish TV and Airtel TV openly rejected Star’s proposal of increase in rates but later both players settled their rift with Star India and signed the deal. However, Jawahar Goel Chairman and Managing Director of Dish TV thinks that the pressure will come on consumers as well. Some of the players have also increased the rates. “The purpose of digitisation is to give consumers a choice. The deals that have been closed so far have increased 8-10 percent in the rates for consumers.” On asking whether Dish TV and Videocon will increase the rates too, he said, “Not so far but it will increase.”

In September 2017, Star India bought the telecast and digital rights for IPL for a period of five years for Rs 16,347.50 crore. Apart from the Hindi speaking market, the network also has strong presence in regional markets. That Star has an exhaustive telecast plan comprising six languages across 12 channels is a well-known fact. Therefore, after tapping the major players, Star is also demanding a price hike from regional players.

“Apparently with smaller players in South India they (Star) are pressuring people to pay huge rate increase; in the range of 50-100 per cent, and those negotiations are still going on. Especially with the Southern region being a major market on BARC, Star can afford to take on some tough fights in this part of the country. The strategy now is to put higher pressure on the rest of the country since they have closed the deals with the major ones,” said another senior executive with a National MSO who wished to remain anonymous.

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