• Zee making a pitch for B4U?

    The shakeout in the television business continues.

  • Zee making a pitch for B4U?

    Submitted by ITV Production on Nov 10, 2001

    The shakeout in the television business continues. Several channels have shut down, some are struggling to stay afloat and are laying off people as advertising and subscription revenues continue to shrink. This makes for a prime environment for mergers and acquisitions.

    Into this fray has stepped Zee Telefilms once again, which has made a couple of botched efforts at trying to acquire other channels or forge alliances. (Asianet and UTN are some of the alliances which failed.)

    B4U CEO Ravi Gupta: squashing takeover rumours

    In its current attempt, it is apparently trying to take over the entertainment channel B4U Television Network once again, according to a report in The Hindustan Times.

    The Delhi daily has reported that the Zee group is in negotiations with a senior B4U management team in London currently and that the deal will be finalised shortly. B4U sources in India, however, denied any such development.

    Sources say that the deal is likely to focus on acquisition of the impressive B4U movie library. B4U CEO Ravi Gupta had told indiantelevison.com recently that the channel holds rights to 1,000 films in India and overseas rights of 1,600 films.

    Zee chairman
    Subhash Chandra: once bitten, not twice shy?

    The Zee Network is apparently in a hurry to strike a deal. The reason: its agreements for telecast rights for a large chunk of its movie library are reportedly expiring this year. (In 1994, the company had acquired several movies from various producers with licences ranging from five to seven years.) The channel needs to bolster its stock of films for the days ahead.

    Zee‘s proposed acquisition of B4U Television Network, which owns and runs the satellite TV channels, B4U Movies and B4U Music, is believed to follow the recent absorption of UK-based parent company LMB Holdings into B4U, sources say. Reports say that while Zee has appointed global consultancy major KPMG as its advisor for the deal, B4U has appointed another major consultant, Pricewaterhouse Coopers.

    B4U, which is expected to come out with an IPO in September next year, has dropped its massive expansion plans in the broadband and e-commerce business, reports say. The company has an estimated 70 movies under production but further movie plans have been substantially scaled down.

    As part of the deal, reports say, Zee will also get B4U‘s lucrative international operations, including UK and US, reports said. In UK, B4U has around 40,000 subscribers. With B4U Movies, the company had broken even on cash basis in the overseas marketing during the first year of operation, reports said.

    This is not the first time that Zee Telefilms is trying to acquire B4U Telelvision. Earlier in May, the Subhash Chandra-promoted Essel Group?s investment companies claimed to have advanced funds for acquiring a 15 per cent stake in B4U Multimedia (now B4U Television Networks) from the disgraced stock broker Ketan Parekh. The company had then refuted these claims saying that Parekh?s holding was between "four to five per cent".

     

  • Star hike was planned move

    Submitted by ITV Production on Nov 10, 2001

    The Indian Cab & Sat Reporter, indiantelevision.com‘s weekly subscription newsletter, had predicted earlier this week that Star‘s announcement to slash carriage rates was merely an eyewash, and that it would hike rates eventually.
    We present here the full text of the item that appeared in the Indian Cab & Sat Reporter dated 8 November 2001:

    MUKERJEA PULLING A FAST ONE WITH TALK OF SLASHING SUBSCRIPTION RATES?

    Star India CEO Peter Mukerjea is mouthing a new mantra these days. Slash basic carriage rates for cable ops for the Star digital bouquet of six channels if they in turn are willing to declare higher subscriber bases.

    Currently, Star charges cable ops Rs 30 for the Star package, but they disclose only 20 per cent of their actual subscriber counts, he says. "Now if they are willing to take their disclosure up to 40 per cent, we are willing to charge these cable ops, half of what we are charging them currently," says Mukerjea.

    Mukerjea has given his own spin to the whole affair by declaring that the valuations of cable enterprises will go up if they buy into his proposition. This might have made sense in a context outside that existing in India because internationally valuations are based on connectivity. The Indian market operates quite differently so where Mukerjea derives the confidence that his idea is workable is a bit of a mystery.

    Mukerjea, along with his distribution head Arun Mohan, has started discussions with two large MSOs - Hathway Cable (in which Star has a 26 per cent stake) and the Hinduja-run Incable - on this issue. InCable has often been involved in arm wrestling matches with the network as it has refused to cough up even the 20 per cent carriage fees. Star in turn has on occasion switched off the receiver boxes in InCable headends in order to get them to pay up.

    Mukerjea says he is taking this step because broadcasters are getting payments from cable ops for only 5-6 million of the 40 million cable and satellite homes in India. At around RS 100 for all the basic subscription channels, that works out to about RS 600 million a month or RS 7.2 billion a year. Total cable subscription revenues garnered by cable ops amount to about RS 4,000 million a month (@RS 100 per month) or RS 50,000 million a year.

    These figures are nowhere close to reality. If the pay channels were collecting so much money they would be laughing all the way to bank. Last year, they reported pay TV collections of only RS 3,000 million for the 12 months. Obviously Mukerjea is flinging the numbers out of thin air, or he expects the digitisation and encryption efforts of Zee TV and Sony Entertainment to result in the increased figures he is talking about for this year.

    Or he could be voicing that he is making a desperate grab at subscription revenues at a time when ad spends are vanishing.

    Will cable ops buy into his scheme? Unlikely. The reason: what guarantee is there that Star will not hike its rates after cable ops disclose higher subscriber numbers. Even if Star promises that there will be a lock-period what guarantee is there that it will stick to it? The trade is known for the conflicts between broadcasters and cable operators.

    A school of thought is that Mukerjea is letting loose some smoke to camouflage the real issue. Once cable ops refuse to buy into his scheme, he is going to propose a hike in subscription rates for cable ops at the existing subscriber levels.

    For the cable TV trade it is likely to be a Catch 22 situation. If they refuse to buy in to the higher disclosure or higher subscription schemes and their headends are switched off, they will face flak from the viewers who have become diehard fans of Star Plus, the numero uno entertainment channel. Clearly, this will be a hard fought battle.

     

  • Star acts pricey, hikes cable subscription rates

    Submitted by ITV Production on Nov 10, 2001

    In a volte-face, Star TV has announced a hike of Rs 12 in cable subscription rates for its digital bouquet of six channels, with effect from January 2002.

    Star, which had announced its intention to lower rates earlier this week, will charge cable ops a basic rate of Rs 42 per subscriber, as against an average of Rs 30 now, when the rate hike becomes operational. The channel has taken a decision to make the announcement currently because its contracts with some cable ops stipulate that a 60 day notice period be given to them if a rate hike is being resorted to.

    The move is likely to have a ripple effect on how much individual subscribers pay for receiving cable TV in their homes: observers expect cable ops to eventually hike the rates they charge subscribers from Rs 75-Rs 175 prevalent currently to Rs 100-Rs 225 (depending on whether the subscriber is in a posh or poor locality). This translates into a hike of Rs 20-50 per subscribing home.

    That is after the dust settles down. Observers expect cable ops to get into a major scrap with Star India‘s distribution team for daring to take the step to hoick basic subscription fees.

    And that too when Star India CEO Peter Mukerjea had as recently as two days ago declared in the media that his network was planning a cut in basic subscription rates, if cable operators were willing to disclose higher subscriber bases. Mukerjea‘s justification of the new hike is that operators did not respond to the channel‘s clarion call.

    Star India CEO Peter Mukerjea

    Mukerjea told The Times of India: "We have 38 million cable homes across the country and we receive payment for just 6 million cable homes. Because of the under declaration of subscribers by the cable operators, we have no option but to increase prices.‘‘

    Mukerjea said that they are charging the cable operators and not the end subscribers. ‘‘It is sad that just 6 million subscribers in the country share the cost of 38 million cable homes. Cable operators and MSOs have to declare true figures,‘‘ he added.

    Mukerjea said that Star is ready to cut down its subscription cost once they get a reasonable declaration from cable operators. ‘‘It is our long-term strategy to cut down prices. For that we need true declaration from cable operators,‘‘ he said.

    While the news of the hike comes as a surprise to many, indiantelevision.com had predicted earlier this week that the proposed cut in rates was an eyewash and that Star would be hiking rates shortly.

    In its latest issue of The Indian Cab & Sat Reporter, a weekly subscription newsletter, indiantelevision.com had foreseen that `once cable ops refuse to buy into his (Mukerjea‘s) scheme, he is going to propose a hike in subscription rates for cable ops at the existing subscriber levels.‘ The prediction came true in three days.

    Star Plus has a lion‘s share of Indian cable & satellite viewership and is the numero uno satellite channel by far. It leads the number two Hindi entertainment channel by a factor of two and the number three by a factor of almost three, while it trails its rivals in the news category. Overall, nine of the top 10 slots for Hindi entertainment programmes are occupied by Star India‘s shows.

    The announcement of the hike comes close on the heels of I&B minister Sushma Swaraj‘s indication at the FICCI meet this week that the government is thinking of restricting advertisement telecast on pay channels.

     

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  • Net4Domain pushes .biz domain extension

    Submitted by ITV Production on Nov 09, 2001

    Lost out on the URL with a .com or .net or .org extension because some domain squatter grabbed it? No sweat. You can now get your favourite URL with a .biz extension. And at a tab of just Rs 650. That‘s an offer that Net4India is making. The URL can be booked for a two year period by logging onto net4india‘s online booking facility at www.net4domains.com.

    Dot biz is a restricted gTLD (Global Top Level Domain) open only for companies engaged in commercial or business activities. Charity organisations and individuals cannot use the extension. Market sources expect demand for domain names to cross 40 million by the end of the year.

    Says Jasjit Sawhney, CEO Net4India: "The exclusivity of .biz brings an enormous opportunity for the business community. Dot biz is where businesses will be conducted in the future and it brings superior technology, better security and a platform that facilitate the business transactions of the future. Dot biz is an ideal opportunity to extend a businesses brand communication"

     

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