MUMBAI: When reality bit, it chomped. The pay channel rate card circulated yesterday by Star India and Sony Entertainment (Zee disowned it) at the meeting with the information and broadcasting ministry has burst the bubble that was building that the CAS rollout ride may not be that rough after all.
A breakdown of the proposed price structure makes one thing clear. If this is the way pay channels will be priced, the consumers' cable bill will total at least Rs 417 in Mumbai. And that is only if the cable trade accepts the proposition put forth by Star and ESPN-Star Sports (and one assumes Sony as well) that revenue share should be 85:15 in favour of the broadcaster.
Zee, which has disowned the document, has been on record as saying that it was comfortable with a 50:50 revenue share. However, if the global norm is taken (which swings widely depending on whom you talk to) as 70:30 in favour of the broadcasters, then the total tab is Rs 458.
The math works out thus:
The total declared cost of all the four bouquets is Rs 175. For simplicity, let us put a a notional value of the three pay channels not on the list - Nickelodeon, Hallmark and Ten Sports - at Rs 25. Therefore the total cost of the pay channels is Rs 200. This is a net value and does not include tax and the cable service provider's margin.
The Star revenue share model is 15 per cent to the cable operator so that will be examined first. A 15 per cent margin adds up to Rs 230. To that add the FTA package cost of Rs 72 which is Rs 302. Then there is the service tax of 8 per cent and entertainment tax that varies from state to state. Since it is 30 per cent for Maharashtra, that is the value that will be taken for Mumbai. Therefore Rs 115 is the tax. The total is Rs 417.
At a 30 per cent margin to the distributor the cost is Rs 260 + Rs 72 totalling Rs 332. Add the tax and the total tab is Rs 458.
A 50:50 revenue share costing works out to Rs 372. Add the tax and the total tab is Rs 513.
The demand by big distributors like Hinduja Group MSO INCableNet for a 70 per cent revenue margin is not even being considered here as being a non-starter.
And this tab does not include the monthly outgoes for the set top boxes, whether through rentals or hire purchase.
In the end analysis, there is no running away from the fact that at these prices, consumer uptake of STBs, upon which the smooth rollout of CAS hinges, is just not happening.
