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A Golden Goose of Indian Television Continued

Continued from

The year saw the entry of Kerry Packer’s Channel Nine in a joint venture with HFCL. The HFCL-Channel Nine JV sealed a deal with Prasar Bharati, agreeing to pay a whopping Rs 1200-odd million for a three-hour prime time band on the floundering DD Metro channel. This revenue model was unsustainable, as would be proved later when Channel Nine withdrew from renewing the contract on the same commercial terms. DD Sports was also launched as a pay channel, trying to cash in on the India cricket rights which Prasar Bharati bagged in a successful bid for five years. It was also the year that saw the birth of a Hindi news channel, Aaj Tak, from the India Today stable. This was to later fuel a news channel boom in the country. B4U, promoted by LN Mittal, Kishore Lulla and Binani, was also launched during the year.

 

There was activity in the regional channel space. Down south, Sun Network continued to rule supreme. Zee made a foray into regional language broadcasting with the launch of four channels under the Alpha brand - in Marathi, Punjabi, Gujarati and Bengali. Rathikant Basu, ending his stint as CEO in Star India, launched the Tara group of regional channels. ETV Network also made a foray into regional language broadcasting.

Cable TV was getting high valuation on the back of ambitious convergence plans. Intel forked out $59.23 million to pick up 3.3 per cent stake in Hinduja-owned IndusInd Media & Communications. Chandra’s Siticable was valued by HSBC at $1.9 billion. MSOs announced upgradation plans, but the investments were more promised than made. The cable TV industry grew to over 30 million subscribers in the year, up from around 28 million a year ago.

Telecom operators like Reliance, Bharti, BPL and Spectranet also began to dream of the convergence play. Hopes on broadband emerged with players like NumTv.com, broadcastindia.com, sharkstream.com, homelandnetworks, and spectranet.com surfacing. On the policy front, Ku-band DTH broadcasting was permitted after a three year ban. Guidelines were issued but a detailed note on how DTH will roll out mysteriously did not see the light of day. Uplinking and ownership of earth stations by private broadcasters from Indian soil were opened up.

No final word was heard on the broadcasting bill however. The idea of a convergence bill was mooted, but it was caught up in a tussle between the IT, telecom and I&B ministries as to who would play the steering role for convergence. The door was open for private players to own and operate communication satellite systems. The local INSAT system was offered for commercial use by private agencies. Sun TV and Eenadu TV were the first players to get permission to enter the fray. They set up their own earth stations and were granted uplinking facilities. Meanwhile, Chandra’s ambitious Agrani satellite project ran into export licence issues under US munitions restrictions imposed after India’s nuclear explosions.

 

2001 – LOOPHOLES IN TELEVISION CREATED CONTROVERSIES The year 2001 was marred by a series of controversies, starting with diamond merchant and noted film financier Bharat Shah’s arrest and Ketan Parekh’s expose which led to the collapse of the stock market and the media stocks. B4U’s initial public offering (IPO) plans went for a toss as Shah was to play a prime role in the company.

Then came the accusation against the prevailing ratings system - the currency advertising industry used to measure the popularity of television programmes - being rigged, an effort by some organisations that ultimately fizzled out as they could not back it with adequate proof.

And just as this mudslinging effort continued, the news came that a unified rating system would emerge after Dutch Communications giant VNU NV had acquired AC Nielsen. This meant VNU would own TAM and INTAM, the two companies that were monitoring TV viewer ship in India.

It was also a dark year with three events spelling disaster: the earthquake in Gujarat, the 9/11 terrorist attacks, and the US-led offensive on Afghanistan. But this was fodder for the news channels and Aaj Tak gained audiences to become the leading news channel in the country. Kerry Packer’s dream to expand his base in India ended rather unfortunately as Doordarshan did not bend to sweeten the commercial terms with HFCL-Channel Nine. By no stretch of imagination would DD Metro find somebody to bet Rs 1.2 billion a year for a three-hour prime time possession on the channel. Packer had done it as an entry strategy, but hoping that he would repeat it for another year was a little too much to expect. And with the exit of Packer also ended Balaji Telefilms’ hopes of roping in Channel Nine as a minor equity partner in the company.

Zee continued to fall and its much-hyped relaunch with 24 shows initiated by newly inducted chief executive Sandeep Goyal flopped miserably. Star retained its premium leadership position, climbing up the charts. Sony failed to stem Star’s onslaught and its Jeeto Chappar Phaad Ke, a game show hosted by actor Govinda, managed to create initial hype but fizzled out fast. Chandra’s attempt at getting Turner International to invest as an equity partner in Zee may have failed, but he managed to get a joint venture agreement for distribution. While Zee Telefilms would hold 76 per cent stake in the distribution company, the balance 26 per cent would be with Turner. Such distribution alliances to strengthen bouquet offerings to cable operators would prove to be the trend in future. The government continued to be hazy on outlining a broadcast policy that would free foreign media companies from the clutches of regulation and be attractive for investments. But the government finally tabled the Convergence Bill which envisaged a super convergence commission with control of broadcasting as its major plank.

2002 – LAW AND ORDER ON CAS


Making conditional access system (CAS) mandatory for viewing of pay channels was the most important piece of legislation to be passed by Indian Parliament in 2002, though it came after several hurdles. On 7 May 2002, the Cabinet passed a bill in the Lok Sabha (lower house) seeking to amend The Cable Television Networks (Regulation) Act 1995. Cable TV operators would have to transmit or retransmit programmes of any pay channel through an addressable system. For the free-to-air channels that were to form part of the basic tier, the government would decide the minimum number of channels and the maximum rate that cable operators were to charge viewers.

And on 15 May, the Cable TV Networks (Regulation) Amendment Bill, 2002 was passed through voice vote by the Lok Sabha after a marathon debate that lasted three hours. However, hectic lobbying by a section of politicians and broadcasters delayed the passage of the Bill in the Rajya Sabha (upper house). Finally on 10 December, it won overwhelming support in the Rajya Sabha. The credit to bring legislation in for CAS must go to then information and broadcasting minister Sushma Swaraj. Multi system operators welcomed CAS which they believed would change their fortunes as they were squeezed in between broadcasters asking for more payout and last mile operators who were under-reporting their actual subscribers. Independent cable operators also saw this as an opportunity. The complexity of implementing CAS would only surface in 2003 as it would require massive investments and seeding of CAS boxes. In 2002, it was seen by the MSOs and independent cable operators as a victory for them.

Sony Entertainment Television India also had reason to celebrate as it bagged the exclusive cable and satellite TV rights for live telecast of ICC cricket tournaments to be held from 2002 to 2007 covering the Indian subcontinent. The cost: a whopping $ 208 million in the biggest ever licensing deal in Indian broadcast history. Sports broadcasting saw a new entrant with the launch of Ten Sports in April. The channel was immediately in the limelight as it had bagged the exclusive terrestrial and C&S telecast rights to the FIFA soccer World Cup for a piffling $3 million. Sports properties would thus get fragmented, a situation that ESPN Star Sports had wanted to avoid when they set up the joint venture.

2003 – CONTROVERSIES BY STAR NEWS AND NDTV


The big news of the year was the split between Star and NDTV. While Murdoch wanted complete control, Prannoy Roy did not want to let go of editorial independence. Star would take full control of Star News from 31 March 2003 after the five-year exclusive supply contract ended while NDTV announced it would launch two channels of its own around the same time.
The government also set in motion a process whereby FDI in TV channels operating in the news category was to be reviewed and likely to be linked to the parameters prevailing in the print medium. In the print arena (except trade publications), the government allows 26 per cent FDI investment. Zee Telefilms was on an acquisition spree, buying stake into ETC Networks and Padmalaya Telefilms. The size of the all-cash deal for ETC Networks which owned ETC Punjabi and ETC Music was approximately Rs 250 million (Rs 180 million for purchase of shares from promoters and Rs 70 million for preferential allotment).

Zee’s stake in Padmalaya Telefilms (a listed company) was through an acquisition of a 64.3 per cent stake in the holding company, Padmalaya Enterprises Pvt Ltd (PEPL). This gave Zee a 32.8 per cent stake in Padmalaya Telefilms, a Hyderabad-based content company. Zee was to pay Rs 590 million for the deal including an open offer of 20 per cent as required by regulations. The year also saw the exit of Zee Telefilms CEO Sandeep Goyal. Chandra decided to run the company at the operational level as well and brought back his brothers Jawahar Goel and Laxmi Goel to manage Siticable and news businesses of Zee. For the major players like Sun and ETV in the southern region, it was a period of consolidation. Vijay TV led the move towards pay in Tamil Nadu. Sun announced plans to take Telugu channel Gemini TV pay.

Doordarshan’s revenues were being taken away by the private satellite players. During 1999-2000, DD’s revenues stood at Rs 5,971.9 million and AIR’s at Rs 808.4 million. DD’s earnings increased in 2000-2001 to Rs 6,375.1 million while AIR’s dipped to Rs 739 million. For 2001-2002, DD earned Rs 6,152 million (indicating a dip in earnings), while AIR’s revenues increased to Rs 966.8 million. By the time this financial year closes, Prasar Bharati expects that DD would have mopped up about Rs 6,250 million, while AIR is expected to do another Rs 1,000 million.

Contributed By :   Saumendra Das, Asst. Professor, Aditya Institute Of Technology And Management; Tekkali (A.P.) somu.das2110@gmail.com

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