Indiantelevision.com Team

(31 March 2007 7:30 pm)

NEW DELHI: In a landmark judgment, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) has set "parity" as the principle for working out subscription base and monthly fees between MSOs and broadcasters, concluding the Asianet Vs Star TV case on the issue.

This means that any broadcaster cannot apply different standards while signing agreements based on subscription base of competing MSOs and impose different charges on such discriminatory basis.

This judgment would impact the industry as a whole and this principle would shape all future contracts between the players, and its import can be measured from the Supreme Court's observation:

"Since several disputes will be resolved if this issue is determined finally by the Tribunal, we request the Tribunal to dispose of the matter finally, preferably within three months from the date on which a copy of this order is produced before the Tribunal by either of the parties."

TDSAT felt that Asianet Satellite Communications Pvt Ltd has succeeded in showing that while its own holding was less than one third of the total connections in Kerala, at around 500,000, it was paying Rs 8.34 million monthly, which was nearly three times that of others.

"Since then the Respondent (Asianet) had been time and again requesting the Petitioner (Star India Pvt Ltd) to determine the dues of the Respondent on the basis of parity with its competitors which would have reduced the payouts of the Respondent substantially.

That order was passed on 30 March, and Asianet would gain substantially from the judgment, as a lot of money that it has already paid Star would now have to be refunded.

TDSAT recounted the case stating that Star India Pvt. Ltd, the petitioner, and respondent Asianet Satellite Communications Pvt. Ltd. had entered into a subscription agreement on 1 January 2003 for one year, which said that a package of Star channels would be given to Asianet.

This agreement stipulated a monthly subscription fee of Rs 8,340,000 and the number of subscribers indicated against the subscription fee was Rs 278,000.

Based on this agreement Asianet started receiving signals from Star, which were continued even after the expiry date mentioned in the agreement.

Later, Asianet did not pay the subscription fee as demanded by Star, and fell into arrears and according to Star's petition, the amount payable by Asianet was Rs 85,820,295 as on 30 September, 2004.

The court recorded that according to Asianet, the viewership the of Star bouquet as per TRP ratings was only about 3.67 per cent, covering the cities of Kochi and Trivandrum while for the other areas where Asianet was present in Kerala it was only 3.95 per cent.

"The Respondent has stated that the demand of Rs 8.34 million per month was based on a declared subscriber base of around 55 per cent of the total number of its subscribers which was a very high figure, unknown in the industry," the court recounted the arguments.

It observed: "On the principle of parity, according to (Asianet), it should be charged on a declared subscriber base of around 60,000 or at most 81,000, instead of the 278,000 recorded in the agreement for the period 1/1/2003 to 31/12/2003.

"It is clear that (Star), who is privy to all the relevant information in the above matter, namely the exact amounts being charged and how they are being linked with the subscriber universe and in turn the declared base of subscribers, has for reasons best known to it decided to adopt a rigid and inflexible approach."

"The onus of proving 'reasonable' and 'market' price was on Star for another reason also, namely, because it had come to the Tribunal to pursue its demand for payment for the signals provided to Asianet.

"However, no proof whatsoever has been given by Star as to the market price. i.e the price at which signals were being provided by Star to other cable operators in the rest of Kerala," the court held.

Taking its logic further, the court held that "it is also necessary to know the formula establishing the relationship between the actual number of subscribers who have access to the signals and the 'declared number of subscribers'.

"Unless this is known any player in the market would not be able to determine whether the monetary outgo to which it is subjected to by the broadcaster or supplier of signals is close to that being charged from its competitors in the same market.

"However, when specifically called upon to do so by this Tribunal, Star has refused to produce it on the specious and false plea that such information is 'confidential'."

It added: "We are of the view that mere increase in numbers in the total subscriber base of Asianet would not be of much relevance in the determination of 'reasonable subscriber base' until it is known as to what proportion the declared subscriber base of "other cable operators" who are its competitors in the same market, bears to the total subscriber base of this category.

"On the other hand the increase in the total subscriber base in absolute terms would be totally irrelevant information for the purpose of determination of reasonable subscriber base if it is found that during the period of such increase the declared subscriber base of 'other cable operators' who are competitors in the same market has been accepted as static."

Even for the sake of argument, the court said, if it is assumed that the universe of subscribers getting Star signals in case of 'other cable operators' has grown, the fact remains that the product of the declared subscriber base and the rate per subscriber has remained static.

"Under these circumstances, there is no justification for us to accept the contention of M/s Star India Pvt. Ltd. that the declared base for Asianet subscribers having access to Star signals would increase at 13% annually, when the declared subscriber base of 'other cable operators, has been accepted as static," the court said.

Rounding off the arguments of both parties the tribunal ruled, "Accordingly we decide that the accounts of the Petitioner and Respondent be reconciled on the basis of the following:

• The agreement of 1.1.2003, which has been upheld already, being taken as the basis for the period 1.1.2003 to 31.12.2003.
• Rs 4.05 million per month as the monthly subscription fees for the year 2004, 2005 and 2006 until 30th April 2006.
• No signals were received by the Respondent for a period of 3 months and 10 days in 2005 for which corresponding deductions will be made by the Petitioner.
• The Petitioner (Star) is directed to rework its demand for the period ending 30.4.2006 taking into account our determination in para 12 above and the payments that have been received from time to time from the Respondent as per interim orders of the Tribunal or otherwise and reconcile and settle the accounts on the above basis with the Respondent.
• We further direct that the statement of accounts be finalised by the Petitioner in the above manner in order to determine the exact amounts payable or refundable from one side to the other and the parties are directed to settle the accounts on that basis within a period of one month thereafter.

According to legal experts, in financial terms, this means that Asianet, which has been paying Star a monthly fee of Rs 5.5 million, would get a total refund of Rs 50.4 million from Star, but more significantly, the principle of parity would have a deep impact on the industry as a whole.