Cable TV
‘Carriage market has exploded and will close this fiscal at Rs 14 billion’ – Gurjeev Singh Kapoor
Broadcasters are being hit hard by hefty carriage fees as bandwidth is getting choked both on analogue cable and DTH (direct-to-home). Building formidable distribution bouquets is high on their agenda as they struggle to ramp up subscription revenues which are estimated to touch Rs 28 billion this fiscal.
Star Den, a 50:50 joint venture between Star and Digital Entertainment Networks, is quickly adding regional channels to complete its otherwise strong Hindi and English entertainment-news-kids bouquet. Zee-Turner is the only other broadcasting distribution company which has a formidable regional content lineup.
Star Den is eyeing a revenue of Rs 10 billion at a time when the television industry is beginning to feel the first serious signs of a slowdown in advertising revenues. Analysts say this will be a hard task to achieve, despite the boon from DTH revenues. Big TV and Airtel Digital TV launched later in the year, reducing prospects of a full-fiscal revenue gain for the broadcasters.
In an interview with Indiantelevision.com’s Sibabrata Das, Star Den Media Services chief executive officer Gurjeev Singh Kapoor talks about the dark holes in the distribution business and how the company plans to ramp up growth in a tough business environment.Excerpts:
Is the steep climb in carriage fees upsetting the business model of broadcasters?
The carriage market has exploded and is expected to end this fiscal at close to Rs 14 billion, up from Rs 6 billion a year ago. As there is a huge amount of bandwidth constraint on analogue cable and even DTH, the industry has changed in terms of carriage. DTH operators are offering 200 channels while the Information and Broadcasting ministry has given the nod to 370 channels. A plethora of channel launches in the Hindi general entertainment, news and regional space has meant that there is a fierce fight for frequency. In a market where funding was easily available, channels were willing to pay more for space on cable networks. Insanity ruled the market.
Will we see a correction in the carriage market?
The balancing act has to happen now. With private equity and other sources of funding drying up, many broadcasters have started contracting their distribution budgets. We could see a flat carriage growth next year as channels start rationalising their costs. Broadcasters are in no position to be omnipresent in all cable networks; they will have to pick and choose where they want to be present and optimise their resources.
But we will continue to see more channel launches next year as Reliance ADAG is planning to get into broadcasting space. Even existing players like Star India have plans to add more channels. Won’t this ensure that the carriage tap continues to flow freely?
We may see a 10-15 per cent growth in carriage fee market in FY’11 as more channels enter the race. The next two years will be the blue litmus test for many broadcasters. For the weak channels, there could be a shake out. The fact is that distribution costs have grown unmanageably high.
There can be no potential threat to carriage revenues unless the digital universe expands to at least 25 per cent. When we reach that stage, other models can emerge like broadcasters getting into agreements for sharing their distribution revenues with delivery platform providers.
Are broadcasters getting united to resist on carriage fees?
Broadcasters have doled out so much money in the past because of competition that it will be difficult to correct the system fully. More so, as we will see new channel launches. Carriage fee is being governed by market forces. But it is good that the thought process has started to fight carriage fees collectively. How far that will succeed only time will tell.
Would you want Trai to (Telecom Regulatory Authority of India) come out with some regulation on carriage?
I wish there could be some kind of formula that can be arrived at to regulate carriage. As an idea, it is definitely good since the regulator has mandated pricing issues.
How difficult is it to ramp up subscription revenues in the backdrop of MSOs (multi-system operators) consolidating the cable TV market and Trai introducing pricing regulations?
Subscription revenue for pay-TV broadcasters will close at Rs 28 billion in FY’09, up from Rs 23 billion a year ago. Even though there is a slowdown in the market and the times are tough, the industry expects a 10-15 per cent growth in FY’10.
Isn’t that growth mainly because of DTH?
DTH, undoubtedly, has expanded the market. But ARPUs (average revenue per user) haven’t grown in the DTH business; they are virtually the same as that of cable. IPTV, though much talked about, has also not happend this year.
Will Star Den’s revenue touch Rs 10 billion this fiscal?
While we are looking at very aggressive numbers and have set ourselves a very challenging task, I can’t comment on our financials.
Do broadcasting distribution companies see the consolidation in the cable TV sector as a welcome change?
The marketplace will make it difficult for small networks even as broadcasters rationalise their distribution budgets. Networks who have a geographical spread can bargain hard with broadcasters. In the short term, they will get paid more and will be reluctant to pay for more subscribers. But in the long term, it is better that the industry moves towards a better structured environment. MSOs and broadcasters have to join hands and realise that ultimately money has to come from the ground.
Since the parent owner of Star Den also runs a cable TV company, how do you leverage the power of your bouquet to push the cable distribution business?
We operate as independent entities. We treate Den like the other MSOs.
Star India had earlier inked a distribution deal with sports broadcaster Neo which did not last long after the new management took over. Do you feel that the Star Den bouquet is strong but still incomplete without sports channels in its mix?
We are currently distributing 23 channels and are in a very strong position to post growth. We have great quality content in the Hindi general entertainment space with Star Plus as the leader and Star One in the fifth spot. In the news television space, we have Times Now which leads in the English segment, CNN-IBN, IBN7 and Star News. CNBC TV18 and Awaaz, of course, are leaders in their segments and are powerful subscription-driven channels.
In the kids genre, we have Hungama and the three Disney channels. For the English-viewing audiences, we have a formidable presence in Star Movies, MGM and Star World. We also distribute NGC and Zoom.
We are now filling up the missing pieces and adding the regional bouquet. With Star buying majority stake in Asianet, we will cover all the languages down south. Star has also launched a Bengali and a Marathi general entertainment channel while the one in Gujarati is in the pipeline.
Will Colors (the second most-watched Hindi GEC from the Viacom18 stable) automatically come to your bouquet when it decides to go pay?
I wouldn’t like to offer any comments.
Will you also be getting the MTV channels after Viacom’s contract with One Alliance expires on 31 March, 2009?
I don’t want to comment on this.
What about the wedding and home shopping channels that Star is planning to launch next year?
Whatever niche channels Star launches, we will be happy to service. Niche channels will have a demand particularly on digital platforms. One the Fox channels launch, we will also be happy to distribute them.
MUMBAI: When margins wobble, liquidity talks and in Q3 FY25-26, cash did most of the talking. Den Networks Limited closed the December quarter with consolidated revenue of Rs.251 crore, marginally higher than the previous quarter but down 4 per cent year-on-year, even as profitability stayed resilient on the back of strong cash reserves and disciplined cost control.
Subscription income softened to Rs.98 crore, slipping 3 per cent sequentially and 14 per cent from last year, while placement and marketing income offered some cheer, rising 15 per cent quarter-on-quarter to Rs.148 crore. Total costs climbed faster than revenue, up 7 per cent QoQ to Rs.238 crore, driven largely by higher content costs and operating expenses. As a result, EBITDA dropped sharply to Rs.13 crore from Rs.19 crore in Q2 and Rs.28 crore a year ago, pulling margins down to 5 per cent.
Yet, the bottom line refused to blink. Profit after tax stood at Rs.40 crore, up 15 per cent sequentially and only marginally lower than last year’s Rs.42 crore. A healthy Rs.57 crore in other income helped cushion operating pressure, keeping profit before tax at Rs.48 crore, broadly stable quarter-on-quarter despite the tougher cost environment.
The real headline-grabber, however, sits on the balance sheet. The company remains debt-free, with cash and cash equivalents swelling to Rs.3,279 crore as of December 31, 2025. Net worth rose to Rs.3,748 crore, while online collections accounted for 97 per cent of total receipts, underscoring strong cash discipline across operations, including subsidiaries.
In short, while Q3 showed signs of operating strain, the financial backbone remains solid. With zero gross debt, steady profits and a formidable cash war chest, the company enters the next quarter with flexibility firmly on its side proving that in uncertain markets, balance sheet strength can be the best growth strategy.
