Govt should consider reduction in other taxes also: Dish TV
Posted by Sathish | Published on December 11th, 2008 | Comments 3
Salil Kapoor, COO, Dish TV said there would be some relief to the consumers which will be because of the reduction in CENVAT. He said the government should look more into the multiple taxation issue because the taxation issue is huge. “We have about four types of taxes including the service tax, the VAT, entertainment tax and so on and if some ease is given on this front as well, this will help the industry grow.”
Here is a verbatim transcript of the exclusive interview with Salil Kapoor on CNBC-TV18. Also watch the accompanying video.
Q: What do you think about the CENVAT relief being passed on to consumers? Do you think there would be some ease in pressure in availability of set-top boxes and DTH services?
A: There is no problem in availability of set-top boxes as of now. The only thing is that there would be some relief which will be because of the CENVAT issue. However, this industry is based on a huge subsidy platform, therefore, we cannot see much of benefit being passed on to the subscribers. However, this will help the industry to grow. This industry is one of the infrastructure industries in the information space where we are the only way how we can provide the last mile connectivity even in the remote places in this country. So, there is a lot of support which this industry requires from the government side and the government should look more into the multiple taxation issue because the taxation issue is huge. We have about four types of taxes including the service tax, the VAT, entertainment tax and so on and if some ease is given on this front as well, this will help the industry grow.
Q: That point is taken but the immediate issue will be the kind of competition one is facing from biggies––there is Big TV, Tata Sky and the Airtel connection as well. Given all this, how does it push your own breakeven deadline? Does it push it back significantly?
A: No, it doesn’t push our breakeven simply because our numbers are ramping up in a much better pace in the last few months. In October, we did close to 4.5 lakh which was about 44–45% of the entire industry. So, more competition is welcomed because the overall visibility of the platform has gone multi-fold in the last few months with the launch of two big players. However, it doesn’t affect our leadership status as the learning’s that we have in this space of about four-years and the penetration we have in the market in terms of a distribution and the learning’s we have in terms of the content.
Q: Clearly, as the market leader you would have a lot of learnings, but you would also have a lot of cash burn. Is it something like a minimum of Rs 500 cash burn on every set-top box you add? Where is the money coming from? Will not that, per se because of your leadership status, push it back? Just give us a ballpark figure on what is the cash burn, how is the money coming and therefore where is the breakeven now coming?
A: The overall cash burn per box is higher than what you have just said, about Rs 500. It is much more than that. So, the overall money that is required in the overall acquisition of the new subscribers comes from two areas. One is the internal funding, and the other is the renewals that we get of all the customers that we already have.
We have a huge base of installed customers. Right now our subscriber base is close to 4.66 million subscribers. So, we get a monthly renewal from all of them that goes into the funding of the new acquisition as well. We also have our rights issue now, and we will be garnering around Rs 1140 crore from this, which would also be ploughed back into the acquisition of the new subscribers.
Q: What about the foreign investment cap being increased for DTH players? Have you heard anything from the government on that front?
A: We haven’t heard anything on that front. However, we are an India-based company so I don’t think that affects us in any significant manner.
Filed Under: Dish TV
DTH players explore new revenue streams
Direct to Home (DTH) players are exploring new revenue streams in the pay per view (PPV) market. To add more steam to its push for PPV subscribers this season, DTH biggies such as Tata Sky and Dish TV will premiere Oye Lucky! Lucky Oye! (OLLO) on December 18, consequent to which the movie will be available for four weeks versus the usual 24 hours.
UTV Motion Pictures has struck a deal with two major DTH platforms on a revenue-sharing basis, where OLLO will be the first Indian movie to hit DTH platforms in just over three weeks of release. Normally, movies have been going to DTH platforms only after 6-8 weeks and sometimes after the first satellite telecast of the movie.
A Media Partners Asia study pegs the total PPV revenues in India at $18.5 billion by 2017 while subscriptions can fetch up to $12.3 billion, advertising revenues will grow up to $6.2 billion. Worldwide too, pay-per-view revenues have grown steadily over the past decade, accelerating during the past five years with the addition of new PPV subscriber services.
The main staple for most PPV services is feature motion pictures which have been released in theatres. Salil Kapoor, COO, Dish TV, said, “The premier of OLLO on Dish TV will enable our 4.6 million subscribers to enjoy the latest and best of movies in the comfort of their home. We are the only DTH platform to broadcast Bollywood and Hollywood blockbuster movies like Taare Zameen Par, Jab We Met, and Spider Man 3.”
Dish TV believes that PPV on a long-term outlook will drive its revenues, which today consists of approximately 10-15 per cent of the Dish TV subscriber-base. Kapoor insists, “Many production houses have approached us for the release of their forthcoming films on Dish TV. In the current scenario of multiplex sales dipping and viewers preferring to watch movies at home, this association could form a growing new revenue stream for us going forward.”
A Big TV spokesperson confirms the emergence of PPV as a revenue driver. “Specifically for BIG TV, our strategy has been to provide subscription-based bundled service called Subscription Video-On-Demand (SVoD).”
dishtv to premier new movies; targets 9 million subscribers by 2010
With the economic slowdown affecting pay packets and job security like never before, people have become cautious about their spends. One of the ‘luxuries’ that is getting struck off people’s lists is a visit to the theatre to catch up on the latest release.
Keeping this in mind, DTH service provider DishTV on December 12 announced the premier of a recent Bollywood release, ‘Oye Lucky, Lucky Oye’, over their movie-on-demand (MoD) service within three and a half weeks of the film’s theatrical release. The consumer needs to shell out Rs 100 for every new movie that is premiered on the DTH platform and watch the film throughout the day.
Salil Kapoor, COO, DishTV, in a prepared statement, said, “The premiere of ‘Oye Lucky, Lucky Oye’ on DishTV will enable our 4.6 million subscribers to enjoy the latest and best of movies in the comfort of their homes. We have broadcast both Bollywood and Hollywood blockbusters like ‘Taare Zameen Par’, ‘Jab We Met’, ‘Spider Man 3’, ‘Pirates of Caribbean’, etc.”
He further said, “Many production houses have approached us for the release of their forthcoming films on DishTV, the largest DTH platform in the country. In the current scenario of multiplex sales dipping and viewers preferring to watch movies at home, this association could form a growing new revenue stream for us going forward.”
The DTH service provider has also started running trailers of the newly released movies as well, which are run on their MoD channels by default. “We are right now releasing on a co-promotion basis, but going forward, we look forward for this move to be monetised and even featured in our ad sales strategies,” Kapoor added.
Growth as per expectations
Kapoor said, “We had three million subscribers on April, 1 2008, and we have set a target to achieve five million subscribers by March 2009. Today, we are at 4.6 million subscribers and we are very sure that we will achieve more than our target very comfortably. Our focus will be on providing a wide choice of popular content across customer segments and regions and specific value-added content according to their interest levels and requirements, such as special interactive services, channel packages, and offers.”
Competition vital for DTH growth
This year also saw the entry of more players in the DTH space. The launch of Big TV and Airtel Digital has set off a price war amongst the DTH players, forcing the old players to change course in order to retain their subscribers and attract new ones. With Videocon, too, preparing to join the DTH bandwagon, the competition in this space is set to become fiercer.
Speaking about competition in the DTH space, Kapoor said, “Currently, DishTV enjoys a market share of 46 per cent in the DTH space and aims to garner 9 million subscribers by 2010. The competition has only opened up the DTH category. Having multiple players will only expand the DTH space more and hasten the adoption of the category. I believe there is huge opportunity in this space and a lot of pent-up demand for DTH in the Indian market.”
He further said, “A DTH service provider needs to achieve economies of scale, resulting in lower operating costs, breaking key price barriers for consumer adoption, as well as granting easy access to premium content.”
Part of Zee Group, DishTV’s creative duties are being handled by Lowe, while Madison Media is its media agency. DishTV has on its platform 225 channels and services, including 21 audio channels.
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TRAI consultation paper on interconnection issues in broadcast and cable service
Keeping in mind the stiff competition between DTH players and the cable industry, the Telecom Regulatory Authority of India (TRAI) has issued a consultation paper on interconnection issues relating to broadcasting and cable services. The last time such a consultation paper was issued on interconnection was on December 10, 2004, the regulations issued were constantly amended in order to cover new issues. The Authority has invited all stakeholders to respond to the issues raised in this consultation paper by January 12, 2009.
There has been a marked increase in deployment of addressable platforms for distribution of TV channels in recent past. IPTV services and voluntary CAS have been rolled out by many service providers. In the near future, Head-End In The Sky (HITS) and mobile TV services are also likely to be available. The number of subscribers being served by the DTH services has also gone up significantly.
This consultation paper covers the interconnection issues for addressable platforms, interconnection issues for non-addressable platforms, general interconnection issues as well, as issues related to registration of interconnection agreements.
FDI hike not important for DTH and cable industry
TRAI had earlier recommended a hike in FDI to 74 per cent from the current 49 per cent in DTH and IPTV, which excluded the cable industry, which the Government is said to be considering. exchange4media speaks to Roop Sharma, President, Cable Operators Association of India (COAI), and Salil Kapoor, COO, DishTV to find out how much the FDI hike matters to them and their expectations from the Government.
Although a section of the cable industry is unhappy with the TRAI recommendation, Sharma has a different take on it. He said, “The cable industry does not want more than 49 per cent of the FDI, however, the fact remains that the growth in the cable industry will remain good even in 2009 despite the competition from DTH players, and no matter what, the cable industry is here to stay and give a tough fight to their competitors.”
Kapoor was of the opinion that, “Even if the FDI is hiked to 74 per cent, it will not help the industry much as we have Indian promoters and, therefore, FDI has no role to play in it. Whether or not the Government hikes FDI limit, it will be of no difference to us. We are available even in the most remote areas of the country and provide 100 per cent remote coverage, which is not so in cable and being an information industry, Government support is vital. Currently, the industry is based on total subsidy and multiple taxes, which are hurting the industry. Government support should come by way of lowering these multiple taxes, which, in turn, will help in the growth of DTH industry.”
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