Star India, Indian cable & satellite's "price driver," today announced a major hike in its monthly subscription rates, effective January, from the current Rs 30 to Rs 40.50. The buzz has been in the air for a while now that Star is going in for a further hike in its subscription rates and come 1 January (?) that will be the case.
This move on Star's part is likely to be followed by a subscription hike announcement by ESPN Star Sports - again to come into force in January - as well as by the Zee Network. Industry sources say talk of a subscription hike was one of the reasons for the recent spurt seen in the Zee scrip (other than speculation surrounding a possible offload of stake to AOL Time Warner).
If anything, the hike by ESPN Star Sports (in percentage terms) will be even more significant with the expected pricing for the two premium sports channels being between Rs 20-24 from the current Rs 16 rate.
As per current indications, Sony Entertainment Television is not likely to change its pricing structure anytime soon, at least not till it has set its house in order as far as its management structure is concerned.
Defending itself, Star says while India's cable industry has grown to a nationwide figure of 38 million homes (NRS), the broadcaster is only paid for 6 million homes. Peter Mukerjea, CEO, Star Network, says: "It is sad that just 6 million subscribers in the country share the cost of 38 million cable homes. If cable operators and MSO's declared their true connectivity, we would be in a position to reduce our monthly charge in the long run."
Sameer Nair, executive VP - head of content & communication says: "We have increased our investment in programming so as to deliver a better viewer experience. We are evolving and innovating with every new programme that we bring, to our viewers. With escalating costs and high production values, that go into this process, it's only fair that the cable operators declare their true connectivity or accept this nominal price increase."
Star's announcement looks likely to set in motion a major dogfight with cable operators and MSOs. Some Mumbai-based operators, when contacted, said they were still to decide how to respond to the proposed hike.
Ashok Mansukhani, executive V-P, corporate services, HTMT, part of the Hinduja Group that runs the InCable MSO, giving the cable industry's point of view, asserted the hikes were unsustainable in the current scenario.
According to Mansukhani, the cable industry would only accept further subscription hikes if the government acceded to two of longstanding demands:
* The government shift the burden of entertainment tax to the broadcasters.
* Compulsory institution of conditional access systems so that subscribers have the option of seeing (and thereby paying for) only the channels they wanted to see.
How the issue will pan out should become clearer in the coming days.
