STAR has started talking with some of the big multi-system operators (MSO) proposing to cut subscription rates to 50 per cent for its eight-channel bouquet if the cable networks, as a quid pro quo, report subscription revenue closer to the real connectivity they posses.
According to broadcasters cable networks are reporting no more than 20-25 per cent of their actual consumer base. If STAR manages to reach a deal with the cable networks, it is likely to be replicated by other channels.
A lower overall cable rate is expected to translate into better collections and prompt payment by consumers to cable networks and franchisees. Due to repeated hikes over the last two years in the cable bills, consumers are increasingly defaulting on their monthly payment.
According to industry sources, payment by cable networks based on their actual consumer base will also enhance their valuation with proof of payments serving s a better index of their true asset base of consumers.
The latest STAR strategy of lower-rates-higher-subscription collections is backed by industry projections of a fairly flat growth in advertising revenues but a robust increase in subscription number.