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Timely CAS to boost revenues for broadcasters: ICICI Securities Survey

27-December-2002
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Timely CAS to boost revenues for broadcasters: ICICI Securities Survey

If Information and Broadcasting Minister Sushma Swaraj surprised the industry by forecasting that all pay channels would gradually shift to a free-to-air regime, a recent survey by ICICI Securities points out that broadcasters would now need to optimise the advertisement and pay revenue trade-off paradigm to maximise revenues.

Although the Indian Broadcasting Foundation (IBF) is now backing CAS, earlier several broadcasters had opposed the same, particularly criticising the way it was being introduced. The I-Sec survey should bring greater cheer to the broadcasters’ fraternity. It says that “if implemented in a timely manner, CAS would expand the pay revenues for broadcasters and MSOs through increased declaration of subscribers.”

But, this again is conditional. As the survey states, CAS is expected to evolve a system that would reward channels having good programming content. What it implies is that viewers would opt for pay channels only if their content is good. If that is the scenario for subscription revenue, advertising revenue for pay channels too will depend on viewers’ choice.

The survey talks about impact of CAS on broadcasters, on MSOs, on content providers and on listed firms. The survey notes that in the medium term, the transition period of CAS implementation would impact both the subscription and advertisement revenues of pay TV channels. In the longer term, however, it is expected to be positive for broadcasters. Over a period, the share of broadcasters in the total pay revenue pie would increase to 48.6 per cent, from the current 6.4 per cent, it predicts.

MSOs too are expected to gain from CAS over a period, due to improved declaration by the local cable operator. But, their investments would be too large in installing CAS at headend. As for content providers, top players would be in a strong position to negotiate higher rates. Listed companies in the sector such as Balaji Telefilms, Zee and CNBC India too would experience the CAS impact in different ways, according to the survey.

Another recent study—by Indica Research—had also discussed the implication of CAS on broadcasters. Among other things, it had pointed out that the focus of broadcasters would now have to be on marketing at the channel level, and not just marketing of programmes.

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