Hathway-MSM imbroglio: MSO in yet another broadcaster feud

As MSM issued a public notice against Hathway, the MSO chose not to renew contract with the broadcaster. Hathway has also been in dispute with other broadcasters in the past. We look into some of them…

e4m by exchange4media Staff
Updated: Aug 24, 2015 7:56 AM
Hathway-MSM imbroglio: MSO in yet another broadcaster feud

The battle between multi-system operators (MSOs) and TV broadcasters still continues to affect the broadcast sector and consumers alike even till date. The most recent dispute is the one between Hathway Cable and Datacom (Hathway) and Multi Screen Media (MSM) where the MSO, Hathway, has now decided not to renew the contract with MSM.

The MSM-Hathway tussle

Trouble started brewing between the two by the end of July when Hathway had put out notices on its cable network informing subscribers that it will be carrying MSM channels on a-la-carte basis with effect from August 2, 2015. This was followed by MSM Media Distribution Pvt. Ltd. putting out a public notice in newspapers against Hathway saying that they had disconnected signals to the MSO in the DAS II areas on account of non-payment of outstanding subscription dues and non-renewal of agreement. This impasse between the two has led to the non-renewal of the contracts for distribution. While Hathway’s reason to not renew the contract with MSM is the “dropping ratings and average content cannot be a base for a broadcaster to take distribution platforms for a ride by demanding hefty growth year on year”. Hathway said that the subscription fees of the broadcaster were too high in relation to the content and its ratings and in fact required a major correction in subscription fees.

MSM’s grouse is the non-payment of subscription dues by the MSO for the past seven months which according to Makarand Palekar, EVP – Sales and Marketing, MSM Media Distribution in a media report extends to Rs.50-60 crore in outstanding dues. Hathway too has not renewed its contract with MSM in DAS II markets after its expiry and in DAS I markets it is offering MSM channels on a-la-carte basis to consumers till the expiry of the contract on October 31, 2015.

MSM had approached the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) later regarding Hathway’s non-payment of subscription fees to the broadcaster for the last seven months. Following this the TDSAT on August 14, 2015 passed an order directing Hathway to pay Rs.14.56 crore towards subscription fee dues to MSM Media Distribution till the expiry of the agreement i.e. October 31, 2015.

While Hathway claims that the TDSAT dismissed MSM’s petition Vide order dated August 14, 2015 with regards to the Hathway’s move to shift their channels to a-la-carte. Palekar had refuted Hathway’s claim on the same stating that the regulator had clearly stated that unless the MSO clears their dues they will not be able to get any service from them and this also includes providing signals to them on RIO (reference interconnect offer) too.

Ratings impact

Hathway is one of the largest MSOs in the country with a cable TV subscriber base currently at 11.8 million, out of which 8.6 million subscribers have been digitized. The carriage revenues of Hathway for first quarter of this financial year grew to Rs.83.8 crore from the previous quarter where it stood at Rs.77.5 crore and had accounted for 31.69% of its total revenue.

According to senior media planners we spoke to any network’s channels not being available on any of the MSO network is expected to have an impact on its viewership ratings. When exchange4media had earlier questioned Palekar regarding the ratings impact he had said, “Not much impact will be there as the ratings are now shifting to rural areas. It is manageable.”

Hathway on August 21, 2015 in a release had stated that the ratings of MSM’s flagship channel Sony Entertainment Television (Sony TV) had “plummeted” post the switch-off on Hathway’s network. A company spokesperson said, “Latest BARC ratings for Week 32 (Period 8-14 August 2015) are a clear indicator of the huge impact on the channels’ standing due to its wide switch-off on Hathway, primarily in DAS 2 markets. GRPs for Sony Entertainment Television saw a sharp decline from 77 GRP to 72 GRP. This validates the strong position of Hathway across the geographies and MSM channels being off across the platform has created further dent in its ratings, thus, raising questions about MSM’s strength as a bouquet.”

MSM’s Palekar however responded to this saying, “Hathway’s claim of impacting MSM’s rating because of the switch off is absolutely absurd. Their claims are unjustified and the comparison is unfair. The marginal drop in the ratings for SET (Sony TV) is more because of programming changes and not because of the switch off as Hathway claims. On the contrary, the GRPs for KIX, MAX2, PAL, MIX, SIX, PIX saw an increase in week 32 as compared to week 31. We have always expressed our concern about not making the consumer suffer because of irrational demands from Hathway. In spite of repeated requests from the consumers they continue to act in a head strong way and deny them the MSM boutique. It is an eye opener for the industry and the broadcasters should make a note that the switch off does not impact ratings.”

Previous issues between Hathway and TV broadcasters

MSM is not the first broadcaster to have had issues with the MSO Hathway. Hathway in the past has had problems with broadcasters such as Star India and ZEEL’s Taj TV and had constant battles which had to be settled by the TDSAT. Some broadcasters had even last year accused Hathway of causing disruption to their channels. 

Last year during the month of August Taj Television, ZEEL’s distribution arm had similarly issued advertisements in dailies against Hathway asking subscribers to question the MSO as to why Zee and Turner channels have not been put on a-la-carte. It also asked subscribers to shift to an alternate DTH and cable service to enjoy uninterrupted viewing of their channels. The problem erupted after Taj Television switched off the signals to Hathway for a total of 42 channels under Zee and Turner after the end of the 21-day notice period which ended on July 31, 2014 after both had failed to reach an agreement regarding the carriage deal. Further to this, Hathway had also failed to pay the outstanding subscription fees at the rate of Rs.21.60 per subscriber from April to July as directed by the TDSAT. While TDSAT had given an interim order directing Taj Television to restore the signals to Hathway, it has also directed the MSO to make the outstanding payments due to the distributor. It had also allowed Hathway to put Taj Television on RIO from August 1, 2014.

Star India too had issues with Hathway regarding the subscription dues last year. TDSAT had at that time directed Hathway to pay Star India at the CPS (cost per subscriber) rate of Rs 23.00 for the period from April 2014 to September 2014. The tribunal had additionally directed Hathway to pay a CPS of Rs 4.0 per subscriber for the Star Sports channels. Therefore the total payment to Star would be at a CPS of Rs 27.0 per subscriber. Hathway will have to pay RIO rates to Star w.e.f. 1st October 14 as Star had given an affidavit to the tribunal that they shall be giving channels to all MSOs on RIO basis.

Star India had also accused Hathway of causing disruption to its channels. This had however been refuted by Hathway stating that it had just been following the TDSAT order of carrying the channels on a-la-carte basis.

Not long after this Star India had decided to shift to the RIO model and carry all its channels on a-la-carte basis with all MSOs. This was in its efforts to change the system from an analog system of payment to a system of payment expected in the digitized markets.

Though the stalemate between MSM and Hathway continues it remains to be seen what final outcome will be. It also remains to be seen whether more such payment issues between Hathway and the TV broadcasters continue.  

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