Sacrificing 5 GRPs is fine, carriage fees to DTH isn’t: Anuj Gandhi & Gaurav Gandhi

28 Jan,2014

 

A few weeks after Diwali 2013, Dish TV burst what was decidedly a firecracker of sorts announcing carriage fees. The announcement was followed by a major spat with leading distribution platform IndiaCast that finally went to the TDSAT. The TV18 and Viacom18 venture which also has a partnership with Disney UTV drives all domestic and international channel distribution, placement services and content syndication for TV18, Viacom18, A+E Networks, TV18 and ETV channels as well as those of the Disney UTV stable. Following the reference to TDSAT, an agreement was hammered out on providing IndiaCast channels to Dish TV on Reference Interconnect Offer (RIO) terms and with no carriage fee charged. But while the dust may have settled, there is still much anger and angst at the IndiaCast headquarters. MxMIndia met CEO Anuj Gandhi and COO Gaurav Gandhi, both veterans of the business. Excerpts from an interview.

 

So is all well on the Dish TV front?

Anuj Gandhi: All well for sure. We don’t have a deal with Dish TV. They are carrying our channels a la carte, which are being offered on Reference Interconnect Offer (RIO) terms.

 

Are your channel’s business heads happy with it?

AG: We’ve now seen a few weeks of data post this development. There has been little or no impact of Dish TV on the ratings. We are very clear that we are not going to pay any carriage, come what may.  If there’s a marginal drop in the ratings because of Dish, we will live with it. We believe we can live without them. I sincerely doubt whether they can live without us, keep growing and compete with cable and other DTH players. So to answer your question: we are very happy and we can live without them.

 

But won’t there be an impact in the hinterland and key LC1 markets where Dish is strong?

Gaurav Gandhi (GG): At the overall level, while they claim the number to be 12 million, our estimate is that Dish has some 7 million homes. Now Zee was there in every single pack. We were almost there in every single pack sometime back, so we know the numbers right? At the overall level, you are talking about 130 million cable TV homes within the country and within DTH homes combined. If you not available in 2-3 million homes theoretically, first of all, it is a marginal impact. Secondly, Dish’s contributions towards the current TAM rating amounts to not more than two-and-a-half percent. And it is a tested number. We obviously have a sense that Dish has a very high skew of rural homes compared to urban homes. Realistically speaking, at the worst case, the impact can’t be more than 2%. And that is if everything is off and if the channels are off Dish. That’s not the case right now.  Also that is a universe number, each channel is viewed differently. So for example, the kind of customers who’re there on a platform like Tata Sky or on Seven Star, Hathway or Den in Mumbai; they would have consumed niche channels far more compared to somebody sitting in LC1 market. Therefore, niche channels anyway have a very low impact in terms of ratings from Dish. If you see data for two weeks, there’s no impact…

 

Is there a worry that right now its Dish, the other DTH operators could also do the same?

AG: I look at the other way round. If we had panicked, gone ahead and paid the carriage which is what the demand is, it would have opened a Pandora’s Box and we would have taken the industry back by a decade-and-a-half. Everybody would have paid and every platform would have asked. Unlike in an analogue environment where carriage is a necessity and there was a demand-supply gap, carriage had to be paid to be carried.

 

We looked at it not only from our perspective but also from the industry perspective that we cannot start something which is regressive and not good for the industry.

 

Have you had discussions with the IBF on this?

Not formally, but informally we have been in touch.

 

Is the IBF doing something about it?

We have gone and met TRAI and other regulatory ministry, told them this is what is happening. Obviously, they are watching what is happening.

 

But you do pay carriage fees to cable companies, right?

AG: Two years back, we started reducing carriage to cable too. Every one has started reducing it and it will see a further decline over the next two years. We couldn’t cut the chord immediately.

 

If you are not averse to cable, so why not pay Dish?

AG: Because I am not going to start something which has been happening historically on analogue cable. It was a mistake then. Digital platforms have to grow. They have to look at ARPU growth. They have to work with content to increase customer service, quality of service, value added services. They have to go in that direction rather than going in another.

 

GG: Are they selling capacity or boxes or content? The day DTH companies address this question, you will get the answer on whether carriage should be paid or not paid. If somebody is selling content, his or her job is to maximize ARPU and create more customers and make sure the content is monetized. The reality was that in the analogue world, you were short of bandwidth; you were paying for scarce capacity. The moment the billing comes to him, the money comes to him, he doesn’t need the carriage money and all the top MSOs are very clear about it. We meet them day in and day out. It is a phenomenon which will disappear. Should I start another monster who doesn’t need it, just because his business plan has gone awry? Just because you are not able to sort out your life, why should I pay carriage fee to you? Earn it.

 

AG: Like you said, it’s a question of precedents. If I pay one, I will have to pay everybody.

 

GG: Informally, we have got calls saying don’t do this else we’ve all had it.

 

So what led to it?

Well, our deal was up for renewal but they didn’t realize that our resilience will be so strong that we will go the other way round.

 

What next now? You said IBF is not doing anything about it?

GG: It is not an IBF issue.

 

AG: It is a deal between two parties -Platform and Content Provider.  Clearly, I’ll not pay carriage. Yet, I am willing to do a deal which is reasonable. We will come across as mature adults and discuss it. But I will not pay carriage.

 

And even though ratings haven’t been affected, at some point they could?

GG: They can’t at 2% weightage

 

Voice 1: Why does everyone keep threatening that channels can’t survive without platforms and ratings will fall?

 

GG: 2% is 5 GRP. We will live without 5 GRPs.  Let me see whether Dish lives without Colors. I challenge.

 

AG: It is simple. I will live without and I cannot budge under every threat as a content aggregator. Everyone will get on and say you do this or I will switch off. I will not buckle under and pay.

 

As a network, Dish has a very large presence in the Hindi-speaking market

GG: In the cable dark areas which are not measured.

 

The a la carte data will of course come to you

Yes, by February sometime, hopefully it is transparent and clear. We will see.

 

 

 

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