Two of India’s largest pay-TV operators, Essel Group’s Dish TV and MSO Siti Cable Networks are forming a joint-venture, Comnet, in order to better negotiate with broadcasters.
Comnet’s main role is to tap into the synergies available in jointly dealing with broadcasters and shift the balance of power more in favour of distributors, and to trim the cost of content.
One of the main challenges is India’s so-called Phase III digitalisation scheme, which on the upside will address tens of millions of homes, the downside is that they are mostly in small towns and have lower than average ARPU rates. India’s pay-TV operators have already asked broadcasters to come up with a lower fee-per-home for the Phase III dwellings in order for the pay-TV operators to achieve a margin.
Dish TV is targeting more than 1.5 million net new subs in its 2016 financial year, mostly as a result of digitisation, while Siti is also on an expansion route.
Signing yearly contracts with broadcasters in an environment where scales are always tilted in favour of popular content is a difficult process particularly when the consumer ARPU is under pressure, the two companies added.