MRP Presentation - Distribution 16 th July 2013 Industry Overview - PowerPoint PPT Presentation

MRP Presentation - Distribution 16 th July 2013

Industry Overview

Industry Overview - Digitization – STB Penetration » DAS I – 95% • Chennai still analog » DAS II – 80% • Coimbatore, AP still analog – Concerns » MSO back-end / infrastructure still not ready » No packaging / addressability for consumers. » 40% CAFs still not received from susbcribers. » Hence, no subscriber reports to broadcasters. » MSO’s business model with LCOs continue to be same. » No increase in ARPUs on ground. » Unavailability of institutional finance to MSOs. » MSO Alliance – Big cartel

Digitization Update - Broadcasters DAS II – Industry Average Subscription fee – increase of 10% - 15%. • Carriage fee – reduction of 10% - 15%. • Low ARPU’s and poor back - end infrastructure of MSO’s has resulted in fixed fee • deals rather than CPS for all broadcasters  MSO alliance acting tough & negotiations taking far longer time compared to previous renewals.  Digicable completely lost the market share due to lack of funds, big loss to all b’casters .  Huge benefit for small / niche channels – PIX, AXN, MIX, ANIMAX in terms of all across availability.  Cash crunch – collection outstanding pilling up.  I&B / TRAI planning to target aggregators with strict regulations.

Industry Overview - DTH Digitisation - Huge opportunity assumed but no real gain actually. • DTH not competitive enough against MSO offerings • Huge hardware cost differential with MSOs ( ฀ 1,500 Vs ฀ 500) • DTH content offering costlier against that of MSOs. • 15%-20% Churn • Bandwidth continues to be a constraint for platforms. New channel • launch almost impossible. Reliance Big TV- De-growing platform, likely sell out to SUN Direct. • T Sky to incur ฀ 1000 Cr to swap MPEG4 hardware. •

MSMD Update

MSMD Update DAS II • • 15% - 20% growth in subscription revenue • 15% - 20% reduction in placement fee. • Deals concluded with preferred LCNs for most of our channels. • Analog 10% growth on Non DAS base. • • Dedicated work force on ground for LC1 markets. • 70% of renewals completed. • TIMES Channels • Strong resistance from MSO alliance

MSMD Budget - FY 14 Achieving this year’s budget - A big challenge. • • Most of the assumptions not coming through - Smooth roll out of DAS – • • 30% increase in subscription ? • 30% reduction in carriage ? IPL exclusive on SIX • • Survival of Digicable & Reliance DTH ? Tough call / deactivations for DAS I renewals – A must for desired revenue • objectives • Managing growth and payouts from State owned networks in Punjab and Tamil Nadu – Big challenge • Manage the carriage/placement of channels within limited budgets – Big challenge

MRP FY 14-18

Year-wise Subscription 900 (INR Crores) 847 REVENUE TREND - MSM 800 684 700 600 533 500 447 REVENUE 400 340 300 255 210 208 200 191 200 163 100 23% -5% 9% 1% 21% 33% 31% 20% 28% 24% Including all channels of MSM (incl SPENI) 0 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13

1800 1661 PROJECTED REVENUE TREND – MSM Upto FY 18 1600 1401 1400 1189 1200 1033 1000 940 847 RVENUE 800 684 600 533 447 400 340 255 210 200 0 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18

Assumptions • Market / Ground will stabilise in the next 15-20 months. • Complete digitization with addressability by FY 16. • Carriage fee to come down in phased manner. • ARPUs to grow for Cable as well as DTH. • MSM channels to be in top 3 in respective genres. • IPL exclusively on SIX.

Strategy • Move from fixed fee deals to CPS deals for some MSOs • Aggressive stands – May have to compromise on the placements of channels • Strengthening of SIX content – New acquisitions ICC, WWE etc. • We will have to start evaluating stakes on ground – MSO / DTH. Both STAR & ZEE have huge advantage. • Aggressive marketing. • Keep the TEAM motivated .