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Sun Direct to lose money despite 500,000 subscribers

Sun Direct to lose money despite 500,000 subscribers
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First Published: Sun, Jun 29 2008. 11 39 PM IST
Updated: Sun, Jun 29 2008. 11 39 PM IST
New Delhi: The television programme service provider promoted by the Sun TV founder Kalanidhi Maran, Sun Direct TV Pvt. Ltd is expected to lose Rs200 crore every year for the first two years of operations despite having some 500,000 subscribers in its first six months of operations, due to low monthly fees.
At Rs75 per month along with a free dish and set-top-box, the venture will lose money, says a research report by Citi Investment Research on Astro All Asia Networks Plc., the Malaysia joint venture partner that is listed on Bursa Malaysia, that country’s stock exchange.
Astro, in its filing with Bursa Malaysia, said Sun Direct TV had more than 500,000 subscribers as of April—the latest set of numbers available. The Sun TV group did not respond to the email sent to them seeking to check the figures.
Saying that the total subscribers mark is above management expectations, analysts Alyson Shin and Jason Brueschke wrote, “However, the strong growth came at the expense of Arpu (average revenue per unit), which was only Rs75 due to aggressive introductory packages.”
Sun TV, which has interests in direct-to home, or DTH, channels, cable and TV channels, is led by Maran, who is in a spat with a cable network backed by his cousin M.K. Azhagiri, son of Tamil Nadu chief minister M. Karunanidhi.
In their battle for eyeballs of viewers, Sun is competing by lowering the rates for DTH because the bulk of the TV viewers in Tamil Nadu use cable, which is cheaper and has a wider offering than DTH. Both firms want to control viewership in the state.
Relations between the two cousins soured last year, after a Tamil newspaper controlled by Maran printed a survey trying to pin down the likely successor to Karunanidhi and, by implication, thus asking readers to choose between Karunanidhi’s two sons.
Meanwhile, the state government, opening a third front against the Marans, has floated a state-owned cable distribution company, Arasu Cable TV Corp., to provide satellite television channels to households in the state. Arasu Cable is likely to launch its operations in most parts of the state by the middle of next month.
The fight between the cousins is only benefiting DTH service providers, as cable TV viewers controlled by Azhagiri-backed networks are not able to receive Sun TV channels, which have dominant marketshare in satellite viewership in the state, said an official of Tamil Nadu cable TV owners and consumer welfare association, while refusing to be named.
The DTH market in India is witnessing increasing competition among existing players, such as Dish TV India Ltd, belonging to the Zee group, and Tata Sky, a joint venture between the Tata group and Star Network. Dish TV, which leads the numbers game with some 3 million subscribers, has reported a net loss of Rs115 crore on a total income of Rs136 crore for the quarter ended March. For the year ended March, Dish TV reported a net loss of Rs414 crore.
Despite the projected loss in the initial years of operations, DTH operators are hoping they would turn profitable once they gain a substantial number of subscribers. DTH subscription is projected to grow at a compounded growth rate of 48% between 2008 and 2012, according to the India Entertainment and Media Industry Report 2008 by industry lobby group Ficci and PricewaterhouseCoopers, an accounting and consulting firm.
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First Published: Sun, Jun 29 2008. 11 39 PM IST