The report claims that a study of the bouquets of various networks
revealed three features:
o The other channels in the Zee bouquet provide a much more sustainable
set of drivers for the bouquet compared to the Star and Sony packages,
which are one channel or event driven.
o Cable operators and MSOs believe that Zee ratings have bottomed
out and they are seeing improvement in the visibility of the channel
after the movie strategy.
o The demand for the Zee bouquet is in no way lower than the others
and, as such, the implementation of CAS would not be detrimental
to the bouquet.
Zee-Turner bouquet's strength is its breadth
The fact that Star Plus is the most popular channel is clear.
Additionally, SET MAX with the cricketing rights is likely to draw
large viewership during World Cup in February and March 2003 and
the flagship Sony channel has usurped the No. 2 position from Zee
However, the report claims that the Zee-Turner bouquet provides
the strongest value for the customer. Despite the current drop in
popularity of the flagship channel Zee TV, the analysts believe
that the drivers for the Zee-Turner bouquet are much more sustainable
than the Star bouquet or One Alliance (Sony).
The report reasons that broadcasters have gained through increasing
pay revenues in the last 3-4 years. As the revenues come without
much attendant costs, the "pay revenues" have helped profitability
of channels significantly.
A case referred to in the report was Zee. The report estimates
that the company would have close to Rs1.6 billion from the domestic
pay market in FY03. These revenues would be the key driver of profits
in years that advertising revenues of the network are weak. The
report also adds that for Star TV, pay revenues form about one third
of total revenues.
And people on the ground corroborate findings
The report claims that it has checked its hypothesis with several
cable operators. Nearly all of them felt that, ratings notwithstanding,
the popularity of the Zee bouquet is certainly comparable to the
Star and Sony bouquets. The operators opine that Zee TV has bottomed
out and that they have definitely noticed an increase in Zee TV's
visibility. Additionally, these operators feel that there is a demand
for other channels in the bouquet like Zee Cinema, Zee News, Alpha.
Assessing the strength of each bouquet
Over the last two years, Star Plus has firmly established itself
as the numero uno Hindi general entertainment channel. The ratings
of programs on the channel are far better than its nearest competitors.
However, the other channels in the Star bouquet are not among the
audience favorites in their respective segments. Thus, its flagship
channel is the only driver in the Star bouquet. However, the channels
are not available a la carte, thus ensuring a good reach of all
The Sony bouquet was the last one of the three mainline channels
to go pay. In the last few months the flagship Sony channel has
overtaken Zee TV as the No. 2 Hindi entertainment channel. Set MAX
which initially started as a Hindi movie channel has now diversified
into cricket and has the telecast rights of the World Cup cricket
in India. The bouquet has recently signed in HBO to be a part of
the bouquet from January 2003.
Zee TV was the undisputed leader of general entertainment in the
end 90s. However, over the last two years the flagship channel of
the Zee-Turner bouquet has seen a steady decline in its popularity.
Though Zee TV has taken several initiatives to retrieve the top
position, it hasn't so far been able to.
The silver lining for the Zee bouquet has been the performance
of the other channels in the bouquet. The Alpha channels have been
regional favorites. The addition of the Turner channels and ETC
(the music segment leader) has added more stability to the bouquet.
Apart from these three main bouquets, there is the sports bouquet
of ESPN-Star Sports, the regional Sun Network bouquet and the MEN
bouquet. ESPN Star Sports has the highest connectivity among the
bouquets. Sun TV draws mostly a regional audience. The MEN network
has lacked a consistent following from the audience and is still
some way from being a mainline bouquet.
The Morgan report adds that all the companies could be investment
opportunities as shown in chart 9.
MSOs biggest gainers - JP
Morgan CAS report
Domestic pay revenues likely
to drive broadcaster profits - JP Morgan CAS report
Encryption at MSOs/ICOs
likely - JP Morgan CAS report
Mixed impact on industry
constituents - JP Morgan CAS report