Content Distribution subscriptions
Some say that the pay-TV industry is
more or less immunised from the
current economic downturn.
Chris Forrester examines the facts.
Subscription battles
D
r Abe Peled, CEO at the marketing, and more concessions to with News Corp with its Premiere
now privately held NDS, customers. Sky has just reduced the [Germany] operation, which is going
speaking at the end of price of its Sky+ HD box to £49 ($75). to see a big push in the second-half
February, said he was It is a bargain, and a wonderful deal.” of this year. But the more marginal
enjoying his first flush of Peled continued: “The problem for [pay-TV] operations, perhaps bank or
freedom from the daily us comes with less-developed equity funded, they may have
pressures of the stock market. NDS is countries, where we might be sitting problems.We
now 51% owned by private equity on a nice contract but if they decide “From the NDS perspective the
supported
player Permira (and News Corp holds to alter their plans what do we then biggest impact on us is still currency,
SES
the remaining 49%). “But it won’t do with our contract? It means a not helped by the Pound falling 25%
last,” he joked. “I am enjoying the
Americom
further round of discussions and and the Euro weakening,” continued
freedom just at the moment, but
with its IP
possibly downward pressures. This is Peled. “I wish I could put a timeframe
maybe we have swapped one set of Prime the situation with some marginal on when it will start looking better,
challenges for another! It has been a operators where the business plan but I am hopeful. The downside will,
concept,
wonderful year, and pulling this deal was always going to be difficult. Look frankly, affect some of our
which we
off seems almost incredible now given at Russia or places like Romania competitors very badly. They are not
the current climate. I am not sure the
though was
today, badly affected by local operating with the reserves we have
deal could be done today.”
a solid
devaluations, and which affects and margins will be squeezed. There
NDS is well known as the supplier
proposition.
operators who are having to pay for will be consolidation, or even failures.
of conditional access products, as everything in dollars. They are We supported SES Americom withIts idea was
well as being the brains behind charging their subs in local currencies, their IP Prime concept, which we
to go via
DirecTV and BSkyB’s set-top box and this is difficult for them. It is thought was a solid proposition. Their
satellite to
functionality. By and large Peled held much the same as happened in Latin idea was to go via satellite to the
to the view that the pay-TV industry
the local
America in the late 1990s when again local exchange where these local
in Western Europe and the US was
exchange
currencies fell through the floor. But operators could package the bundle
largely immune from the economic where these the fundamentals, even in places like up. But nobody was biting. It seems
downturn. But there were risks. Russia, still show good local demand that people either have cable or DTH,
local
“People are saying that the pay-TV but the projects need funding. Most of or they cannot afford much else.”
operators
industry is more or less immunised these businesses are in their early Peled remains very optimistic
from the collapse, but in my view
could
start-up stages when they are on the about the prospects for targeted
nothing is immunised. People
package the
way to break-even, but they still need advertising, using the growing
involved in well-established pay-TV
bundle up.
cash. What do you do when credit number of deployed set-top boxes.
businesses will tell you they are and funding dries up? “We now have dates when twoBut nobody
having to work much harder for their “At the margins we are feeling that major pay-TV broadcasters will
was biting.
subscription income and to get the in developing markets hit by currency introduce targeted advertising. BSkyB
same results. The Sky or DirecTV
Dr Abe Peled.
changes it might be difficult,” said has confirmed their interest, as has
results are stellar compared with the Peled. “There are plenty of positive DirecTV, so we are working closely
general picture, but they say they’re signs, however. Look at people like with both. It is going to take time,
having to work harder to hold onto [mobile telco] Bharti in India, which and I’d guess that we will see some
those revenues. It means more is in a very strong position. Same progress being made around 2011.
8 l ibe l march/april 2009 l www.ibeweb.com
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