MEDIA Speed bump: Edelweiss

Finally, acknowledging that on-ground progress of digitization has been
slow and the Phase 1 deadline cannot be met, GoI has extended June 30
deadline by another four months. Requests of a six-month extension by
various stakeholders, including state governments, smaller MSOs and
LCOs, have compelled it to extend the deadline. This is in line with our
expectations (we had projected 3-6 months delay in our report, ‘Padding
up for the digital revolution’, dated June 14, 2012). We do not expect this
development to materially impact the overall scheme of things and
consider it a minor hiccup. In fact, a silver lining we see is that, the govt
will monitor the progress closely and will take strict action for any delay.
In the near term, however, companies like Hathway who are well
prepared will have to bear additional financing costs of boxes for the
incremental period.

��


MIB to strictly implement Oct 31 deadline
Govt has extended the June 30 deadline for Phase 1 of digitization by four months.
According to the Ministry of Information & Broadcasting (MIB), assessment of the onground
situation has compelled it to defer the deadline. Also, TRAI regulations will now
come into effect from November 1, 2012. MIB has indicated that it will set strict
benchmarks to ensure that the modified target date is achieved. All stakeholders have
been asked to provide a written commitment that will be closely monitored by the MIB.
According to the MIB, this extension should not be considered a continuous process.
Only ~24% boxes seeded till May end
Hathway leads MSOs in terms of preparedness for Phase 1. Its digital penetration
stands at 29% in Delhi, 58% in Mumbai and 28% in Kolkata. DEN’s total digital
penetration stands at 21.5% of its universe with 26% in Delhi, 22% in Mumbai and 7.5%
in Kolkata. WWIL has achieved total digital penetration of 17% with 11.7% in Delhi,
9.6% in Mumbai and 23% in Kolkata. IMCL has achieved total digital penetration of 26%,
with 10% in Delhi and 37% in Mumbai. In Chennai and Kolkata, in particular, seeding of
boxes has been delayed with penetration of just ~21% and ~12.5%, respectively.
Deadline extension: Temporary setback
Delay in digitization has also been attributed to the tariff order issued by TRAI which
came on April 30, 2012, just two months before June 30 deadline. Since most MSOs,
except the likes of Hathway, were ill-prepared for digitization, they had been
demanding extension of deadline. Broadcasters, sensing that a delay may further defer
uptick in their subscription revenues, had been opposing the extension. We remain
positive on digitization over the long term and feel that it has positive ramifications in
terms of subscription revenues for listed broadcasters like ZEE and Sun TV, and TV
distributors like Hathway and Dish TV.