1. Pay Channel Market: Realities & Reforms TDSAT Presentation May 2010

2. Prevailing Broadcaster Practices in Cable Distribution How to Reform the System

3. The MSO Operating Environment Today In their Territories, Universe is Getting Squeezed – Subscribers on the Ground Migrating Away Broadcasters Extracting Higher Rates Through Unfair Bundling of Channels in Bouquets MSOs Operating in a Challenging Environment MSO Profitability Being Hit on Revenue and Cost Sides Simultaneously

4. Territories & Subscribers – Reality Check Overall subscribers in the territory remain unchanged Hence, cable has lesser subscribers Total subscribers in a given territory is a fixed number Cable subscribers routinely shifting from cable to DTH MSOs Losing Subscribers on the Ground in their Territories Money Demanded From Cable Going Up Disproportionately In-built annual 7% increase in rates charged by broadcasters With lesser subscribers, cable collects lower amounts from the ground Broadcasters disregard cable’s loss of subscribers Net increase for cable is 25% - 30% for content

5. Broadcasters – Irrational Behaviour Where the same universe is being served by 5 or more new players, it automatically implies that the MSO is losing subscribers to these platforms Broadcasters are making significantly more money from these new platforms However, broadcasters disregard this fact and continue to demand payment increases based on a universe figure that is much higher than what the MSO actually serves The TRAI mandated 7% year-on-year subscription rate growth for pay channels is habitually flouted by broadcasters Broadcasters resort to tricks and dubious logic to circumvent the law and extract rate hikes far higher than the prescribed 7% Circumventing TRAI Guidelines Disregarding the Meaning of Universe

6. Channels – Supply & Capacity Mismatch Most cable homes in India are analog homes Analog systems can carry a maximum of 100 channels Households can be charged a rate commensurate for these 100 channels Analog Cable & Its Channel Carrying Capacity The Supply of Channels from Broadcasters Over 450 channels in the market A majority are pay channels Analog cable cannot carry all these channels The Ground Realities of the Cable Distribution Industry – Known Well to All Stakeholders Including Broadcasters

7. Broadcasters create bouquets with one channel that is a major draw (e.g. Hindi GECs) Along with the 1 popular channel, several other channels of limited appeal are included in the bouquet Such a bouquet, with a high sticker price, is then forced on to MSOs There is frequent annual shuffling of channels within bouquets with no corresponding re-pricing Understanding Bouquets Channel Bouquets: Unfair Bundling Demand for viewers is highest for only 10-15 channels However, these channels are all parts of separate bouquets, forcing the MSO to pay for hundreds of channels nobody wants to watch Subscribers want hassle free, uninterrupted viewing experience at low costs They should not be expected to understand these complexities The Subscriber’s Perspective Bouquets: A Tool Used by Broadcasters for Arm Twisting MSOs into Paying Artificially High Rates for Pay Channels

8. Prevailing Broadcaster Practices in Cable Distribution How to Reform the System

9. Key Areas in Need of Reforms A fixed definition of the universe of a territory Define Territories Replace the unfair bouquet system with a la carte options Flexible Pricing Ensure Fairness in all Parts of the Broadcasting & Cable Distribution Chain

10. Defining Subscribers within a Territory The universe of subscribers within a territory should be a defined figure, irrespective of the number of operators (both cable & DTH) When DTH or other operators enter a territory and take away one MSO’s subscribers, the subscriber count for that MSO should be reduced proportionately Broadcasters should be transparent and agree on the no. of subscribers for any given territory and the rates being charged for these areas There should be a strong check on the broadcasters’ revenue growth Any growth beyond 7% should be refunded to MSO/ DTH players. If this check are not put in place urgently then MSOs will continue to bleed and the consumer will be the ultimate loser Create a System That is Fair for All Concerned Parties

11. Allow Flexible Pricing of Channels Disallow the Practice of Bundling Channels into Bouquets Allow a-la-carte selection of channels by MSOs Make pricing transparent for all platforms (cable & DTH) and for all markets Pricing of popular channels should be reasonable: The highest channel price should not exceed 2 times the lowest channel price Flexibility & Transparency will Ultimately Empower the Consumer with Choice & by Keeping Prices Reasonable

12. Thank You