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Industry Overview (Sectoral)

The Indian Television Sector

The Indian television market consists of terrestrial broadcasting which is provided solely by the state-owned broadcaster, Doordarshan, and cable and satellite broadcasting, which is provided by Doordarshan as well as other Indian and foreign broadcasters. The Indian television market had more than 119 million television households at the end of fiscal 2004, making it the third largest television market in the world after the United States and China. Of these, about 50 million households were cable television households, which represent a penetration rate of approximately 42% of the total television households and approximately 25% of the total households in India. The percentage of households with televisions was approximately 60% in fiscal 2004. An estimated nine million television sets were sold in India in 2004. Of the 25 million households that bought television sets over the three fiscal years ended March 31, 2004, 19 million, or 77% were rural households. (Source: CII-KPMG Report)

Structure of the Indian Television Broadcasting Industry
The Indian television broadcasting industry can be divided into two categories:
Terrestrial broadcasting

This is broadcast through transmitters and received by households through antennas. Prasar Bharati (Broadcasting Corporation of India) is the only terrestrial broadcaster in India and is owned by the Government of India. It operates several channels under the umbrella brand "Doordarshan". As the terrestrial broadcaster, all television households can potentially access Doordarshan. In addition to its national channels in Hindi and English, Doordarshan broadcasts several regional language channels that are broadcast in particular regions of the country.

Cable and satellite broadcasting

This is broadcast by uplink of the channel to a satellite, which then provides the downlink signal to a wide region. Ground-based cable distributors through dish antennas, amplifiers and decoders receive the downlink signal. The distribution of cable and satellite channels to households is then carried out by cable, and has been characterized by complexity and ragmentation. There are a large number of operators in India, consisting of MSOs, as well as LCOs who provide the "last mile" connection. In most areas, there is only one provider of the last mile connection.

DTH

DTH is currently offered in India by DishTV, which is a part of the Zee TV Group and DD Direct Plus, which is a part of Doordarshan. Recent press reports indicate that there will be other entrants into the DTH business in the near future, including a joint venture between the TATA group and Star TV.

Revenue Streams
The revenues of cable and satellite broadcasters generally consist of the following sources:
_ Advertising; _ Subscription, including from international arrangements; and

_ Content syndication

Advertising

Broadcasters earn revenues from advertising by selling time spots that are interspersed in the channel's regular programmes, sponsorships (including title sponsorships) and banners/crawlers that are displayed on a part of the television screen while regular programmes are broadcast. The television advertising market has grown over the last several years, particularly as the share of advertising on television relative to all media has grown. Revenues from Indian television advertising were about Rs. 49.00 billion in fiscal year 2005, which represented 47% of the total revenues from advertising on all kinds of media in India in that year of approximately Rs. 139.0 billion. The following chart shows the share of television advertising as compared to other forms of media advertising in India in fiscal 2004.

Subscription
Broadcasters provide cable channels to cable operators either on a "free to air" basis or a pay basis. In the case of pay channels, the cable operators receive monthly fees from subscribers, which are shared with the broadcaster based on the number of subscribers declared by the cable operators. The Indian cable and satellite television market has also been characterized by relatively low subscription rates, or the
monthly fees paid by subscribers, compared to other countries. In addition, there has been alleged underreporting of subscriber numbers by some operators. Average subscription rates in India for cable and satellite channels were approximately Rs. 150 pr subscriber per month in 2004. (Source: CII KPMG) Subscription revenues have grown in recent years due to expansion of the number of cable and satellite homes, as well as the development of pay channels.

Broadcasters also earn revenue for the broadcast of their programming in other countries. This is done through various technologies, such as cable, DTH and terrestrial broadcast, through arrangements with broadcasters, cable operators and other industry participants. Typically, these are revenue-sharing arrangements based on the total number of subscribers.

Content Syndication

Broadcasters also sell content from their libraries to other users, including other broadcasters and content producers.


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