Dish tv India Limited Case Study

An idea turned into a reality in quest of
reaching the top and revolutionizing the
media industry of India

DISH TV INDIA
LIMITED
Asia’s Largest DTH Company

A case by
Chaahat Khattar
University of Delhi

“The obvious thing from a business point of view was to take entertainment to people if
people were not going to come to your entertainment”

‐ Subhash Chandra

"Formal education gives you confidence. But somehow it also stops you from learning.
When you are not educated you are always in learning mode"

‐ Jawahar Goel

Dish TV was founded with a very simple idea‐ revolutionizing the way people watch
television. The fundamental created an entirely new market place. It was aimed at a never
before approached target audience of over 134 million households which has television sets
out of which 103 million has access to either cable or satellite television. In quantifiable
terms, India’s cable industry is worth over 10 billion dollars (Exhibit 1).

Dish TV with time not only increased its penetration all across India but also started a
journey for itself and soon the company became from India’s first and largest Direct to
Home player to Asia’s largest DTH player and according to some reports the company would
soon become world’s largest DTH player.

Dish TV India Limited is an Indian company engaged in the business of providing direct‐to‐
home (DTH) satellite television service, which includes teleport service, customer support
and transponder space leasing. Dishtv is a division of Zee Network Enterprise (Essel Group
Venture). Dish TV was a brainchild of Mr. Subhash Chandra (Chairman of Essel Group) who is
always highly regarded for bringing a revolution in media and entertainment industry.
Whether it have been about launching India’s first private channel or starting Indian Cricket
League, Mr. Chandra have never feared to take any risk and his risk bearing capabilities has
helped him remain a billionaire for over a decade now.

Dish TV was launched in the year 2004 with a very high investment from its parent company
Zee Entertainment Limited. Currently Dish TV has presence not only in India but also in
several other nations with a total subscriber base of over 11 million and largest share in the
Indian DTH industry which has over seven different players (Exhibit 2). Today Dish TV’s
market capital is slightly lower than its parent company Zee and is slowly narrowing the gap
between the two to become the most successful Essel Group entity.

User published content is licensed under a Creative Commons License. Copyright © 2011 Chaahat Khattar, All rights reserved.

For past several years the Dish TV has never witnessed a positive growth but it is still
growing and expanding its portfolio every other week. The growth story of Dish TV is
revolutionary in itself. It’s a story of an idea imitated by India’s top business houses. The
case here tries to bring about the attractiveness of the DTH industry and how Dish TV
created a niche for itself in this highly lucrative industry.

Dish TV offers 250 video channels and 21 audio channels through a network of 1,400
distributors and 51,000 dealers on its DTH platform.


Company Background
From the beginning of 21st Century, Essel Group was aiming to bring Conditional Access
System (CAS) to India but due to political as well as competitive reasons, the group
continuously failed to persuade other media houses and government agencies to launch this
service on time. CAS was a way through which a subscriber would get cable television via a
set‐top‐box installed at his place and connected to a Local Cable Operator (LCO).
Competitors feared that this would make Essel Group a monopolistic player in the cable
industry. By the time, Subhash Chandra decided to move on to an all new platform known
as Direct to Home. Americans and Europeans were very familiar with this term and DTH had
strong penetration in both these continents. Subhash Chandra believed that taking media
house directly to the viewer, by passing the LCO, would not only be beneficial for the media
firms but would also enable the viewers to view television in best possible clarity.

In 2003, Mr Jawahar Goel (was earlier managing Asia’s largest Multi System Operator‐
Siticable), one of the four brothers of Subhash Chandra was given the responsibility to turn
Subhash’s idea into a reality. Soon in 2004 on October 2nd, Dish TV was officially unveiled to
public with handful channels that too of just Zee Network and Free to Air on offer. Dish TV’s
business was initially started in the 4 metros of the country. Then Dish TV was considered to
be an alien product. All people could understand was that it came with some not so familiar
box and a dish like thing which is set up on the roof of the building.

Very soon the company started expanding its portfolio by adding more channels,
collaborating with other media houses, launching active services and expanding its reach
from metros to rural areas of the country.

Dish TV was also a part of Subhash’s plan in 2006 to demerge the Zee Telefilms group into 4
different companies in order to ensure sustainable growth of each company. Dish TV was
listed on stock exchange in the year 2007 and was poised to be an overvalued stock. With
Dish TV’s listing on the Bombay Stock Exchange (BSE) it became and still has been the only
DTH firm to be listed on any stock exchange in India. Listing on stock exchange also meant
more responsibilities for the firm as it would mean giving a direct report to the public who
has invested having strong faith in the company.


The Business Opportunity
India is World’s third largest television viewer industry. It is not hard to believe that a
limited number of these viewers would be getting superior clarity of all the hundreds of
channels being offered in India.

The simple fundamental of Dish TV which was to bring the best possible television viewing
experience to the public have been the major driver for the company. After failed talks to
launch CAS in India with the government, Zee Telefilms successfully bagged rights and
permissions to launch a direct to home service in the country. As this was much new to the
market, the competitors did not fear much more from the services being offered by Dish TV.
Other media houses believed that Dish TV would be so expensive that a middle class will not
be able to afford it which did hold true initially. At the same time the misunderstood the
fact the India is home largest number of billionaires and millionaires after US. Ironically Dish
TV saw its growth coming more from rural areas within months of its launch. There was a
very peculiar reason behind this. In rural areas around 4‐5 households pool a part of their
income in order to experience television. Due to poor and highly priced service being
provided by their LCOs, people started opting for Dish TV which by default assured of great
quality viewing experience as well as much improved customer service.

Soon in 2006 another media conglomerate launched its DTH operations in India joining
hands with one of India’s most reputed companies. The birth of Tata Sky according many
analysts during that time marked end of Dish TV not only because Tata Sky was heavily
pushed by abundant capital but also because of the latest technologies being introduced by
Tata and Rupert Murdoch backed Sky Broadcasting. Jawahar Goel in an interview said a
sentence which should have entered into management books. He said that I assure the
industry that competition would only help me grow and nothing else. See today and Dish TV
have become a favourite of many investors and is highly respected both in India as well as in
global markets.

From lobbying to taking a risk of millions of dollars is a really risky situation in order to get a
first mover advantage. It was due to the management as well as the holding power of Dish
TV that helped the firm in capitalizing over its first mover advantage and taking it further for
years to come.


Dish TV’s Business Model and Operations
In the television value chain there are four different participants‐ Content Creators (UTV,
Balaji etc.), Broadcasters (Star Plus, Zee TV, Colors etc.), Distributors (Digicable, Hathway,
Dish TV, Big TV etc.) and End Users (Consumers). What Dish TV establishes is the direct link
between broadcasters and end users unlike traditional cable operators who used to
downlink services received from broadcasters and further distribute those services to end
consumers. Due to large number of number of users spread all across India’s expansive
geographical boundaries there was non uniformity in distribution system. No cable operator
could assure of unadulterated pure clarity of over 200 channels. Dish TV whereas works on
an altogether different platform. Dish TV provides a Satellite TV installation screen that puts
the subscriber in control of the installation process. A Dish TV subscriber can change
satellite transponders, and detect the strength of their satellite signal with a satellite signal
meter. Moreover, the satellite signal meter is accompanied by a special audio sound that
lets the subscriber know when they have aligned their Satellite TV dish properly‐leaving no
question that the installation has been performed correctly. Finally, the satellite signal
meter allows subscribers to easily determine if there is a problem with their satellite signal
and to maintain the signal by removing any obstructions and retesting the signal.

Dish TV downlinks the services from broadcasters to its headend (A cable television
headend is a master facility for receiving television signals for processing and distribution
over a cable television system) and uplinks to its satellite and from that satellite, the
consumer directly gets the services with the help of dish usually fit on the roof of the house
which is connected to a set‐top‐box which is further connected to the television set
(Exhibit 3). Hence there is no division of services on offer and the services get delivered
digitally to the customer. Dish TV uses NSS‐6 to broadcast its programmes. NSS‐6 was
launched on 17 December 2002 by European‐based satellite provider, NewSkies. Dish TV
hopped on to NSS‐6 from an INSAT satellite in July 2004. The change in the satellite was to
increase the channel offering as NSS 6 offered more transponder capacity. Recently Dish
TV’s tie up with Asia Satellite Telecommunications Co. Ltd enabled it to offer much better
and more services to its customers.

There are several advantages over which Dish TV pitches upon to give it edge over other
modes of distribution channels. Apart from providing superior clarity viewing experience
coupled with theatre like sound, Dish TV also offers multiple add on services. Add on
services include games and award winning service like Matrimony, Banking, Interactive
News etc. Every single satellite TV program broadcast through Dish TV services is
accompanied with a complete description of the program. With a click of the Dish TV
remote, subscribers are provided with a brief description of the current program, the time
the programs starts and ends and the date the program is being aired.


Revenue Generators and Handling Competition
On balance sheets Dish TV never looked like a very successful idea but there are numerous
reasons justifying Dish TV’s growth which invited competitors in no time. After the launch of
Dish TV, it was offered at a premium price at levels of 6,000‐7,000 INR per connection which
should actually be the realistic price of a DTH connection. But the competition has brought
down the price to 1,000‐2,000 INR for each connection. Hence the pressure lies majorly on
the content as well as the marketing team of the DTH companies. Now the connection is
being provided at highly subsidized levels. Then what generates revenue for Dish TV? Dish
TV earns majorly from subscriptions and carriage fees. The more people would recharge
with Dish TV, the more will be the earnings. Hence marketing team has to make sure that
perfect and best possible packages along with differentiable services are being offered to
consumers. Also the project team has to make sure that more deals are stroked with various
channels so that carriage fee can be generated.

Dish TV faced its first real competitor in the year 2006 in the shape of Tata Sky. Knowingly or
unknowingly Tata Sky brought business for Dish TV. In 2 years of its establishment, Dish TV
successfully developed economies of scale which was not the case with Tata Sky. Tata Sky
believed that with establishes brand name it would be able to attract consumers. This
theory did hold true initially but not for a very long term. Although Tata Sky made Dish TV to
share its DTH pie but at the same time Tata Sky merged as an indirect marketing tool for
Dish TV. People got much aware of this DTH technology. As Tata Sky also required channels
of Zee, it was forced to share channels under Star banner with Dish TV which brought Dish
TV on par with Tata Sky. Both companies provided same services but Dish TV because of its
first mover advantage understood industry in a much better way and could offer much
better services to the consumers. Hence Dish TV’s growth was largely fuelled by increase
competition.

The growth prospect in DTH is likely to be one of the key drivers for Dish TV, which has a
dominant market share in the segment. Cable and satellite subscription market size is seen
growing at a compounded annual growth rate (CAGR) of 17% to 41,600 crore INR by 2015, a
FICCI report said. User base in the DTH segment, one of the fastest growing in the cable
industry in the past five years, is expected to more than double to 7.1 crore by 2015. The
company is also seen benefiting from recommendations of the

Telecom Regulatory Authority of India (Trai) to digitise all cities having a population of over
1 million by 2013. Its user base is estimated to increase to 1.5 crore over the next 2 years
from the 95 lakh now.The company would also benefit from migration of subscribers to
high‐value packages. Among the six DTH operators, Dish TV has been consistently
innovating product offerings. Apart from products such as pay‐per‐view movies,
matrimonial service Shaadi Active and job‐search service Monster Active, the company has
launched 30 channels in the high‐definition format against a mere six channels offered by its
peers. Currently, average revenue per user (ARPU) for high‐definition services is over Rs 400


while for the regular DTH services, it is Rs 142. More and more users are seen opting for
high‐definition services in the near future, thus boosting the Average Revenue Per User
(ARPU). The company is also seen gaining from its shift in business model from per
subscriber to fixed‐fee model, which has led to a decline in content cost the amount that is
paid from subscription revenue. Content cost as a percentage of subscription revenue has
fallen to 39% currently from 55% (Exhibit 4).

Dish TV reported net sales of Rs 372 crore in October‐December 2010 compared with Rs 277
crore a year ago. The company has been making losses over the past 16 quarters. Being the
only listed player in the industry, its valuations are not comparable. Through sources and
from many reports being releases by various analysts, Dish TV is the strongest player in DTH
industry and is expected to touch green levels very soon.


The Road Ahead
Dish TV was never aimed at breaking even in near term. The gestation period was expected
to be minimum 10 years. In 2010 only the company for the very first time declared
operating profits. Dish TV has successfully managed to raise funds from the likes of Kishore
Biyani (Managing Director of Pantaloon Retail) to issuance of Global Depository Receipts to
India focussed largest private equity firm Apollo Global Management (AGM) India Advisors
Private Limited.

As said by Mr. Mintoo Bhandari (Head for Indian subsidiary of AGM):

“There were both macro and situation specific reasons why we found DishTV interesting. On
the macro thesis:  We believe India is perhaps the most attractive media market in the
world today. India is a producer of significant unique content and there is voracious
consumption of media content here. There are on the order of 500 million TV viewers and in
excess of 100 million cable and satellite homes and these numbers are growing. Even with a
large number of viewers, there is an abundance of channels and programming (some might
say there is an excess); we felt that distribution would be the right focus for us in the media
value‐chain in India. And, in distribution, we felt that DTH would be a better solution for
reaching the vast spread of households across India in a cost effective fashion and that DTH
had a more “investor friendly” industry structure than cable represents in India today.”

The DTH industry is poised to be one of the most lucrative industries with much more than
double digit growth every year. The industry relies on the fact that better the service the
firm would offer, the more customers it will get. The switching cost for buyers is very
minimalistic and any day the customer can choose to shift from one distributor to another.
In the business where majority of earnings are from existing customers the firm cannot bear
to have large number of deactivations. Dish TV’s market leadership is an important growth
driver. It tends to make Dish TV a leader in the price leadership model in micro economic
scenario which works in favour of Dish TV when it comes down to pricing.

DTH industry is also burdened by heavy taxes being levied over it and due to high degree of
competition; any single player cannot transfer the burden of taxes directly upon the
customers.

Dish TV have been a pioneer in adopting some really innovative steps to increase market
share, whether it has been the launch of High Definition services to providing services
15,000 feet above sea level in collaboration with Kingfisher Airlines. Such strategies are
extremely important and innovations must go on keeping in mind that every move of the
company is imitated in matter of day. Along with innovations, customer service is of utmost
importance. Dish TV out of all 7 DTH players in India, have the most active social networking
approach but at the same time its on call helpline is not much regarded which the company
is trying to address.


This can be very easily concluded with what Mr RC Venkateish (CEO of Dish TV India Limited)
said regarding the road map of Dish TV for the future:

“I have two objectives – one is acquisitions, that is, getting new people on my platform,
which is where I get my growth and try to get my large share and maintain leadership
position by distribution. So, that is the clear acquisition strategy driven by distribution
expansion, by product innovation, by technology innovation and price range promotion and
marketing like any classic FMCG marketing exercise, which takes a major chunk of the
organisation’s energies and investment. The other constituent that I have is to look at my
existing subscribers that are on board and that number is large. So, how do I service these
people properly, which covers the whole gamut of customer services, touch points that
keep these guys happy. They are already a huge base, how do I actually monetise that base
through revenue streams, which we have not yet tapped like advertising, which I see has a
huge potential.”


Bibliography

‐ http://www.dishtv.in/investors.aspx
‐ http://www.rediff.com/business/report/dish‐tvs‐goel‐defends‐entry‐barriers‐for‐new‐
players/20110809.htm
‐ http://virsanghvi.com/interview‐detail.aspx?ID=9
‐ http://www.exchange4media.com/e4m/news/fullstory.asp?section_id=6&news_id=40278&
tag=32772
‐ http://www.esselgroup.com/
‐ http://en.wikipedia.org/wiki/Dish_TV
‐ http://en.wikipedia.org/wiki/Television_in_India
‐ http://www.businessworld.in/businessworld/businessworld/content/New‐Pastures‐
Patriarch.html?hopping=2


Dish tv India Limited Case Study

More Related Content

What's hot

Viewers also liked

Similar to Dish tv India Limited Case Study

Recently uploaded

Dish tv India Limited Case Study