Malaysia's dominant pay-TV platform, Astro, has reached an agreement with the south-based Sun TV for a $150 million (Rs 675 crore) equity investment in the latter’s new DTH venture - Sun Direct TV.
Astro’s investment represents around 20 per cent of Sun Direct’s equity base, the maximum permissible for foreign investors in DTH. Clearances are believed to be awaited from FIPB and the Union ministry of Information and Broadcasting.
Sun Direct TV’s launch has been delayed by over a year following the crash of ISRO’s Agni-III rocket carrying the Insat-4C satellite. Sun had booked 7 of the 12 Ku band transponders on the Insat satellite for its DTH and news gathering services.
The Sun deal follows two other equity investments in the DTH space. Singapore investment group, Temasek Holdings, has picked up a 10 per cent stake in TataSky for Rs 250 crore/ $55 million. The sell-off has been from the Tata equity bringing it down from 80 per cent to 70 per cent. STAR’s 20 per cent holding remains intact.
At the same time, Essel Group’s Dish TV is believed to have sold off a sizeable stake to Warburg Pincus for an undisclosed amount. Significantly, all three DTH players have gone for an equity dilution to raise funds early in their business. In the case of Sun Direct TV, the service has not even launched. This highlights the high cost of operations and the long period of gestation these companies will have to face in the highly competitive television market.
TataSky launched in August last with an initial investment of close to $600 mn / Rs 2,700 crore. High marketing and operational costs will require additional infusion of funds, and the Tatas are likely to sell off more equity to raise capital.
Similarly, Dish TV has had to make huge investments and the Zee balance sheet indicates the company has been sustaining a loss of over Rs 70 crore a year over the last 2-3 years to meet these high operational costs. With a subscriber base of close to 1.5 million now, Dish TV can now monetize its efforts.