Wednesday, December 30, 2009

Airtel DTH to replace WorldSpace with AIR channels

Airtel DTH is all set to replace WorldSpace services from its platform with
10 radio channels of All India Radio

Indian subscribers to WorldSpace radio services are praying for a miracle so

that it can continue to broadcast signals beyond 31st December. However,
there is a thin line of hope for the continuation of WorldSpace operations
in India.
Airtel direct to home (DTH) that offers WorldSpace radio services to
subscribers in India said that from 1st January, it will replace WorldSpace
with 10 radio channels of All India Radio (AIR).
According to sources, Airtel DTH will start sending messages to subscribers
from Thursday. Interestingly, just last month, Airtel DTH's chief marketing
officer, Sugato Banerji, had said that when other DTH service providers
selected AIR FM channels, Airtel went for WorldSpace and this was a key
India accounts for over 95% of WorldSpace's worldwide subscriber base with
over 450,000 subscribers, more than 50% through the Airtel DTH pay-TV
package. However, WorldSpace India was not earning enough cash from its deal

with Airtel DTH. The DTH services provider offered 10 channels of WorldSpace

for Rs10 per month or Rs120 a year, with subscribers to its Rs200 package
and above getting the radio channels absolutely free of cost.
At the same time, WorldSpace charged Rs2,000 per annum for its 40 channels.
So in a way, the deal was not profitable for WorldSpace but helped it to
increase subscriber base in the country.

Secondly, the emergence of FM channels throughout the country, especially in

the metros, proved to be a major hindrance to WorldSpace's growth. There
were a few factors that worked in favour of FM channels. The major factor
was the ease of listening to FM channels while travelling across the city.
Due to licensing limits, WorldSpace was not able to offer the same.
According to analysts, the radio services business in the country is worth
Rs830 crore and it will grow by a compounded annual growth rate (CAGR) of
14% to Rs1,600 crore over the next four years. The Indian government had
announced the bids for phase III licenses across 700 frequencies in about
200 cities. This will further boost growth of FM channels in India.
Recently, US-based Liberty Media Corp bought all debt of WorldSpace through
its unit Liberty Satellite Radio LLC. Earlier this year, Liberty Media
rescued another satellite radio service provider Sirius XM from bankruptcy
by providing a timely loan of $520 million. In return, Liberty Media secured

40% stake in Sirius XM.
According to media reports, Mel Karmazin, chief executive of Sirius XM, had
said that the company may partner with fellow satellite radio services
provider WorldSpace, which is also partially controlled by Liberty. He said
that the deal most likely would involve using its relationships to help the
struggling company build satellite radio equipment and connect with
automakers, with Liberty adding financial support.
WorldSpace has revenues of $4.70 million as of 30th November; however,
during the same period, its operating expenses and reorganisation costs
stood at $52 million. WorldSpace had $1.10 million unpaid post-petition
debts outstanding for end-November that were supposed to be paid in
According to media reports, Liberty Media, which has bought the assets of
WorldSpace, is most likely to redirect it towards Western Europe, which
boasts of 300 million vehicles on the road. The other possibility is that
Liberty Media may use these WorldSpace assets to target South America,
especially Brazil, which has hardly any players in the satellite radio
space. This could mean robust growth for the company.
The question whether Liberty Media would continue WorldSpace's India
operations or use the assets for other lucrative regions, remains
unanswered. The only thing we can say at this moment is that WorldSpace
radio services will be no longer present in India from 1st January, unless
of course, there is a miracle!

http://moneylife. in/article/ 8/3012.html

Alokesh Gupta
New Delhi

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