Sports broadcaster ESPN Star Sports and direct-to-home operator Tata Sky may soon get entangled in a legal battle as Tata Sky has dropped ESPN, Star Sports and Star Cricket from its basic package offerings.
The move, according to ESPN's lawyers, may go against a recent Delhi high court order that restrains Tata Sky to do so, but the second largest DTH operator maintains that it is operating within the permissible rules.
The basic package offered by the DTH service provider comprises channels that are demanded by the subscribers. It normally includes genre of channels like news, entertainment, movies, kids and sports. However, as a result of shifting out the three ESPN channels from its basic package, Tata Sky has managed to cut its package price by 20 per cent (from Rs 250 to Rs 200).
Using this pricing strategy, Tata Sky plans to enter the smaller towns. The three sports channels from ESPN have now been separately packaged at a monthly subscription of Rs 40. This means a Tata Sky consumer has to subscribe and pay additional money for sports channels in addition to their monthly subscription fees.
For ESPN, moving out of Tata Sky's basic offering means a significant drop in both reach and subscription revenue as its subscription revenue is directly linked with the number of subscribers it reaches. Tata Sky currently has over two million subscribers and is directly competing with Dish TV, the largest DTH operator with over 3.2 million subscribers.
At least two more new DTH players (Big TV, Bharti Telemedia) are expected to launch their services soon because of which the existing DTH companies are exploring new marketing avenues revolving around lower pricing strategy, industry sources said.
When contacted, Vikram Mehra, marketing head, Tata Sky, said, "We have slashed the monthly subscription fees for the five basic packages that have all genre of channels. But I can not push the special interest channels to everyone. Our sports packages, like our lifestyle packages, are available to all consumers at a monthly fee."
However, ESPN claims that by dropping its channels from the basic packaging, Tata Sky may have gone against the a recent Delhi high court order in the matter. As the two-year contract between Tata Sky and ESPN got over two months back, the two companies are in talks for new commercial terms and other related issues. Both parties have also approached TDSAT, appallete tribunal for the broadcasters and telecom operators.
Dish TV and Tata Sky are locked in a war of words over the latest subscription offer by the latter. A day after Tata Sky announced cut in its subscription charges on different packages, Dish TV said "what is being positioned seemingly as a price reduction is not at all a reduction".
"A reduction of price can happen only if the value of the product does no decrease simultaneously, which is not the case here. Whilst a new lower price has been announced, it is at the cost of reduced content (as) 12 channels have been removed from the base pack," a Dish TV statement said.