#Astro: Raising The Charges.. Smart Or Not???

I noticed that many have raised their displeasure when Astro raised their charges just not long after DS Najib presented Budget 2014.

From a point of view, it sounded crazy. It looked like as if Astro did not do thorough thinking. Somehow, I can agree to that view.

However, this news, published yesterday changed my view a little bit. The Star reported:

PETALING JAYA: Malaysian broadcasters, who had submitted a joint bid, have lost out on securing the rights to the 2016 summer Olympics and are now scrambling to negotiate with Japanese advertising firm Dentsu Inc, which secured those rights for 17 Asian countries including Malaysia, sources said.

The Malaysian parties had submitted their bid via Asia-Pacific Broadcasting Union (ABU), a non-profit, non-government, professional association of broadcasting organisations that is said to have comprised virtually all major broadcasters.

Sources said ABU’s bid was priced at somewhere close to 10 times what Malaysian parties had paid for the last Olympics content. Despite the high bid, they had failed, indicating that Dentsu had probably paid a higher price.

If true, this complicates negotiations between the Malaysian broadcasters and Dentsu as the latter would naturally want to charge high fees for the Olympics content.

This, in turn, could lead to higher content cost for local broadcasters who may seek to pass the cost on to consumers.

Sources said that almost all local broadcasters, both free-to-air stations and pay-TV players, were in discussions with Dentsu on buying the Olympics 2016 rights, although it was unclear at what stage the negotiations were.

Sources did say, however, that Dentsu officials had made a recent trip to Kuala Lumpur to meet broadcasters here.

Another notable development is that while the current discussions are between Dentsu and individual Malaysian broadcasters, there is talk that the Malaysian players may seek to team up as one party – in a similar way that they did with ABU – in negotiating with the Japanese.

Sources said these included RTM, Media Prima Group and Astro Holdings Bhd. But the sources added that other players like Telekom Malaysia Bhd and new pay-TV operator Asian Broadcasting Network might also join in.

In August, Dentsu acquired “exclusive gatekeeper broadcaster rights” in the 17 territories and it had then said that it would seek broadcasting partners on all platforms in those markets.

The 17 countries are Afghanistan, Brunei, Myanmar, Kampuchea, East Timor, Hong Kong, Indonesia, Iran, Laos, Malaysia, Mongolia, Papua New Guinea, the Philippines, Singapore, Taiwan, Thailand and Vietnam. The rights are not only for the 2016 summer Olympics in Rio de Janeiro but also for the 2014 winter Olympics in Sochi, Russia and the 2014 summer Youth Olympic Games in Nanjing.

The cost of broadcasting sporting events has skyrocketed in recent years, particularly the Barclays Premier League (BPL) or the English Premier League.

Asia is a big BPL market. Malaysia, Singapore, Thailand and Hong Kong account for around 43% of BPL broadcast rights.

“It is a constant challenge to bid for sporting rights as they are always on the rise and there will always be another party that wants to pay more for the content,’’ said someone from the industry.

Astro, when contacted said it was interested to provide the 2016 Olympics content for its subscribers.

Its chief operating officer Henry Tan said “the prices of broadcast rights for sporting events, especially football have been rising and it is no exception for Malaysia.

“Football players’ salaries have gone up by 300% and top-notch players are being offered £30mil (RM153mil) to £50mil (RM255mil) to switch clubs. Ultimately the fans would have to pay for the players’ high incomes. These costs are passed to broadcasters and today broadcasting rights account for 70% of BPL revenue,’’ Tan said.

“Bidding and buying sports content are getting costly and more challenging,’’ he added.

Kindly note on the bolded/highlighted item. These lines gave me some thoughts.

Yes, those who ‘consume’ Astro always complain that the movies always repeating as if no new movies. Some also complains that the shows are recycled over and over again. Worse, some can’t watch during rainy day, where services is easily interrupted.

From the article above, I think most of their revenue does not come for the entertainment channel. Most of it comes from Sports channels, whereby it is one of the high priced channels.

If their customer based is mainly from sports fan, especially football fans, pretty much they have a secured customer base, with minimal impact, unless BPL’s right is also rewarded to other than them.

With such a huge BPL fan base among Malaysians, I supposed Astro is not really crazy. They are making the hay while they still can.

And about the rainy day problem? I supposed they are working with Maxis, their indirectly siblings to provide fiber optic broadband cables that also linked up Astro Beyond, in which customers no longer need to worry about not getting coverage. The only problem that I can think of so far is…

What if no internet line (ie, Maxis line got problem)?

Well, than again, looking at how things developed, Astro aint that crazy.

The crazy ones are the football fans – makan bola, tidur bola..

p/s: I know we also can watch football via other means.. but there must be reason why BPL rights (or what ever rights) are issued.. right?

Question on the street: Astro… a need, luxury or lifestyle?


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