Airtel DTH to replace WorldSpace with AIR channels
December 30, 2009
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 differentiator.
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 December.
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!