Astro to be told to go ad-free, slash fees

When Astro's top officials led by Ralph Marshall troop to meet government officials this week, they will be asked the question the government has always ask: "When is Astro planning to go commercial-free as stated in its initial licence and reduce its tariff?"

Astro was set up on the basis that it would be solely subscription-based and commercial free, according to Minister of Information, Communications and Culture Dr Rais Yatim.

"Even the Information Ministry is paying RM1.5 million to Astro annually for its Bernama TV to be transmitted over the Astro network.

"I understand from the Malaysian Communications and Multimedia Commission (MCMC) that Astro has been asking for an extension of charging for its commercials as a revenue source.

"Ralph Marshall is expected to see me this week and we will discuss the satellite channel charging for the advertisements," Rais said yesterday.

When Astro first started in September 1996, there were only a handful of TV channels - RTM, TV3 and a few others charging nominal amounts for advertisements.

Today, Astro charges RM8,000 for a 30-second commercial in the Wah Lai Toi (Zone A band) channel, according to the Media Planning Guide 2011 published by Perception Media.

Rais is also expected to raise the consumers' request for a lowering of Astro subscription fees at the meeting.

Last year, there was a massive objection to Astro raising its subscription rates and the government directed the satellite TV provider to halt its increase.

In 1996, when Astro began with 22 channels, the monthly subscription fee was RM80 which included a one-time payment of RM1,400 for the satellite dish and the set-top box to enable pay TV viewing. Today, there about 150 channels and the set-up box is almost free.

Astro's first round of talks this week will be with Rais, followed by another meeting with the Ministry's chief secretary, and later yet another meeting with MCMC's top officials.

Stick to original promise

The Federation of Malaysian Consumers Association (Fomca) wants Astro to stick to its promise of being a commercial free TV.

"The government should liberalise the issuance of TV operator's licence. With more TV networks, there will be more competition and more choices for consumers, and it will translate into more value for money from the consumers' viewpoint.

"The government as the regulator should really study the tariffs closely and ask Astro to lower it with the consumers in mind," said Fomca's CEO Paul Selvaraj.

Astro's revenue for its financial year ending Jan 31, 2011 was RM3.2 billion and its net profit was RM232 million. Its average revenue per subscriber has grown from RM85 to RM90 over the past year.

Astro is a dominant player in the country's entertainment business. About three million out of 6.6 million households in the country subscribe to its services.

It's a lucrative market that has attracted other players. The competition dynamics will change in the months ahead as more interactive and Internet TV are launched.

In 2003, the company was listed at an offer price of RM3.80 a share. Subsequently it also spread its wings into Indonesia but that venture did not turn out as planned and they had to pull out.

It also has a stake in India's Sun Direct TV and a stake in Celestial Pictures, a company with a huge content library.

The company has since also entered into the domain of producing its own content and when combined with Celestial, it would have a formidable data base of content that can be sold across all networks.

Astro shareholders decided to de-list the company in 2010 and it was then estimated to be worth RM8.5 billion. Tycoon T Ananda Krishan (left) continues to have a majority stake in the company via Usaha Tegas Sdn Bhd.

Pay TV operators, such as Mega TV and MiTV, had tried to get a slice of Astro's business but have failed.

Now newcomers such as Telekom Malaysia, REDtone International's DETV, and the soon-to-be launched digital cable TV service by Asian Broadcasting Network (ABN), are set to battle with Astro for a share of the market.