BUSINESS VIABILITY OF DISH TV : WOULD IT BREAK OR BREAK EVEN

Satish Kumar Boywar (146) Shashi Kanth L.Y (149) Shashiranjan Kumar (150) Siddhesh Khade (157) Swaraj Bhore (177) Y Vijay Kumar (197)

Introduction

The total number of TV owning households in India is estimated at 117 million. This represents a 54% penetration of TV in Indian households

Cable and Satellite households are 68 million

The DTH industry is currently pegged at 2.6 million subscribers

Dish TV India Limited is an Indian company engaged in the business of providing direct to-home (DTH) satellite television service

Dish TV is a division of Zee Network Enterprise

Dish TV India Limited is ranked # 437 and #5 in the list of media companies in the Fortune India 500

Currently at loss n hence break even analysis is important

The DTH Industry revenue is expected to grow @ 80% compounded per annum over the next 5 years

Customers will increase demand content from content providers, that they can engage and relate with and which has relevance to their social and leisure lifestyle

With the improvement in the electricity generation and multiple service providers the market opening up

Break-even Analysis Chart

Rupees Total Revenue

BE Point PROFIT

Total Cost

Variable Cost LOSS Fixed Cost

Subscriber Base
.

Total revenue(TR) = 202864 lacs Gross subscriber base = 134 lacs

Total Fixed Cost(TFC) = 216178 lacs (TFC is all the operating expenses mentioned in P&L) Total variable Cost (TVC) = 2135 * 24.4 = 5209.4 (Subscriber acquisition cost * No. of subscribers added this year) AVC = TVC / Q = 5209.4/134 = 38.88 Average revenue (AR) = TR/Q = 202864/134 = 1513.9

Calculating Break Even Point

Total revenue(TR) = 202864 lacs Gross subscriber base = 134 lacs Total Fixed Cost(TFC) = 216178 lacs (TFC is all the

operating expenses mentioned in P&L) Total variable Cost (TVC) = 2135 * 24.4 = 5209.4 (Subscriber acquisition cost * No. of subscribers added this year) AVC = TVC / Q = 5209.4/134 = 38.88 Average revenue (AR) = TR/Q = 202864/134 = 1513.9

Current status: Dish TV

Rupees Total Revenue

BE Point PROFIT

Total Cost

Variable Cost
216178 lacs

LOSS
202,864 lacs

Fixed Cost

134 lacs

Subscriber Base
.

Calculation of Break-Even Point continued

At break even ,=> TR = TC => AR= AFC + AVC AFC = AR AVC AFC = 1513.9 38.88 = 1475

AFC = TFC/Q Q = TFC/AFC = 216178/1475 = 146.56 lacs Thus, at the subscriber base of 146.56 lacs, Dish TV will break-even.

Break-even Analysis Chart

Rupees Total Revenue

BE Point PROFIT
221,848 Lacs
216178 lacs

Total Cost

Variable Cost LOSS Fixed Cost

202,864 lacs

134 lacs 146.54 Lacs

Subscriber Base
.

Proposed Strategies

Acquisitions, partnerships, and the divestiture of nonstrategic assets. Investment in Wireless spectrum holders, videorental chain. Strategy for sluggish economy. Networks adaptive streaming technology in its set-top boxes for streaming to PCs from its Dish Online portal

(I)

II)

Proposed Strategies Continued..

The rollout of adaptive bit-rate technology is important for Dish. Can roll out wireless broadband services and new mobile video delivery platform(700MHz after acquisition of DBSD) . Ready to change in organization structure if required.

THANK YOU