After eight months of negotiations, the Tamil Nadu government-run cable network has agreed to telecast channels of Sun TV Network Ltd from Tuesday after the Madras high court intervened.
The media conglomerate informed the Bombay Stock Exchange that it has concluded an agreement with Arasu Cable TV Corp. Ltd, which provides signals to cable operators in Tamil Nadu, to distribute its channels.
Sun TV will now begin earning additional subscription revenue from Tamil Nadu, the Kalanithi Maran-promoted company said in its statement without disclosing details.
"It is certainly a big positive as the all Sun TV channels will be now be officially available across the state. The subscription revenues will start flowing in from 1 August. The agreement also provides for growth in our subscription revenues which is tied to other terms as envisaged in the contract . We are unable to comment on the precise financial aspects of the deal with Arasu at this time, due to confidentiality reasons," said S.L Narayanan, CFO, Sun group.
Sun TV's woes began soon after J. Jayalalithaa took over as chief minister of Tamil Nadu from K. Karunanidhi after winning the state election last May. She revived Arasu Cable on 3 September to break the monopoly of Sumangali Cable Vision, the cable arm of Sun TV, and the state-run distribution network blocked Sun TV's 32 channels.
Maran is the grandnephew of the former chief minister.
Sun TV has been in talks with Arasu since November to be included in its offerings.
"Sun TV channels have come in our fold. The price was negotiated and agreed, however, I cannot disclose the details of agreement," said D. Vivekananda, managing director, Arasu Cable TV.
On 21 July, the Madras high court directed Arasu Cable to convene a meeting of its board of directors and make a decision on the matter by 31 July.
Justice V. Ramasubramanian passed the order while disposing writ petitions filed by Sun TV Network and Neelakantan Ramanathan, a shareholder. The petitioners requested for a direction to the state-run cable network to issue a subscription order as per the terms finalised and prices fixed by Arasu's price negotiation committee at a meeting on 3 April.
Arasu's decision to telecast Sun TV's channels is a positive move and will help boost investor confidence in the broadcaster, but it has to be seen how much Arasu will pay as subscription fee to Sun TV, said an analyst who tracks the company, asking not to be named.
Arasu Cable's earlier decision to not telecast Sun TV channels dented the broadcaster's net profit to the tune of about Rs48 crore and its revenue by Rs77 crore in 2011-12. Sun TV posted a net profit of Rs159.03 crore in the three months ended 31 March, down from Rs208.34 crore a year earlier.
Competition from rivals also chipped away at what was once an unassailable lead. Sun TV's market share in the Tamil general entertainment channel (GEC) segment dropped to 62% in the first quarter of 2012 from 69% a year earlier. Rival channel Star Vijay benefited, almost doubling its marketshare to 12% from 6.4%.
This happened even as the share of Tamil GECs in the overall language GEC landscape fell to 5.84% from 6.64% a year ago, mostly because of long power-cuts in Tamil Nadu, data from television viewership monitoring agency TAM Media Research show.
Sun TV's shares were trading at Rs268.90 at 12:38 pm, up nearly 4%, while the benchmark Sensex was down 0.49% at 17,059.88 points.