It is no secret that StarHub Ltd?s (SGX:CC3) Pay TV business is under pressure.
In StarHub?s latest annual general meeting (AGM) held in mid-April this year, there were a number of questions about the company?s plans for the Pay TV business. The management team?s responses were captured in the AGM minutes. I would like to highlight three responses that investors should know.
1. Content, content, content
?Mr Tan See Peng @ Tan Kah Hua asked what efforts were made by the Company to lower the content costs or to acquire screen producers from Hong Kong or Taiwan to…
In StarHub’s latest annual general meeting (AGM) held in mid-April this year, there were a number of questions about the company’s plans for the Pay TV business. The management team’s responses were captured in the AGM minutes. I would like to highlight three responses that investors should know.
1. Content, content, content
“Mr Tan See Peng @ Tan Kah Hua asked what efforts were made by the Company to lower the content costs or to acquire screen producers from Hong Kong or Taiwan to enrich the Company’s content.”
“CEO replied that the Company measured viewership tightly. The Company would ensure that the content cost would commensurate with the viewership. In addition, the Company had invested in MM2 Asia Ltd. (“mm2”) to enrich the Asian content offering.”
A Pay TV service is only as good as the content it can deliver.
With this in mind, StarHub is aiming for content that has differentiation and can attract enough viewership. For the former, StarHub has moved beyond what it calls typical US fare to Asian content from China and Korea. The telco has also acquired a stake in film maker MM2 Asia Ltd (SGX: 1B0) with the goal of producing original content that is not available anywhere else.
2. Pirates in the mist
And then, there is the issue with piracy:
“Mr Victor Chng Yew Min, a proxy in attendance, asked about the competition faced in the PayTV business as more consumers were using wifi or android boxes to watch TV programmes. CEO explained that the Company was working with the regulators to address the piracy issue.”
On this issue, StarHub will be working with two main parties – the regulators and the content owners. Here’s management’s response:
“In response to a shareholder’s query on the solutions to tackle piracy, CEO informed the Company would work with the content partners to share the risk. Secondly, the Company had escalated the issue to the regulators.”
StarHub will also be looking for relevant actions from content owners in deciding whether to keep certain channels or content in the future.
3. Data analytics
Subscriber viewership is the key. StarHub said:
“The Company also made use of data analytics to assess the viewership of specific channels and would cease the channels when necessary. This would improve the net margin of the PayTV business.”
The telco will drop channels or content if it finds them to be underperforming in terms of viewership. Removing content will come at a cost – subscribers to the channel may leave StarHub’s Pay TV service, and revenue could decline as a result. However, management believes that the Pay TV business is best assessed through the lens of profitability, rather than sales growth.
The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.