Lopez Group to spend billions for cable TV boxes

The Lopez group will be investing billions of pesos to install addressable set-up boxes for free in the homes of all cable television subscribers of Sky Cable and Home Cable, a move that is expected to put to a halt to cable TV signal piracy and improve income streams through the introduction of more pay per view channels and an expected increase in the number of paying subscribers.

The STAR learned that in addition to a portion of the P1 billion remaining from a $30-million (around P1.5 billion) loan which ABS-CBN Broadcasting Corp. extended to Central CATV (owner of Sky and Home and controlled by the Lopezes also of ABS-CBN) of which only a small portion will be left after loan interest payments and operational expenses, a hefty sum will be invested by the Lopez group to acquire the boxes and install these in the homes of all the 200,000 cable TV subscribers of Sky and Home.

The $30-million infusion of additional funds into Central CATV was a condition precedent to the signing of a debt restructuring agreement with creditor-banks for combined Sky-Home loans totaling P2.5 billion. Of the $30 million (P1.5 billion), around P500 million was used to update loan interest payments and for operational expenses. The remaining P1 billion will be spent for the same purposes as well as for the acquisition of the set-up boxes.

Each box will cost Central CATV around $50 (roughly P2,800) which means that installing the boxes in all 200,000 homes will entail an investment of as much as P560 million assuming one television per home. But since each home has more than one TV, the investment required could easily double if not triple.

Asked where the group will be sourcing the additional funds, a highly placed official said: "We have money."

Sky Cable and Home Cable are planning on installing the boxes beginning October this year. The channels will be encrypted in the boxes and without the boxes, the subscriber will be receiving no signal.

Company officials earlier told The STAR that plans are to give one box per home for free while the additional boxes for the other televisions hooked on cable will have to be acquired by the subscriber. However, management seems to have changed its mind and now wants to subsidize the cost of the boxes.

Officials also earlier said that the migration to digital addressable setup boxes will be done over a three- to five-year period beginning this year but top management now wants a shorter phase-in period.

It was also learned that Sky and Home will be introducing prepaid cable TV subscription for P300 a month. For this amount, the subscriber will get the free channels (Channel 2, 4, 5, 7, 9, 13, 23) as well as five or six additional cable channels (news, movie, sports, among others).

Sky and Home officials estimate that there are easily 100,000 homes in addition to the existing 200,000 subscribers that will patronize the prepaid subscription. This prepaid offering will however require addressable set-up boxes and it is not yet clear whether the prepaid subscribers will likewise be getting their boxes for free.

With the boxes, Sky and Home will also be able to offer pay per view channels for its subscribers and the revenue that will be generated is expected to offset the cost of the boxes.

Putting a stop to signal piracy is also expected to drastically increase the subscriber base. It is estimated that in addition to the total of one to 1.5 million paying cable TV subscribers nationwide, there is another 750,000 to one million which are hooked illegally.