SkyCable loses Star channels

SkyCable lost several channels after the Australia-based Star Group cut the subscription of the Lopez-owned company without notice yesterday.

Sky Vision managing director Carlos Tria said they were in the middle of negotiations for a new contract with the Star Group when the plug was pulled on networks like ESPN and STAR Sports.

STAR also carries National Geographic, Star Movies and Star World.

Tria explained SkyCable was proposing a deal for fewer channels for rates that the company could afford.

"Their current price was just too high. They rejected our offer and cut off the Star programs," he lamented.

SkyCable, the country’s biggest cable television company, recently merged with PLDT’s Home Cable.

Tria said the issue was about the price and had nothing to do with the company’s arrears.

"We are paying something we cannot afford. While we are not increasing the rates of our customers, they (STAR) are increasing theirs," Tria noted.

He said Sky was surprised when Star arbitrarily cut their subscription without any warning, despite the fact that there was an informal agreement "with one of our officials" that some kind of arrangement can be made.

"There was some sort of understanding that no channels would be cut while talks were ongoing. They were supposed to give us time to

explain the situation to our subscribers before any channel would be taken out," Tria said.

Since it is unlikely that SkyCable will be able to pursue getting back its subscription to STAR, the Lopez company has put up its own sports channel "that is more attuned to the needs and wants of the Filipinos."

SkyCable is featuring exclusive sports events, such as the Dunhill golf tournament, on Channel 29 to fill in the void left by ESPN and Star Sports. The same program appears on Channel 30 for Home Cable subscribers.

Rising programming costs and the weakness of the peso have dealt the cable TV industry a double whammy it can no longer afford.

Philippine cable television operators have kept rates steady since 1998. Right now, cable operators charge on the average P400 per subscriber per month. In turn, they pay the program distributors around $8 to $10 per subscriber, or roughly P500. Other countries charge as much as $20 for basic cable services.

Cable service providers have come under heavy pressure to rationalize operators as industry costs continue to rise. The unstable foreign exchange rate has practically doubled programming costs from 1997 to 2001, without a corresponding increase in subscription rates. Programming costs are expected to jump 20 percent year-on-year.

Since 1997, cable companies have been absorbing increased programming costs, unable to pass it on to customers largely for fear that demand will only go down. Program fees have risen from 20-30 percent to 40-50 percent of subscription revenues in the last four years.

Cable operators do not enjoy foreign currency adjustment (FCA) which should serve as protection against exchange rate fluctuations. The escalating annual rates being charged by some international channels, denominated in US dollars, have made it prohibitive to operate the business.