Exclusivity deal with Sky-Home Cable behind pullout of Star TV from Destiny

The Star Group pulled out five of its major channels from Destiny Cable following an agreement with Sky Cable and Home Cable to provide these programs exclusively to them in exchange for Sky and Home paying "market rates" for these channels.

Highly placed sources revealed that because getting ESPN, Star Sports, Star Movies, National Geographic, and Star World on an exclusive basis would be more expensive, Sky and Home which last year merged into Beyond Cable will be increasing their subscription rates to their customers to as much as P825 a month, inclusive of the 10 percent value-added tax.

Right now, Sky Cable charges its customers P770 a month, and Home Cable P550, VAT inclusive. Destiny charges a subscription rate of P520 a month.

Another reason for Star’s pullout, according to sources, is that it believes Destiny has not been honest about how many subscribers it now has. Star charges its customers on a per subscriber basis.

In a letter to Destiny president David Lim, Star regional director Charles Pollard said it is under no obligation to provide Destiny with the said channels after Oct. 14 when the contract between the companies expires.

Star has offered to continue providing 12 other channels, but Destiny is only interested in getting four, which are Viva, Fox News, Star Mandarin, and Channel V International.

By giving Sky and Home exclusive right to air ESPN, Star Sports, Star Movies, National Geographic and Star World, Star hopes to increase the number of cable subscribers in the Philippines (cable television providers pay Star on a per subscriber basis) by creating two market tiers — the middle and high end or higher priced market to be addressed by Sky and Home and the lower end and lower priced segment to be supplied by Destiny, sources disclosed.

With the current costs of Sky and Home of at least P600 per subscriber under the new agreement with Star, sources said it will have to price its subscription rate at more than P750 VAT inclusive in order to survive.

It was learned that Sky and Home were able to convince Star that giving the two an assured market is the only way for them to make money, get back the subscribers that they lost to Destiny, and pay back what they owe Star amounting to around P160 million last year.

It will be recalled that Sky and Home lost a big chunk of their subscriber base when Star in October of 2001 pulled the plug on them due to non-payment of debt. From a 75-percent share of the market, the market share of Sky and Home went down to 65 percent when Destiny continued to carry the Star channels.

The signal cut-off came at a time when the airing of the World Series, the National Football League, and the National Basketball Associations seasons were about to commence.

With the pullout of Star’s sports channels from Destiny, the latter has decided to tap other program providers. It is currently airing the Euro sports channel.

Earlier, Destiny said that Star’s action of cutting them off grants Beyond Cable an implicit exclusive hold on the five programs and a potential monopolistic capability. "This action is clearly discriminatory as it effectively cuts Filipino consumers‚ affordable access to prime programs and denies them the right to choose their preferred cable operator."

At the House, Biliran Rep. Gerardo Espina Sr. has filed a resolution asking the committee on transportation and communications to investigate Star’s withdrawal of the five channels.

Meanwhile, National Telecommu-nications Commission acting chief Armi Jane Borje said they are awaiting Star’s explanation for the pullout.