7.taiwan 21-11-06 v1g - public television service 21-11-06... · acquired through an asia based mbo...

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From the Perspective of the Corporate Consultancy

Broadcast Transmission:

Presented By: Hugh Brammar Director of Business Development



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The next 20 minutesThe next 20 minutes

Introduction to The Modern Dilemma Revisiting the Broadcast

Value ChainOptions for reducing risk -

focus on the core business



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Introduction to



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Formerly part of NTL, at the time the world’s largest Transmission Services providerAcquired through an Asia based MBO in 2004Builders of the world’s first Mobile DTT networkAdvanced propagation and coverage planning24/7 operations & maintenance services to broadcasters in AsiaIndependent consultants on Transmission & Digital Migration to Governments and broadcasters in 11 Asian territories



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RECENT CONSULTANCIES:

Coverage Planning for IPTV network (Malaysia)State broadcaster digitization (Malaysia)DVB-H implementation (Malaysia)DAB (Hongkong)UNOPSDTT Coverage Planning (Brunei)DTT Implementation (Singapore)2 x Network Performance Assessment & due diligence (Indonesia)Coverage Survey (Thailand)First DTT Transmission in Thailand



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A DilemmaA Dilemma

Imperative for new services (revenue streams)

Equal imperative to control costs Focus on core business essential Something has to give! Increased use of Outsourcing Can be rough road if not

correctly advised & implemented



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Core Competencies of a Core Competencies of a businessbusiness

Its where the business adds value with its own, inherent ‘know how’

Example: An Airline, its about selling tickets and providing customer service

… NOT in owning and maintaining aircraft

For a bank, its about making money on money, interaction with the customers, finding new business

… NOT in owning and maintaining all its IT systems

For a Hotel, its about selling its rooms; making its guests happy, providing an excellent service experience

… NOT in owning and maintaining the buildings



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The Broadcast Value ChainThe Broadcast Value Chain



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Infrastructure fundamentalsInfrastructure fundamentalsStrategy Strategy

Long-term assets – deserve a long term strategy, not a ‘Band-aid to survive’ approach.

Develop the business on the Network for the long term, not just survival or the quick turnaround for ill thought out rapid implementation of new services.

Network operators need to be industry leaders in technology and regulatory advancement.

Financial optimisation of Networks can add substantial value to investors, governments and industry



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Objectives of focus on coreObjectives of focus on core

Efficient use of capital through:

Allowing broadcaster capital to be deployed to programming or core other uses

Only investing in the parts that are unique to you for the digitisation of transmission equipment

Reduce costs through performance-based contracts and outsourced field force

Reduced cost of capital via innovative financing sources and structures



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Times are a changing!Times are a changing!

Many regional Broadcasters are vertically integrated

‘New’ services provide pressure towards consolidation of infrastructure

New opportunity and impetus to focus on core competencies



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The problem is ..The problem is .. Many Asian broadcasters view infrastructure

as integral and core. Often Governments are a major stake holder

without deriving any benefit beyond control. Other Broadcasters have no title to the

infrastructure they operate on but retain the risk and cost of support.

Current network owners reluctant to part company with network infrastructure.

So, ‘Vertical Integration’ still rules



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The IT industry exampleThe IT industry example Back in the 1980’s, companies dependent on information

technology found themselves facing a serious challenge

Technology was changing so rapidly that the costs and risks

of staying ahead of the curve were skyrocketing

Then came the revelation: In order to benefit from advanced

technology…

A business doesn’t need to manage it

They only need to use it



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The The ‘‘DavidDavid’’ solutionsolution Remove the parts that aren’t

‘David’

BUT they still need to be done !



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How to benefit from risk How to benefit from risk mitigationmitigation

Understand the Business Case for Outsourcing Non-Core functions…

Identify the expected benefits of outsourcing network operations & maintenance on…

Operating Costs

Network Efficiency

Network Performance

Infrastructure Flexibility

Selecting an appropriate outsource partner to support core business functions

Setting appropriate SLAs* for outsourced network operations and maintenance

*SLA = Service Level Agreement

P2

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P2 Not sure whatthis slide adds thats not alrady covered elsewhere ?Patrick, 2006/11/16



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OptionsOptions

A Broadcaster looking to outsource has, essentially, 2 options:

Acquisition Contracted outsourced support



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What have others done?What have others done?

The UK allowed 3rd parties to acquire the entire transmission infrastructure.

Australia has partially followed suit

Malaysia has a hybrid outsourced access & services model



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Acquisition?Acquisition?

NTL Broadcast’s first quarter results (2002) from continuing operations included revenues of £49 million ($70m) and EBITDA of £25 million ($36m)

That is an operating profit of 51%Source: NTL Incorporated published results for three months ended 31 March 2002

http://media.corporate-ir.net/media_files/irol/13/135485/quarterly/2002-1.pdf

P9

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P9 This still seems harsh ....they will hit the roof ... But I like it ..... We just need to be ready for retaliation I guess, and we probably have more to fear ?

Maybe just say 'A leading Broadcast infra outsourcer in the UK' rather than NTL, but leave the source info on the bottom. ?Patrick, 2006/11/16



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Outsourcing meansOutsourcing means……

Retention of asset Same access to knowledge as

with acquisition Access to investment for new

services Guaranteed service levels One stop shop Controllable supplier margins



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If a business can do it all now, why change anything?

Improved control, management &

commercial alignment Meaningful metrics

Reports aligned with business interests

Ability to influence and control

Avoidance of micro management

Predictable costs Fixed monthly fees for fixed coverage and availability..

Guaranteed

Better service and/or reduced cost Economies of scale and scope

Increased focus on core activities



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BUT!!!!BUT!!!! Outsourcing or, worse, divestment of such an important link in the chain to

your customer (the viewer) is a huge step.

There are significant HR issues in running networks more efficiently.

It requires a tidal change in approach to the business and it is being driven by Digital services.

There are examples elsewhere where the profits generated by the new network owners are, in our view, ‘extraordinary’.

It is very easy to end up with an infrastructure monopoly.

Asia IS NOT Europe or Australia, politics, mindsets and business customs are often very different and every Asian territory is unique.

What works in the ‘West’ does not necessarily work in Asian territories.

Legal and regulatory frameworks in Asia are diverse and very different from those in Europe, US or Australia.

P3

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P3 Lots of words here, can you compress and rely more on speaking ?Patrick, 2006/11/16



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Facts about Facts about ‘‘NewNew’’ servicesservices Most technical arguments for new

generation services are settled…this is now a commercial decision.

Be at the leading edge by all means, but avoid the ‘bleeding’ edge!

New technologies are a driving force towards infrastructure consolidation

Individual vertically integrated service providers are struggling to justify unilateral new service provision

There must be a way to launch new services whilst reducing traditional areas of risk and unpredictability.



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The Tools are thereThe Tools are there……

All the tools needed to predict coverage before buying hardware now exist and are readily available

Independent consultants are now experienced and available to support migration, development and avoidance of exploitation

The real decision making power is, therefore, firmly in the hands of the commercial minds



24 DTT and Managed DTT and Managed InfrastructureInfrastructure

In an analogue world the Broadcaster could be ‘vertically integrated’

In a Digital world the broadcaster cannot be vertically integrated and still expect the business case to work.

Technical MUX management and common standards are areas that should (and do in successful Digital markets) sit within the remit of the Infrastructure Manager.



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New Services New Services -- Broadcast or Broadcast or Telephony?Telephony? TV consumer tolerance of lost

connections/service is lower than that of mobile telephony consumers

Delivery will probably be via a hybrid network of both cellular and broadcast sites

This requires a specific operational approach with a focus on reliable long-form content delivery

P8

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P8 Maybe more explicit here ... 'In some markets, Telco is dominant' somewhere. This slide makes sense to us but maybe not to othersPatrick, 2006/11/16



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Outsourcing StrategyOutsourcing StrategyConstruct the Outsourcing Agreement to build a successful

relationship by….

Seeking advice

Acquisition is NOT the only option

Structuring the deal for flexibility and change

Developing baselines

Setting objectives and negotiating the agreement terms (SLAs)

Defining the services and getting what you pay for

Allocating risk and reward

Avoiding disputes

Managing re-tendering and exit



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Summary Summary –– the potentialthe potential Cost savings to broadcasters arising from consolidation of

common functions, which are generally not their core business (i.e. Transmission, Distribution and even Play-out)

Reduced network overheads leading to more profit/reinvestment in programming (core business)

Contractually guaranteed ‘up time’ of all parts of the network

An opportunity to make operations more efficient

Risk mitigation for new service roll-out

One-stop-shop for the entire network

Reduced learning curve for digital technology



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Summary Summary –– the riskthe risk Loss of local style of management as huge multinationals take

operational control of networks through acquisition.

‘Extraordinary’ margins enjoyed by some operators may also be expected in Asia

Multinationals’ wider relationships with suppliers may influence decisions pertaining to local contracts

Consolidation needs to be protected from monopolisation to prevent punitive pricing

Long term contractual conditions may look attractive at day one –but will you feel that way in 5 or 10 years in?

Regulation must be tailored to protect the Broadcaster as well as the operator (e.g. caps on annual service charge increases)



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When you do outsourceWhen you do outsource……Guiding Principles

Seek experienced advice

Know that any funds invested by the network operator will be recovered with profits.

Win/win collaborative approach throughout the term

Proactive problem solving & joint resolution of issues

Trust will develop through actions

You, the Broadcaster, are the customer Outsourcing (as opposed to acquisition) may be the way to

go in many Asian territories

P10

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P10 Maybe add' retainthe control you need' and 'ensure you share in the benefits' could be added. Maybe combine the motherhood n apple pie stuff , confidentiality, trust and proactive ?Patrick, 2006/11/16



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Thank You

Malaysia: +(60) 03 2273 3378Singapore: +(65) 6332 6938Thailand: +(66) 2343 1627www.on-ap.com



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Thank You

Malaysia: +(60) 03 2273 3378Singapore: +(65) 6332 6938Thailand: +(66) 2343 1627www.on-ap.com

7.taiwan 21-11-06 v1g - public television service 21-11-06... · acquired through an asia based mbo...

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