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StarHub: English premier league - Case Study Example

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StarHub is the only cable TV provider in Singapore, in a bid that it won from the government at $ 160 m. In addition, it managed to secure the bid for the broadcast rights, which ESPN Star Sports was previously holding, to air English Premier League matches across the country. …
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StarHub: English premier league
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1. Identify changes in demand and costs (fixed and marginal costs relative to the number of subscribers) arising from StarHub’s acquisition of the EPL rights.
StarHub is the only cable TV provider in Singapore, in a bid that it won from the government at $ 160 m. In addition, it managed to secure the bid for the broadcast rights, which ESPN Star Sports was previously holding, to air English Premier League matches across the country. The increases in costs arise from the fact that it has to pay content providers such as ESPN royalties on airing their content on their channel.
2. Which of the changes in (a) would be relevant to StarHub’s pricing of cable TV services?
The payment of royalties to content providers is the main cause of the increase in pricing of pay TV within the country, especially basing on StarHub’s case study. In addition, the company is the only provider of cable TV in the country, and the license of acquiring the cable TV rights is very costly too. Therefore, the higher charges assist in covering up for the additional costs that the company incurs in content provision.
3. Do you think that, prior to the 2007 price increases; StarHub’s prices had maximized profits?
Prior to the price increases in 2007, StarHub has already maximized the profits that it made from the provision of its services. This begins from the sports package, inclusive of the ESPN Star Sports, which increased by $7 to $ 15, the rise of basic packages from $ 20 to $ 24, and a raise in its all-new sports package airing EPL matches by $ 10 to $ 25.
4. From the viewpoint of a content provider like ESPN which receives a per customer royalty from a cable TV operator, explain the moral hazard to which the cable TV operator is subject.
The cable TV operator is bound by provision to ensure that he remits subsequent payments to the content provider for each one of its customer as royalty. It is against broadcast rights to air another company’s content without prior permission from the content provider, which in turn leads to the infringement of media broadcast rights.
5. From the viewpoint of EPL, explain how a lump-sum bid would resolve asymmetry of information between EPL and cable TV operators.
A lump-sum bid would be instrumental in resolving the asymmetry of information between EPL and cable TV operators such as StarHub as this payment enables the live streaming of matches from EPL to these Cable TV providers. This covers the overhead costs thereby enabling the fans to watch the games one on one.
References
Hartmann, T. (2009). Media Choice: A Theoretical and Empirical Overview. London: Routledge Publishers. Read More
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kelli13 added comment 1 year ago
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A very detailed analysis of the company, especially of the financial part. Very helpful.

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