Which of the changes in (1) would be relevant to StarHubs pricing of cable TV services?

far from Highbury Ol Show more Some of the most ardent fans of Arsenal Manchester United and Liverpool live far from Highbury Old Trafford and Anfield in Hong Kong and Singapore. Until the 2006-07 season ESPN Star Sports held the broadcast rights to the English Premier League (EPL) for Singapore. Then in late 2006 StarHub bid an estimated US$160 million to beat incumbent ESPN Star Sports and telecommunications provider SingTel to win the rights for the next three seasons. The winning bid was reputedly several times the amount that ESPN Star Sports had paid for the previous rights. The Singapore government prohibits the reception of satellite TV.Integrated telecommunications and cable TV provider StarHub is the only provider of cable TV in Singapore. The government did offer a second cable TV license but no one applied. In 2007 StarHubs major source of revenues was mobile services which accounted for 52% of revenues with cable TV broadband fixed network services and equipment sales accounting for 17% 12% 14% and 5% respectively. In 2001 StarHub unbundled the basic cable TV package into thematic basic packages and reduced the price from $32.95 to $20 a month. Subsequently it added new channels to the various basic packages without raising prices. The new channels included CCTV-9 Discovery Travel & Living and STAR Chinese Channel. In 2004 StarHub raised the price of the sports package by $7 to $15 a month. The sports package included ESPN Star Sports. Typically cable TV operators pay content providers such as ESPN a royalty based on the number of subscribers to the content. Following its acquisition of the English Premier League rights StarHub announced price increases. It raised the price of basic packages by $4 to $24 a month with effect from July 11. It decided to broadcast the EPL on its own sports channel which was included in the sports package. It raised the price of the sports package by $10 to $25 a month with effect from October. Mr Thomas Ee Senior Vice President of Cable Fixed & IP Services justified the prices increases Most pay-TV operators around the world increase prices periodically and StarHub has not done so despite a steady rise in costs over the years. In 2007 StarHubs cable TV revenue grew by 9% from S$313 million to S$342 million. ARPU (average revenue per user) rose by 6% from S$48 to S$51 while the subscriber base increased by 4% to 504000 as at end December 2007. Relative to the number of households in Singapore the subscriber base amounted to a 45% penetration rate. 1. Identify changes in demand and costs (fixed and marginal costs relative to the number of subscribers) arising from StarHubs acquisition of the EPL rights. 2. Which of the changes in (1) would be relevant to StarHubs pricing of cable TV services? 3. For each of the changes in costs explain how StarHub should adjust its cable TV pricing. Show less

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