SINGAPORE -- StarHub, Singapore's No. 2 telecommunications company, is embroiled in a payment dispute with popular U.S entertainment company Discovery that risks driving subscribers to rivals in an increasingly competitive pay TV market.
"StarHub is not prepared to pay fair value and have announced their decision to cease transmission of all 11 Discovery channels on their platform," the American company said in a press statement earlier this week. "All we are asking for is the equivalent of a cup of coffee per customer per month."
Discovery's programming, which includes the Discovery Channel, Animal Planet and TLC, has been popular here since it arrived more than 20 years ago, largely for its educational content. In Singapore, its channels reached over 1.3 million viewers in the past year, despite tough competition for eyes.
Although StarHub assured its TV subscribers that it is still "in renewal negotiations" with Discovery and is doing "everything possible to arrive at a deal," the telecom has also informed customers that it would stop carrying 11 channels under Discovery. Seven are to end on June 30, and another four by Aug. 31.
StarHub's share price has suffered, hitting an almost nine-year low after the news was revealed. The stock closed 3.5% lower at 1.93 Singapore dollars on Thursday.
"Starhub has lost almost 20% of its customer base over the past nine quarters and S$40 million in video revenue," said Vivek Couto, executive director of research firm Media Partners Asia. He noted that the issue also "highlights the lack of unity between operators and content providers."
StarHub reported S$2.4 billion ($1.79 billion ) in revenue for the year ended Dec. 31.
Southeast Asian pay TV providers are facing more pressure than ever to innovate in order to compete and attract subscribers, as more choose to watch content from video streaming websites. According to Media Partners Asia, Southeast Asian online video's contribution to total TV and online video content costs will rise from 10% to 20% between 2018 and 2023.
Astro Malaysia Holdings, the country's top pay-TV provider, has formed partnerships with regional peer to seek out different avenues for growth. For example, its "over the top" online video service, Tribe, has recently partnered with Telkomsel in order to gain access to the Indonesian mobile operator's 60 million-strong user base.
Other pay TV providers in the region have also opted to work with online content rivals like Netflix to stay competitive. GMM Grammy, the largest Thailand-listed media conglomerate, reached a multi-title licensing agreement with Netflix earlier this year that would bring Thai television content to the U.S-based streaming service's more than 125 million global subscribers.