It is time now for the big boys to play. More than 65 per cent of all television watching time in India is dominated by five large networks — Star, Sony, Zee, Sun and Network18. The last is a new addition to the list with its acquisition of Ramoji Rao’s ETV. Note that we are talking about networks. For instance Star has roughly 21 per cent audience share across its 35 channels in seven languages. Zee has 25-plus channels that get roughly 14 per cent share, and so on.
Of the total, the remaining 35 per cent is split between local cable channels, which have a large chunk; Turner; Doordarshan; some of the news networks; and other standalone channels. (This is based on TAM Media Research data for the first quarter of 2012.) So consolidation is almost complete on the broadcasting side of the Rs 33,000-crore Indian television industry.
On the distribution side the business is already getting consolidated. Six direct-to-home (DTH) firms reach about 50 million homes. Mandatory digitisation is underway. Soon, access to India’s 146 million TV homes will be controlled by a dozen or so cable and DTH companies.
Add these two factors and you have an industry that looks like it is in the final stages of tackling the biggest factor pushing down both advertising and pay revenues — fragmentation.
India’s television industry has three main sets of players: broadcasters, distributors and content producers. At almost every point in the value chain, extreme fragmentation has been the bane of the business. There are more than 60,000 cable operators, over 600 channels and thousands of programme producers. Add a wonky industry structure and ad-hoc regulation and you can see why over the last five to seven years, the margins for most TV broadcast companies in India have fallen to half the levels they were in the good years. They were good because capital had not begun chasing the business. The moment it did and competition grew, the inherent weaknesses in the industry structure started telling.
This consolidation then is, largely, a force for good. What are its implications?
Many months back, Haresh Chawla, the former CEO of Network18, in an interview with Business Standard, had said that post digitisation, when cable and DTH operators get more powerful, the networks with the maximum channels and viewership share are the ones that will have negotiating power.
In most markets, by the time the market reaches this stage, there is a robust regulatory and industry framework in place. India lacks both. So you have these large consolidated broadcast behemoths with 10 and 15 per cent audience share each negotiating with distributors who control say 10-20 million homes each. In a market with a patchy regulatory framework and an industry full of players who have just about stopped squabbling; this is fraught with all sorts of dangers.
There is the danger of sudden switch-offs, of blanking out voices and opinions, of consumers and advertisers left at the mercy of broadcasters that are too busy fighting battles with cable and DTH operators.
A few simple things could help.
One, cross-media regulation based on ownership and share-of-voice caps. This should include all media including print, radio, and the internet. In newspaper publishing for instance several firms now own cable companies and radio stations in the states they operate in. This gives them disproportionately high market power in those cities or states. The norms are set in dozens of countries. All we need to do is apply them to India. And in places with existing cross-media monopolies, the concerned companies have to be given enough time to reduce their holding or market share.
Two, at the cost repeating myself for the umpteenth time, even before we start debating cross-media norms we need an independent-of-the-government media regulator. There is no way a coalition government will ever be able to arrive at a consensus on cross-media or any other media rules that involve any control. The pulls and pressures of partners who own media companies, the fear of being drubbed by the press, among others, will mean that no government can take a visionary and neutral stance that balances the economic imperatives of the media business with the need for plurality and diversity.
As the big boys pad up to play a few ground rules will be good to have in place.