Trai cap pushes up TV channel ad rates

After being stagnant during the first half of the year, advertising rates on television channels have started increasing, owing to the Telecom Regulatory Authority of India (Trai)’s recent 12-minutes-an-hour cap on advertising on TV channels. The cap prompted broadcasters to raise ad rates by 8-10 per cent. By October, when the cap would be implemented, the rise in rates would stand at 25-30 per cent, said media buyers in the know. The chief executive of a general entertainment channel admitted ad rates had started rising. “With inventory levels set to decline, this is bound to happen,” he said on condition of anonymity.

News channels have already appealed against Trai’s ruling, with the Telecom Disputes Settlement & Appellate Tribunal agreeing to hear them on the matter. Trai has been given two weeks to respond to an appeal filed by the News Broadcasters Association of India.

Trai’s move, according to people in the know, was prompted by the ad clutter on TV channels, which it believed violated the Cable Television Network Rules of 1994. Typically, news and film channels have ad breaks of 20-22 minutes an hour, while Hindi general entertainment channels have about 16 minutes of ad time an hour.

By capping advertisements at 12 minutes an hour, the regulator tried to make TV viewing a better experience for consumers and improve the quality of service.

But predictably, the move saw opposition from broadcasters, who argued capping ad time would put pressure on revenues from a crucial source. Owing to the rampant under-declaration of analogue subscribers by cable operators, the Indian broadcast industry continues to depend heavily on advertising, rather than subscription, which is the trend abroad.

Last year, the government had initiated a digitisation drive across metros. Though this was expected to address the issue, broadcasters argue Trai’s move was ill-timed, considering digitisation hasn’t been completed yet. Mumbai, Delhi, Kolkata and Chennai were part of the first phase of the digitisation drive. Cities such as Bangalore, Pune, Hyderabad, Ahmedabad, Chandigarh, Thane, Surat, Bhopal and Patna were part of the second phase, which concluded this March. Of the 210 million Indian households with TVs, about 155 million are cable & satellite households. Of these, about 30 per cent are digitised.