As top broadcasters plan to move court against the Telecom Regulatory Authority of India (TRAI), challenging the amendments to the new tariff order (NTO) of last February, they are unlikely to adhere to the regulator’s deadline of January 15 to publish their new channel prices in line with the new rules.
“We are definitely evaluating legal options and plan to move court on the matter. In that case, there are no plans to come out with new channel prices in accordance with the amendments to the tariff order at this moment,” said a top executive of a leading broadcaster.
TRAI came out with amendments to its earlier tariff order on January 1 and noted that while the changes were applicable from March 1, broadcasters had to publish their new channel pricing by January 15.
Broadcasters say that after the amendments, they have not had any detailed discussions with either TRAI or the distribution platform operators (DPOs) after the amendments were released.
“We had already shared our points of view with the regulator during consultations that happened post the earlier NTO. TRAI has chosen to ignore them mostly. We have not had any detailed discussions with the regulator after the January 1 amendments,” said NP Singh, managing director (MD) & chief executive officer (CEO), Sony Pictures Networks India (SPN) and also president of the IBF.
In a rare show of solidarity the country’s top broadcasters came together to address the media on Friday, expressing their displeasure about the amendments to the tariff order.
“There have been two tariff exercises in less than a year. What was the need to have a second one so soon. It only means that the previous exercise was not thought through because it needed to be tweaked so soon,” said Uday Shankar, chairman of Star and Disney in India.
In its January amendments, TRAI has limited discounting of channel bouquets to 33 per cent besides bringing down the maximum retail price (MRP) of any channel to be included in the bouquet to Rs 12 from Rs 19 earlier.
Sudhanshu Vats, group CEO & MD, Viacom18 and vice-president IBF, claimed that since 2003 till date, the rate at which channel prices have grown is less than that of inflation in the country. This is at a time when cost of acquiring or creating content has only gone up.
He added, “The objective of NTO 1 was to give choice to consumers, bring transparency and reduce litigation. While only the first two have happened, it’s too early to talk about the third. Statistically, overall 94 per cent of Indians are aware of the NTO and the choices they have are because of the efforts made by the broadcast industry collectively. The month-on-month churn in the industry shows that people are continuously fine-tuning their choices. The other objective of the NTO was transparency which it has also brought in. The question therefore, is “what is the fundamental need to change again? In my opinion there was no need.”
On the whole, broadcasters echoed that the industry, consumers and all stakeholders needed to settle down from the changes implemented in the February tariff order. The collective cost to the broadcasters was well over Rs 1,000 crore in just communicating changes to the consumers.
Singh claimed. “Even with that, there was an overall loss of 12-15 million subscribers in the process,” he added.
In the current NTO, if a consumer is paying, say Rs 275 per month as his bill, around 60 per cent goes to the distribution platforms, 15 per cent towards taxes, and about 25 per cent comes to pay broadcasters.
“This when it’s the broadcasters who are creating the content, investing in talent and capability, and taking all the risks related to content development. Why then is the focus only on the broadcaster’s component of revenues, which is only 25 per cent of the consumer bill,” Singh argued.
Broadcasters felt that with the current state of affairs, small and niche channels would have to shut shop.
“It is not good in terms of subscription revenues, nor in terms of advertising revenues as the reach would also shrink. It is bad for the overall sector that may see severe job losses as a result,” said a top executive of a leading broadcast network.