It doesn’t look good. Late on Wednesday the ministry of information and broadcasting extended the June 30 deadline to digitise all TV homes in the four metros. The new deadline is October 31.
“This is the first big step on a slippery slope,” says Uday Shankar, CEO, STAR India and president of the Indian Broadcasting Foundation (IBF). “We don’t doubt the commitment of the minister and ministry to bring digitisation. But we have seen that one extension usually provides the grounds for many extensions. It is very disappointing.”
Yogesh Radhakrishnan, managing director and CEO, Media Network and Distribution, echoes that with a rider. “Sure it is disappointing, but three months will not make a difference. The fact is that it is happening,” says he.
“Four to six months doesn’t matter, as long as the process is on,” agrees Sameer Manchanda, chairman, Den Networks.
That roughly sums up what the Rs 33,000-crore Indian television industry that reaches 146 million homes or about 700 million people thinks of the delay. The industry, largely, understands the political compulsions that have forced the delay. If cable television in the four metros blacks out on July 1, the analog switch-off date, this government in its current weak state, will not be able to take the backlash.
It may be committed to digitisation but it has harmed a process that would have forced transparency, plugged revenue leakages and brought more taxes. This delay means a squeeze on working capital, loss of face for the government and a signal that consumers need not take the next deadline seriously as you will read later.
Why the delay?
About 80 per cent of the money collected by cable operators leaks out. Digitisation or selling TV signals only through a digital set-top-box (STB) is the only way to tackle this. It forces transparency which “many stakeholders don’t want,” says Jawahar Goel, managing director, Dish TV. The government attempted to fix this in 2002 with CAS but that did not work. Back then, cable had no competition. Digitising by force would have meant blackouts. No government wanted to risk that.
Now DTH (direct-to-home), a digital form of TV delivery, already reaches 46 million TV homes and offers an option to cable. So late last year the government amended the Cable Television (networks) Act of 1995 to make digitisation mandatory for all TV homes by December 2014.
Typically, the move has been resisted by cable operators and smaller MSOs. Plus, there was the issue of logistics.
“The delivery times for STBs are four months and components are two months,” says Dinyar Contractor, editor, Satellite & Cable TV magazine. So, some MSOs had asked for time. There was also the odd bit of litigation. There was a supporting tariff order from the Telecom Regulatory Authority of India (Trai) that came four months late. Plus there was the politics. In many states local politicians who own cable networks are loathe to subject their fiefdoms to the broadcaster or taxman’s scrutiny.
All these factors probably combined to pressure the ministry for an extension.
What does the delay mean?
The delay means financial pain for the companies geared to meet the deadline. “What happens to the guys who are saddled with thousands of STBs and 10 times the labour they usually have because they hired people to install those boxes before the deadline. It is a cost. Can I sack those people? What about the customer who trusted you and bought a digital STB?” asks Harit Nagpal, CEO, Tata Sky and president of the DTH Operators Association.
“It queers the pitch for the guys who want to digitise,” says Ashok Venkatramani, CEO, MCCS. Nagpal also points out that October 31 is a bad date. It is just before Diwali, the peak advertising season for TV. If digitisation is not complete, and switch-offs happen, it means a huge loss for broadcasters and advertisers.
What about the markets? “Most investors had factored in a delay. What worries them is the impact on consumer psyche,” says one analyst. “Crores of rupees have been spent by broadcasters using commercial airtime to advertise digitisation. Now the change will end up confusing consumers,” adds Anuj Gandhi, group CEO, IndiaCast, a Viacom18 company. Then there is the loss of face for a government that kept saying that the date is sacrosanct.
Venkatramani sums it up best: “We don’t want it (the extension), we don’t like it. But now all we hope is that the November 1 date is stuck to.”