Media Monday: Pay TV- A silver lining for Broadcasters?

This year has been bad for Broadcasters with most of them making losses (TV18, NDTV to name a few). But most of them still remain optimistic as markets are returning back to normal and DTH services are adding more and more numbers to their subscriber’s list.

But can this really help Broadcasters?

Revenues from subscription for Broadcasters are a mere 20%, where majority goes to the local cable providers and MSOs (Multiple System Operators).

When we dig deep we find that total DTH subscribers in India stands at around 13 million (10% of total TV homes in India i.e. 130 million) with a projected CAGR growth of around 30% for next 3 years. Even if we assume this number to be 25 million by 2012 we still have lots of issues to catch up.

Why do you think TV Channels now-a-days are showing up more of sensational stuff than logical? Why we have news channels which show more of breaking news than genuine ones? The point is that they need to remain ahead in the TRP game, as majority of their revenues still depend upon Advertisements.

Broadcasters have long been fighting with TRAI to get more of total subscription revenue chunk. Recently, TDSAT set aside TRAI’s old ruling which Broadcasters argued was more in favor of the cable operators [How can distributors of a product earn more than the manufacturers?]. To understand this ruling lets learn the issue at hand-

1. TV content distribution has 4 major players- Cable operators, DTH owners, MSOs and Broadcasters.
2. In India after Govt mandated CAS (year 2006) in some areas, we have seen a major growth of DTH players in those areas.
3. During the year 2006 TRAI came up with a fixed rate to be charged between Broadcasters and Cable operators (rate of Rs 5/channel and Rs. 77 for all free to air channels per month) in CAS implemented areas.
4. In 2007 TRAI further tied Broadcaster’s hands by extending a similar ruling for non-CAS related areas (the charges payable by cable operators and MSOs for pay channels could only be increased at the then inflation rate of 4 per cent).
5. It was also asked from Broadcasters to provide their Channels on a la carte basis to Cable operators and MSOs. By this ruling Broadcasters had to price each Channel instead of a complete bundle of Channels.
6. This ruling was challenged by Sony TV, Discovery, Zee Turner, Star India and Sun TV at TDSAT.
7. Finally TDSAT ruled out TRAI’s mandates (fixed price for every pay channel and la carte menu for Channels) during January this year.

So finally, Broadcasters have something to cheer about. But this ruling may have some negative impact on subscriber’s pocket.

Imagine with 300 odd new channels launching, what would happen if there is no price restriction on them.

But from Broadcaster’s point of view, if subscription revenues kick off they would be the happiest, as this kind of revenue model will be independent of the economy (as against advertisements).

[This Media Monday post has been submitted by Rabi Gupta, a start up enthusiast and soon to launch his first product iDubba (Intelligent Box).]