Senior executives such as The Walt Disney’s Uday Shankar, ZEEL’s Punit Goenka, Discovery’s Megha Tata, Viacom18’s Sudha...
- On January 1, 2020, TRAI issued a few amendments to the New Tariff Order and Interconnection Regulations for the Broadcast industry.
- After broadcasters spent over Rs 1000 crore to implement the NTO passed in Feb’ 19 and lost more than 13 to 15 million subscribers, the key stakeholders of the industry gathered in Mumbai today to challenge the latest TRAI amends.
- Television experts think the New Tariff Order pan out to be counterproductive as it would affect the content quality, take away the choices consumers have now, hit revenues, employment and take away the fundamental right to monetise their content in the manner they choose.
Senior executives such as The Walt Disney’s Uday Shankar, ZEEL’s Punit Goenka, Discovery’s Megha Tata, Viacom18’s Sudhanshu Vats, TV Today’s Aroon Purie, and Star and Disney’s K. Madhavan came together to highlight how the regulator’s intervention at the fundamental level could prove detrimental for the entire economy.
To implement the NTO passed in February 2019, the collective cost that broadcasters bore was more than Rs 1000 crore. They also lost more than 12 to 15 million subscribers in the process. While the consumers and the industry were still grappling with the shift, NTO 2.0 could worsen the situation, leading to smaller channels shutting down.
NP Singh explains how capping the prices under TRAI's latest amendments will impact broadcasters and consumers in the long-run
“As broadcasters, we expect a stable regulatory regime, which is necessary to enable long-term business planning and a strategic approach towards investments. This is absolutely critical to enable us to provide the best of content to our consumers, more so in these times of rapid technological change,” said NP Singh, MD & CEO, Sony Pictures Networks India and President - IBF.
Lack of Insights
He thinks that a 40% reduction from Rs 19 to Rs 12 for creating bouquets, has no backing of consumer insights and serves no ‘logical rationale.’ This could directly affect the quality and cost of content that is offered to the consumers. In a competitive market like broadcast, channel pricing should be determined through open market forces
“IBF believes the latest amendments will severely impair broadcasters’ ability to compete with other unregulated platforms and adversely affect the viability of the pay TV industry,” added Singh.
TRAI’s decision will come in force from March 1.
TV Today’s Purie said, “A regulator’s job is to facilitate, enable and encourage growth, not strangulate. They are killing the golden goose which lays the egg.” He further said that content is not an essential commodity. Therefore, the market forces should be free to run it according to their will.
Drawing an analogy, he added, “These regulations are like tying our feet and asking us to swim.”
Too Soon to Meddle; Proves NTO 1.0 Missed Depth
Uday Shankar said that the implications are so disruptive, that it has forced all of the broadcasters to come together. He thus questioned the very need of implementing another NTO in such a short span of time. He also questioned if there was a need for another regulation, which implies that the previous tariff lacked depth and planning.
The broadcasters also pointed out the dichotomy of NTO; while on one side it aims to bring the prices down for consumers, on the other, it restricts discounting completely. On top of that, 60% of the cut goes to distributors, as they charge Rs 106 as Network Capacity Fee (NCF).
What is the Agenda?
Viacom18’s Sudhanshu Vats, highlighting the success of previous NTO, said that 70% of the consumers bought a bouquet from DPOs, a crore and a half of the audience opted for NTO, month-on-month churn showed how consumers are making choices, 94% of the audience were aware about the shift, and transparency was achieved. Vats, therefore, questioned the fundamental need for another NTO.
“Micro-managing in a diverse country like India is impossible. Why is there a desire to serve a standard thalli to our sector? In every other sector, there are wide options; there is a shirt from Rs 100 rupee to Rs 10,000 and above. India is a very heterogeneous country and that plays out even more in media with the complexities, genres, languages and events. Therefore, there will be different choices made by different people, so this entire thing of keeping it consistent is not in the interest of the industry,” said Vats.
No Feedback from the Stakeholders
Questioning the fact that TRAI had taken enough feedback from the industry stakeholders and also the need to further reduce the prices in our country, Megha Tata said, "India is already the cheapest market in the world. There are 100s of channels and there is no evidence of market failure or high channels price compared to other developed economies that warrants TRAI fixing a cap on prices, discounting and the number of bouquets one can form.”
The new amendment also begs the question -- has TRAI taken considerable feedback from all the broadcasters before coming up with this amendment order? A progressive policy framework must be impartial to all stakeholders in the ecosystem. The new change will impact the equilibrium of stakeholders," concludes Tata.