The single most profound and structural change in the broadcast business is that the distributor is in control.
With attention firmly on the spectrum battle in the telecom space, a new war is poised to break out in another critical arena, for a resource scarcer than oil or radio spectrum—analogue cable frequencies. An insatiable demand is being created by a plethora of new entrants and existing players fighting for a share of the finite basket of analogue frequencies. Logistical and operational inadequacies, along with lack of will, have grounded the CAS (conditional access system) effort.
In the absence of any kind of road map or legislative push for digital broadcasting, analogue cable, with its severe supply limitations, still rules the roost.The first wave of impact has already hit broadcasters—carriage and placement fees have shot through the roof. The carriage fee kitty across the organized broadcast business is believed to be more than Rs600 crore. The industry is already reeling from runaway cost inflation in content development and viewer acquisition, combined with limited growth in advertising revenues and stagnancy of yield.
The Pay TV model envisages exceptional superior quality to be made available to demanding and discerning viewers who exercise the choice and are willing to pay for it. The presence of regulation on the revenue generation side and its absence on the cost side has made it a lopsided proposition for broadcasters. From the role of a facilitator providing viewers access to content, cable operators have turned into de facto regulators.
Without legislative or industry or any kind of common, consensual guidelines, the viewer is often saddled with a disproportionate number of channels of a single genre. The other driving factor has been the impact of the industry measurement system as an indirect catalyst to the carriage business. TAM Research already directly influences Rs7,000 crore of television advertising revenues. The knowledge and availability of information with cable operators about the weightage and impact of their individual networks on TAM panel determines their carriage fee demands.
Cable operators are almost accurately aware of the TAM panel in their network and, consequently, their indirect power of influence on ratings.
The carriage market threatens to spiral further as new content providers with launch budgets vie for visibility and access to prospective audiences. Carriage could easily overtake subscription revenues in the near future. When the dust settles in time, which it surely will, the industry faces the very real possibility of regression from the present and painful climb back to present levels. The solution and hope for this evergreen medium lies in digital. The question is of “will” on the part of stakeholders.
Joy Chakraborthy is president and head (revenue), Zee Entertainment Enterprises Ltd.
As told to Anushree Chandran