ISA meet says no to surcharge; members mull individual action

ISA meet says no to surcharge; members mull individual action

On Tuesday, a day after major broadcasters—including Star India Pvt. Ltd, Zee Network Ltd and SET India Pvt. Ltd—yanked off ads of major advertisers such as Hindustan Unilever Ltd, Procter & Gamble, and Marico Ltd, the Indian Society of Advertisers (ISA) said its members would take “individual legal action" against the broadcasters for “breach of promise".

ISA, the apex body of advertisers and the Indian Broadcasting Federation (IBF), which represents TV companies, have been sparring over a 25% surcharge on TV ad rates that the latter has levied starting 16 October.

Advertisers had until the evening of 15 October to accept this surcharge; those that did were promised a one month waiver on the very surcharge. Those that did not found their ads going off air.

“Certain advertiser members brought forward the point that for television channels, advertising on-air is revenue, whereas for brands like us, its cost. Members stated that there are many media options that we can work with; mobile, outdoor, print, and so on. Channels have limited options," said Bharat Patel, chairman, ISA.

“In which case, why are they fighting with us?" said Paritosh Joshi, president of Star India. “It doesn’t make sense if we are that uneconomic a medium and clearly more unattractive than before."

“All that’s been decided (at the ISA meet on 16 October) is that individual brands or companies would take respective action as they deem fit, if the channel does not execute the release order. The course could be legal," said an advertiser who did not wish to be identified.

As reported in Mint on Tuesday, channels and broadcasters, including TV Today Network’s Aaj Tak, Turner International India Pvt. Ltd (channels such as Cartoon Network, Pogo etc.), ESPN Software India Pvt. Ltd, MTV Networks India Pvt Ltd, Discovery Channel India and Walt Disney Co. (India) Pvt. Ltd are not levying the 25% surcharge, due to contractual obligations.

“Turner will not be able to implement this recommendation (from IBF on the surcharge). This is for two main reasons: The terms of our existing contracts do not let us unilaterally increase the rates negotiated under those contracts and, more significantly for us, our corporate standards do not allow us to consider participating in the recommended action, in respect of existing and immediate future business," said Siddharth Jain, vice-president, distribution and business operations, India and South Asia, Turner International India.

A spokesperson for ESPN did not comment specifically on this, and said that IBF was making “necessary press statements on behalf of all broadcasters at this point in time."

The division within IBF could work against the surcharge, according to one media buyer who did not wish to be identified.

“With Aaj Tak deciding to go without the surcharge, there will be pressure on other news channels within the IBF coalition to follow suit," this media buyer added.

Naresh Chahal, director (finance), IBF said the channels could consider a waiver for most regional language channels. IBF has already given a one-month waiver to south Indian channels that need to start levying the surcharge only from 16 November.

Advertisers who have agreed to comply with the surcharge are mainly media companies themselves. Dish TV is one such.