Home / Industry / Media /  TV channel price hike likely to be implemented only by April
Back

TV channel price hike likely to be implemented only by April

Distribution platform operators are yet to finalize agreements, and industry experts say the 1 February deadline will be missed.  (Photo: Bloomberg)Premium
Distribution platform operators are yet to finalize agreements, and industry experts say the 1 February deadline will be missed. (Photo: Bloomberg)

As the date for the implementation of new TV channel pricing nears, broadcasters expect a 10-15% increase in distribution revenues, with announcements of new channel bouquet and a-la-carte pricing in line with amendments to the tariff order, known as NTO 3.0

NEW DELHI : As the date for the implementation of new TV channel pricing nears, broadcasters expect a 10-15% increase in distribution revenues, with announcements of new channel bouquet and a-la-carte pricing in line with amendments to the tariff order, known as NTO 3.0.

However, distribution platform operators are yet to finalize agreements, and many in the industry say that the 1 February deadline will be missed. Industry experts said that NTO 3.0 might effectively be implemented only by April, as direct-to-home (DTH) and cable operators are hesitant to pass on the price hike to the end consumer amid churn.

Many said these rates might seem nominal to affluent, urban audiences but will pinch many consumers in small towns.

A few said that implementation of the new rates might result in a marginal growth of subscription revenues, but it could well get offset by the subscriber churn because many consumers are either looking to do away with second television sets or moving entirely to video streaming or consume free content on DD Free Dish or YouTube. Times will be particularly challenging for markets where both Hindi and regional content are viewed because channels in one of these will be done away with.

“The sentiment in the broadcast industry currently is one of fear and caution. A lot of churn had already taken place with NTO 1, and genres like English entertainment had been absorbed into the fold of OTT. Even though subscription revenue could grow marginally at 8-10% because of these price hikes, overall subscriptions will come down, nullifying the impact," said a senior executive at a broadcast network declining to be named. In addition, local cable operators, who are the first point of assistance in small towns, are very reluctant to implement the new rates, the person said.

Chandrashekhar Mantha, a partner at Deloitte India, said the NTO 3.0, to some extent, is on the same lines as NTO 1.0, as the price cap for a-la-carte channels is back to 19. “It will give leverage to broadcasters to price their very popular channels higher than the earlier cap of 12," Mantha said, adding that subscription revenues may grow at a minimum, in the range of 7–10% for leading broadcast houses while ad revenues may go through some stress test with the looming slowdown.

One way of looking at it is that price hikes are in line with inflationary changes, said a media analyst declining to be named. “Genres like English have already been hit. The real question is whether Hindi GEC will be able to sustain it, given that many people are now watching catch-up content for free on OTT, if not DD Free Dish. Many regional channels, on the other hand, aren’t yet available on Free Dish, so those could have an advantage," the person said.

While the pay-TV universe in India has already shrunk to 108-110 million from 120 million four years back, the investments in content, especially sporting rights, have gone up tremendously.

Media industry experts say multi-system operators may face some challenges as consumption preferences skew either to digital or free programming on YouTube or DTH packs that are increasingly bundling OTT and linear television channels.

“Television subscriptions have either remained flat or fallen over the past few years, in which case, the only solution was to increase the base or hike rates that were fixed for three years. But these hikes aren’t going to be easy from the perspective of last mile cable operators or for consumers," said Anuj Gandhi, media analyst and founder of Plug and Play Entertainment, a media tech start-up.

Gandhi added that the fact that all major broadcasters have their own OTT platforms should provide some compensation. It is also important to recognise that a significant increase in TV subscriptions is going to be hard to achieve, he said, given the number of people moving either towards DD Free Dish or giving up TV sets entirely, he added.

The sector regulator, Telecom Regulatory Authority of India (TRAI), meanwhile is trying to find a balance between the price for the end user and business viability for broadcasters.

“Our endeavour has been to ensure prices are not increased beyond a reasonable level. Broadcasters have been saying these hikes have come after many years and distributors are currently of the view that they will be able to implement them only if they get some incentives," said Anil Kumar Bhardwaj, advisor (broadcasting and cable services) at TRAI.

NTO 3.0, which was notified in November last year, allowed TV broadcasters to place their channels with MRP of up to 19 to be a part of bouquets while offering a maximum discount of 45% on bouquet pricing over the sum of MRPs of all the pay channels in that bouquet.

K Madhavan, president of the industry body Indian Broadcasting and Digital Foundation (IBDF) and country manager of Disney Star had welcomed the move and told Mint in an earlier interview that even though there was a delay, the new changes introduced by the regulator posed a win-win situation for the entire industry. He, however, added that the industry needs a complete forbearance on pricing and distribution.

ABOUT THE AUTHOR

Lata Jha

Lata Jha covers media and entertainment for Mint. She focuses on the film, television, video and audio streaming businesses. She is a graduate of the Columbia School of Journalism. She can be found at the movies, when not writing about them.
Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less

Recommended For You

Trending Stocks

×
Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout