Why are top TV channels going off cable?
Under new amendments to the tariff order, NTO 3.0, broadcasters were allowed by the Telecom Regulatory Authority of India (Trai) to hike the price of channels that are part of a bouquet to ₹19 from ₹12 earlier.
Major television broadcasters including Disney Star, Zee Entertainment Enterprises and Sony Pictures Networks India have switched off signals to cable operators, as the latter refuse to roll out channel price hikes. Mint explains both sides of the story:
What’s with these price hikes?
Under new amendments to the tariff order, NTO 3.0, broadcasters were allowed by the Telecom Regulatory Authority of India (Trai) to hike the price of channels that are part of a bouquet to ₹19 from ₹12 earlier. The new price was effective 1 Feb. Most broadcasters have increased their bouquet and popular channel prices by 10-15%, and claim that it’s the bare minimum as there has been no price increase in the last four years. Direct-to-home players, who don’t have local cable operators, have decided to take a hit on other costs, pass on 5-9% increase to subscribers and are thus on board.
What are cable operators saying?
The cable industry is concerned that the price hike could put off low-income consumers especially in small towns. The All India Digital Cable Federation (AIDCF) has petitioned the Kerala High Court against NTO 3.0 and asked for relief from broadcasters’ disconnection notices. AIDCF says its decision to not execute revised pricing is a mark of protest against unreasonable rates, and a legal effort to get channels restored at prevailing prices for the benefit of consumers. It argues the hike would mean an annual payout of ₹5,000 cr- ₹8,000 cr from consumers, which would largely benefit broadcasters.
What are the risks to cable platforms?
The cable TV market in India is shrinking, with subscribers down from 46 million in June to 45.5 million in September 2021 according to a Trai report. Experts agree there could be challenges with price hikes as consumption preferences skew either to digital or free programming on YouTube or DTH packs that are now bundling OTT and linear television channels.
What does it mean for the industry?
This move has deprived 45 mn cable TV families from watching channels transmitted by these broadcasters. It could have a significant negative impact on ad revenues for broadcasters, and subscription revenues could dip 25-30%. If the issue persists, the impact will be far higher for multiple system operators (MSOs), as these broadcasters have substantial viewership share on TV. It could be a big dampener for TV broadcasting growth rates which are already struggling due to a shift toward digital platforms.
Is there a way to strike a balance?
Trai, the sector regulator, has said it has been trying to find a balance between the price for the end-user and business viability for broadcasters. In a recent interview, Anil Kumar Bhardwaj, advisor, broadcasting and cable services at Trai said it aims to ensure prices are not hiked 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," Bhardwaj said.
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