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Carriage fee: how channels pay for your cable

If you thought you were the only one paying for your cable, think again.

New research says an average TV channel pays Rs 20 per household per year to compensate the cable network for bringing it to you in the prime band.

In other words, if you get 150 channels, the cable operator would end up getting Rs 2,000 to 3,000 per year from the owners of those channels.

Simplified further, while the cable network gets Rs 150-250 per month from you, it also gets an equal amount from the owners of the channels.

The actual numbers are much lower as the above rates are for carrying channels in the S or prime band. Most of the channels are carried on non-prime channels, which require lower channel owners to pay lower ‘carriage fees’.

In addition, big broadcasters often win ‘discounts’ on their carriage fee obligations, while others refuse to pay it at all.

In all, the Indian broadcasters paid about Rs 2,300 crore as carriage fee in FY 2011-12, or about Rs 300 per household.

The phenomenon of ‘carriage fee’, paid by the channels, came in to existence when the number of TV channels in India exploded to 600-plus, even as the capacity on its cable networks remained at around 150-200 channels.

As channels scrambled to get on board, cable operators started charging them for the privilege, and you — the subscriber — could afford to get 200 channels at Rs 200 or so per month.

The research report, called Chrome Dii R2 (Distribution Investments Index – Round 2) is one of the few to try to put a number of the ‘carriage fee’ market.

The telecom regulator has already stipulated that all cable networks will now have to spell out the carriage fee that they charge, and stop discriminating between channels when imposing the fee.

According to Chrome Dii R2, brought out by Chrome Data Analytics & Media, the cost (of renewals in the S-band) per household is the highest in central India with an average of 26.3 per year, followed by the west at 24.2.

According to the report, if you wanted to ensure that your channel was carried throughout North India on the prime band on cable, you have to spend Rs 28 crore per year, if you are new, or Rs 22 crore if you are existing one.

“With limited bandwidth available on the analogue platform, the carriage fees paid to MSOs and local cable operators have sky rocketed over the last few years. The fee varies largely basis the choice of band, popularity of the channel (content affinity) and clout exercised by the broadcaster,” Chrome Data Analytics & Media noted.

“Broadcasters continue to vie for a larger share of viewer eyeballs, in order to garner ad spends. Fragmentation of ratings forces players to incur higher distribution costs in order to remain relevant in a highly competitive environment,” it added.

In the ‘carriage fee’ study, an average of 6 solo deals per cable network were studied for their investments for S band and UHF, the firm said.

It may be noted that while cable operators charge channels for carrying their channels with one hand, with the other, they have to pay subscription fees to channels for being allowed to carry the channels.

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