Recent changes in how television channels are priced and distributed have given an advantage to large broadcasting companies, helping them push out smaller and regional channels, India’s biggest association of news broadcasters warned.
If left unchecked, the current trends would result in a loss of plurality and the establishment of monopolistic market in the country, with a handful of companies controlling all the television channels in India, New Delhi-based News Broadcasters Association said.
“As a result of excessive carriage fee payable, the number of the regional channels is reducing which will eventually affect the plurality of the regional content available in the Indian market,” it said, even as the sector regulator is contemplating coming out with new pricing and interconnect rules in the next few days.
The NBA — an umbrella association of news broadcasting companies such as TV Today Network, Times Network, TV18, NDTV and others — blamed the combination of the channel distribution (interconnection) rules of 2017 and channel pricing rules, also of 2017, but implemented this year, for the current situation.
The organization said the regulations have created an imbalance between smaller/regional channels on the one hand and big, national players on the other.
The TV channel distribution rules — called Interconnection Regulation of 2017 — gave DTH and cable operators the right to kick out any channel that is not subscribed by at least 5% of their customer base. It also gave cable and DTH companies permission to charge ‘carriage fees’ ranging from 5 to 20 paise for each of their customer from channels that are not consumed by at least 20% of their total customer base.
In other words, if a channel have been activated by only 1 million subscribers on a DTH network that has 25 million users, the DTH network can demand a carriage fee of 20 paise from the channel for each of its 25 million subscribers. This would work out to Rs 50 lakh per month.
A regional channel — such as one catering to a Malayalam audience — is unlikely to achieve the 5% penetration level for a pan-India DTH service, as the percentage of Malayalam speakers in India is only about 3.5%.
Assuming that a DTH service gets about 3.5-4.0% of its subscribers from Kerala and all of them activate a Malayalam channel, it will still fall below the 5% mark. As such, the ‘carriage fee’ — calculated using the 2017 rules — for the channel will come to Rs 50 lakh per month for that DTH platform alone. Given that the total subscriber base of all DTH services are estimated at around 60 million, the channel will have to shell out Rs 1.2 cr per month as carriage fee for DTH services alone.
Including cable, the total burden of carriage fee for a regional channel would end up closer to the Rs 2 cr per month, or about Rs 24 cr per year. While this may be affordable for a national channel, most regional channels — particularly news channels — will be forced to shut down if they have to pay so much.
Not surprisingly, only a tiny fraction of news and regional channels have so far signed carriage fee agreements. Most have, instead, opted to pay money to DTH and cable players under the guise of ‘marketing fees’, ‘placement fees’ and so on. However, when it comes to such charges, said NBA, it is a free-for-all.
“Big broadcasters use their clout to displace smaller and stand-alone broadcasters and some Pay channels offer huge discounts on their bouquets to DPOs (DTH and Cable) and name it placement fee,” NBA said.
“If TRAl does not intervene and regulate the interconnection agreements such as placement, marketing or other agreement, the FTA/regional channels will become commercially unviable to run and as a result the plurality of regional content will decline, as will competition.
“There will be no transparency or level playing field established for the stakeholders as the news broadcasters will always be susceptible to threats from DPOs; small news broadcasters from larger players in the market, which could lead to monopolistic practices being established in the industry,” it said.
News broadcasters — who tend to be independent of big media conglomerates — urged TRAI to fix the way carriage fee was being calculated.
To calculate whether a channel is popular or not, they said, its penetration level should be calculated by taking into account its target market, instead of target market of the DTH or cable player.
For a Tamil channel, they argued, the penetration level should be calculated by comparing it with the total number of Tamil-speaking subscribers among the DTH or cable company’s customer base, and not against its total user base.
“It is important that the deﬁnition of Target Market in the said Regulations be suitably amended to re-deﬁne the term based on the language of a state/territory or the total subscriber base of a DPO subscribing to a regional pack of that DPO,” NBA said.
According to the current rules, once a channel reaches 20% penetration, the cable/DTH provider can no longer charge carriage fee. Because of this, said NBA, many cable/DTH operators try to ensure that the penetration level never crosses the 20% mark.
“As Carriage Fee is not payable by news channels who reach beyond the 20% subscriber base, the DPOs ensure that the news channels — FTA, regional or otherwise — never reach the said subscriber base,” it pointed out.
Another prominent free-to-air news channel too pointed out that the current rules are unsuitable for regional and niche channels.
“For e.g., Hathway [cable operator] defines their headend (network origin) located in Kolkata as catering to the target market comprising of Odisha, Wes Bengal & Sikkim. An Oriya Channel may be greatly disadvantaged as given the width of the target market, they becoming over 20% subscribed in the target market may be a challenge & hence they stay in the carriage fee applicable state for the MSO (cable operator),” it pointed out.
It said the situation has deteriorated after the introduction of the new pricing rules, on top of the new interconnect rules that were brought in two years ago.
“The primary issue for FTA (free) channels has been [that] the 100 Channel [base offering] for Rs 130 includes 27-odd DD Channels and thus leaves 1 slot for every 6 licensed FTA channel. [Because of this] the Carriage/Placement menace is back in full swing.”