With just two days remaining for a deadline to file amended TV channel tariffs, a case filed by India’s big broadcasters in the Bombay High Court has been listed for hearing tomorrow in front of Justice SC Dharmadhikari.
Broadcasters, including Star India, Zee Entertainment, Sony Networks and others, have come together under the banner of Indian Broadcasting Foundation to oppose TRAI’s decision to bring down TV channel prices.
In order to prevent a repeat of 2017 situation, in which cases were filed in several courts across India, TRAI has filed caveats in all the major high courts against issuing a stay without hearing what it has to say in the matter.
Ten days ago, TRAI notified new rules that would allow broadcasters to include a channel in a pack only if it is priced at Rs 12 or less. Earlier, it had allowed broadcasters to include a channel inside a bouquet if it was priced at Rs 19 or below.
However, said TRAI, broadcasters had gamed this provision by pricing practically all the popular channels at Rs 19 and all the less-popular channels in the Rs 1-2 range.
These channels were then bundled together and offered in packs in which the popular channels were given at steep discounts over their sticker prices.
This, TRAI has argued, was aimed at forcing consumers and cable and DTH operators to subscribe to packs rather than channels with an aim of pushing weak channels and saturating the airwaves.
To counter this, TRAI tweaked its one-year-old tariff rules on this New Year’s Day, bringing down the maximum price of channels allowed inside packs to Rs 12. Channels can still be priced at any level — Rs 19 or even higher — but they cannot be sold as part of a package.
As part of the new rules, TRAI also directed broadcasters to unveil their new prices by January 15. These prices will go into effect on March 1.
HIGHLIGHTS OF THE PETITION
The following are some of the highlights of the case filed by the IBF.
“..the analogy given by respondent [TRAI] in coming to the conclusion that the subscribers are not choosing a-la-carte channels on account of bouquets being available at discount is not only incorrect, but is not based on any facts, and has not been assessed based on the market realities about consumer behavior qua economic considerations.
“It is reiterated that consumer choices differ not only from one part of the country to another, but also within different parts of a state, a city and even within a household. By way of example children may have interest in watching cartoons or animation, adults may want to watch news or sports, or general entertainment channels, and elders may have interest in religious channels.
“Hence, a normal Indian family is likely to choose one or more bouquets that would provide all such genres of channels as opposed to choosing a-la-carte channels of each category. It is submitted that consumer’s choice of TV channels is based on personal and demographic preferences such as age, sex, culture etc. TRAI has itself acknowledged this in paragraph 101 of the Explanatory Memorandum to the 2020 Amendments to the 2017 Tariff Order. Yet, it has given this fact a complete go by in formulating and notifying the Impugned Provisions…
“..it is manifestly arbitrary to unilaterally and without any application of mind whatsoever, reduce the price cap on the maximum price that a channel can be priced at in order to qualify being made part of a bouquet. There is especially not justification given to reduce the said ceiling from Rs.19 to Rs.12, especially as there is ostensibly a formula on the basis of which Rs.19 was arrived at 3 years ago.
“Instead of continuing and/or increasing the said threshold amount, inter alia, to account for inflation, the reduction on an alleged basis that GEC channels were notionally priced around that range 3 years ago, as per Respondent’s estimation, is completely arbitrary. This is more so, since such determination of price at Rs.12, necessarily classifies channels of different genres separately, only on the presumed and ostensible basis that most people watch GECs (entertainment channels).
“..the entire exercise of fixation of ceiling price of a channel for inclusion in a bouquet and prescribing twin conditions, demonstrates a complete non application of mind in as much as price cap and restricting the manner of offering in TV Channels has been imposed without realizing the consequences that such restrictions would have an impact on the broadcasters, and content creating the ecosystem. It is submitted that the fixation of ceiling of Rs.12/- as well as prescription of twin conditions in formation of bouquets does not take into account any cost involved in creation of content.
“..prescription of ceiling of MRP of Rs.12/- on a-la-carte channels forming part of a bouquet or for that matter, fixation of any ceiling on a-la-carte and/or bouquet, is an invasion in broadcaster’s right to enter into commercial contracts for exploitation of free speech. Such an invasion cannot be done in a casual manner as done by TRAI by prescribing Rs.12/- without any basis or justification or cost-based analysis being carried out.
“Thus, such a restriction or invasion into the right of the Petitioners impinges upon the Fundamental Right guaranteed to them under Article 19 (1) (a) and 19(1)(g). Any restriction on right granted under Article 19 (1) (a) and 19(1)(g) has to be reasonable. However, prescription of Rs.12/- without any basis, cannot, by any stretch of imagination, be considered as a reasonable restriction…
“..the Broadcasters, content production companies, operators and their linked service providers together employ more than 10 lakh people in the sector. TRAI’s Impugned provisions that virtually control everything from fixing of a ceiling price of a channel for inclusion in a bouquet and prescribing twin condition will negatively impact the financial viability of the business.
“The Impugned Provisions will force shutting down of TV channels. In such circumstances, the Broadcasters will be unwilling to launch new channels and producers will be unwilling to experiment with new content. All these factors will lead to fewer shows being produced, which will have a knockdown effect on downstream production and on employment in the sector eventually infringing the Right to livelihood under Article 21 of the Constitution of India.”
“..given the fact that the first deadline for implementation of the Impugned Provisions is 15th January 2020, it is imperative that this Hon’ble Court passes an ad interim order of stay of operation of the Impugned Provisions pending hearing and final disposal of this present writ petition. The Petitioners have demonstrated a good prima facie case in terms of the foregoing submissions.
“It is also noteworthy that in the event that the Impugned Provisions are not stayed/Respondent is not restrained from giving effect to the Impugned Provisions, the Petitioner No.1’s members shall be forced to upload their amended Reference Interconnect Offers (“RIO”) on their respective website and new contracts would come into effect creating third party rights with over 100,000 entities, the rollback whereof would be impossible.”
TRAI officials and consumer groups are wary of witnessing a repeat of the 2017 scenario, when the Madras High Court granted a stay on the implementation of the original tariff order and delayed its implementation by nearly two years.
The tariff order of 2017 was finally implemented in 2019, after more or less escaping challenges in Madras High Court, Delhi High Court, and finally Supreme Court.
The 2017 order was challenged on the basis that TRAI did not have the right to set prices for TV channels (content).
However, the Supreme Court, in 2018, upheld TRAI’s right to set price limits on TV channels.
The primary contention of the petitions challenging TRAI’s move this time will be that the move to allow only those channels priced at or below Rs 12 in channel packs is ‘arbitrary’ and ‘lacking in any logical rationale or consumer insight’.
Broadcasters will also argue that frequent changes to the regulatory regime can unsettle their business plans.
Besides the above, they will also challenge other new provisions, such as not allowing broadcasters to offer discount-incentives for channel packs and forcing them to link the price of the channel packs to the price of the channels inside.
The key fight, however, will be on disallowing channels priced above Rs 12 from packages as well as preventing broadcasters from offering discount-incentives to cable and DTH players on channel packs.
Discount-incentives are currently given to cable and DTH operators who manage to sell a particular channel or package to a large proportion of their subscribers.
For example, Zee can say that it will give a discount of 30% on the price of the channel to a cable TV operator if the operator manages to get 80% of its customers subscribe to the channel.
Similarly, Sony can offer a discount of 30% to a cable operator who manages to get at least 25% of its subscribers to activate the Happy India Pack.
However, under the new rules, such discount-incentives can only be provided on individual channels, and not on packs.
TRAI has inserted this provision to make sure that broadcasters do not try to push channel packages down consumers’ throats by providing incentives to cable and DTH companies.
With this new provision, cable and DTH operators are more likely to sell individual channels, instead of packs.
Broadcasters do not prefer consumers purchasing channels individually, and would rather have them buy bouquets or packs. The aversion is based on their fear that if consumers start buying channels one-by-one, their less-popular channels will find no takers.
For similar reasons, TRAI’s decision to disallow channels priced above Rs 12 per month inside packs is also a major irritant.
This provision provides broadcasters with two choices — first, they can continue to price their popular channel at Rs 19 or higher and sell them individually, or they have to bring their prices to Rs 12 or lower and continue to sell them in packs.
The petition against TRAI’s new rules are likely to be filed by IBF. However, individual members of IBF may file separate cases against changes to the new tariff order.
If the court orders a stay in any of the cases, the implementation of the new rules — designed to bring down monthly bills and increase consumer choice — are unlikely to happen before 2021.