The introduction of Conditional Access System (CAS) is leading to various industry issues. One of these issues is the loss in pay TV households, as was seen in a recent set-top box study conducted by TAM Media Research. Based on the findings of this study, a loss in revenue of Rs 100 crore to advertisers is indicated. Players like Hindustan Unilever Ltd (HUL) and Reliance state that broadcasters should take cognizance of this loss and offer ways of making it good.
Giving an indication of some of the steps that advertisers were taking, Sandip Tarkas, Head, Media, Relaince ADA Group, said, “I can’t discuss specifics, but we are discussing this issue with all our partners.” Rahul Welde, GM, Media Services, HUL, said, “We have not factored the loss yet. We will watch and respond to the connectivity as it progresses. However, several broadcasters have already engaged with us on this. Where the dilution is large, we are making appropriate corrections.”
Charles Berley Jenarius, CEO, Carat Media, explained, “This translates as even more elusive audiences for the advertiser. So, we have a situation where households who have not invested in either a set-top box or a satellite dish will now consolidate across a few free-to-air channels. Those who have opted for a satellite dish will fragment even further. In either case, it seems likely that satellite TV channels will lose in the short-term. So will the advertiser, if advertising rates are not rationalised in line with the emerging viewing patterns and numbers.”
R Gowthaman, MD, MindShare (South & West), said, “Obviously, the loss in homes needs to be compensated in some form. At the end of the day, we have planned for some eyeballs to be delivered, and if it is not being delivered, purely on the basis of connectivity, this needs to be addressed. It is important, considering the fact that CAS is here to stay and it is not a ‘one off’ situation like ‘blackouts’ or ‘power cuts’.”
What Broadcasters Have to Say
Some broadcasters, who could be affected by this projected loss in revenue on account of CAS, largely comprise STAR India, SET India and Zee Entertainment Enterprises Ltd (ZEEL). When quested on the subject, the fact that advertisers and agencies could think of this as an issue, has attracted both “hurt” and “angry” comments from the channels.
Joy Chakraborthy, ZEEL’s EVP - Sales, said, “I don’t know why agencies and clients are jumping on this. We are in a business here. Every month more homes are being added to the C&S universe and DTH homes are growing and not being charged for. Despite this, we have never gone to advertisers revising our rates constantly. That is being opportunist.”
“Yes, CAS will have an impact, but advertisers can’t be selective in considering these issues – you ignore growth and you jump on a hint of de-growth. This is unethical,” Chakraborthy further said.
Agreeing with him, STAR India’s Paritosh Joshi said, “I’m hurt and angry that this issue has even come up. Every one knows that there are over two million DTH homes and these are not even accounted for in ad rates. Second, this calculation of 2 per cent on the all India markets is fundamentally incorrect. This is only on TAM reported homes and that is less than half of C&S homes. This is under representation of the real numbers, implying an inherent loss to channels and advertisers or agencies actually think that this loss of 2 per cent is the only concern.”
SET India’s Rohit Gupta added here, “TAM is giving data for only 40 per cent of the universe. This 2 per cent loss is a very, very small amount to even talk about. TAM doesn’t cover rural India at all. We are not getting rates that we could have and for advertisers to think that this is a loss. It is unfair.”
“When poll forecasts, where organisations go to thousands of people, can go wrong, why can’t the ratings systems today?” asked Joshi. “The loss of 2 per cent is on the installed base and it is probably less than that in the overall scenario,” he added.
Broadcasters also feel that it is a matter of months before the dynamics correct themselves and CAS adoption increases. Said Joshi, “It’s a matter of a year on the outer. People are not going to stop watching the channels they like.”
All broadcasters are clear that they will not concede on any rate reduction on account of CAS. Chakraborthy said, “No client has approached us directly yet, but we are not going to give any rate reduction because of CAS.” Joshi added, “It is sad that somebody can be so mercenary. On our part, we are going to resist this.”
“There is no reduction in rates on account of CAS irrespective of what clients like Levers is saying,” affirmed Gupta.
Chakraborthy observed, “I personally feel that agencies have not understood, and are still learning the new panel implications. That is why they are asking these questions. We would be more than happy to explain the nitty-gritties of the system to both advertisers and agencies.”
“It is questionable now whether agencies are working with us at all. This attitude is the plain reason why the advertising industry is not growing in India and is at par with a small market like Hong Kong, where we compare ourselves to China, where the advertising spends is 100 times more than that of India,” said Chakraborthy.
Joshi commented, “I feel hurt that this can become an excuse for people to expect discounts. We believe that we contribute to brand building and this seems to suggest that the relation has been so opportunist.”
CAS Conundrum Part 1: Advertisers suffer loss of up to Rs 100 crore