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CAS fallout: Ad rates likely to shoot up with cap on advertising time on channels

CAS fallout: Ad rates likely to shoot up with cap on advertising time on channels

Author | Noor Fathima Warsia & Tuhina Anand | Monday, Aug 07,2006 8:19 AM

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CAS fallout: Ad rates likely to shoot up with cap on advertising time on channels

The directive by the I&B Ministry to curb advertising time on TV by setting a 12-minute cap on advertising per hour would probably leave the channels working their own permutations and combinations. Out of the 12 minutes, two minutes would be for social messages and for the channel’s self-promotion. As a consequence, channels see hike in ad rates as a possibility. Another fallout might be that advertisers, who have hitherto not considered the second rung of channels, might turn to them, given the restriction on the ad-content ratio.

The reason behind this 10+2 rule is that the implementation of CAS in the notified areas of Mumbai, Delhi and Kolkata from January 1, 2007 will mean blackout of pay channels if a household has not acquired a set-top box. Viewers would be paying a premium to watch the channels they want. The idea is to offer a better, non-cluttered environment in such a scene.

Speaking on this, Paritosh Joshi, President, Network Sales, STAR Entertainment, pointed out, “As a network, we have always followed the 10+2 rule. However, many times for competitive reasons, it hasn’t been easy to increase rates in the manner that we would want to. With this restriction, everyone would be forced to increase ad rates to maintain revenues, and so I see this as a positive step for the industry.”

Even as STAR has been adhering to this rule, given that the same is practised in Hong Kong, where STAR channels are uplinked from, there are many instances such as movies and festivals, and very recently during STAR primetime that an exception to the rule has been made, which Joshi accepted did happen at times.

Raj Nayak, CEO, NDTV Media Ltd, said that the channels had been left with no other option but to increase their advertising rates. He said, “It’s not by design but by default that channels, to sustain themselves and break even, would need to hike their advertising rates in the days to come.”

He pointed out that they would seek clarification if this directive was applicable to both pay channels and free-to-air channels, following which they would plan their course of action.

Rajnath Kamath, Director Sales, TV-18, said, “You know as well as I that viewers don’t come on a channel for ads, in fact, the affluent viewers find ads intrusive. In a controlled environment, they wouldn’t mind advertising and spend more time on the channel and even watch ads. For me as a broadcaster, this is a perfect way to treat both my viewer and advertiser. For various reasons, this couldn’t be done earlier but now in a regulated environment, it is possible.”

NDTV’s Nayak is of the opinion that TV channels would anyway have to increase their ad rates if this directive was not issued as it was becoming difficult to survive in the hotly contested TV market. He said, “While in last 15 years, print advertising rates have multiplied by almost 13.5 times, but TV spot rates have grown by a mere 3 per cent. So sooner or later, TV channels would have been forced to reach a collective decision to increase ad rates, which I think got averted because of the directive.”

Amongst the channels that are seen as not adhering to the 10+2 are SET India and Zee Network. Prensenting his channel’s views, SET India’s Network Sales Head, Rohit Gupta, said, “We strictly adhere to the 10+2 rule for all our channels, more so for the movie channels. That said, this ruling makes it a level playing field for all broadcasters. We see this as a very positive step for both the viewer and the advertiser. The immediate fallout would be of increase in ad rates and it is about time that this happened.”

Zee Network’s, EVP, Network Sales, Joy Chakraborthy echoes his peers. He said, “We understand the importance of giving the viewers a great environment hence we have been very mindful of our ad – content ratio, especially for the flagship channel Zee TV. We welcome this ruling. We have been practicing it anyways but it would now make it easier for us to increase our ad rates to what it should be.”

Sundar Raman, MD, MindShare for North and East, sees this move in a favourable light. He said, “The bottomline is to give value to consumers’ viewing experience and this move is a step towards it. The dip in revenue is not likely to happen as the channels will clearly look at the alternative sources of revenue. With distribution in place which is a big challenge for any channel, the revenues flowing in would be even more in the long run.”

Punitha Arumugam, Group CEO, Madison Media, said, “General entertainment channels have been following this norm to a large extent, so there wouldn’t be much effect on them. However, the frequency channels would be affected. Also, with a control on inventory time, we can expect some advertisers, who otherwise were not considering the second set of channels to do so now.”

Giving his perspective, Premjeet Sodhi, Senior VP, Intellect Lintas Media Group, said, “It’s not that across all channels, all days and time-band does the problem of cluttered advertising exist. So where this is an issue, the solution could be in doing innovative programming or move to in-programme placements.”

Sodhi felt that the scenario might lead to a situation where channels would try to propose advertisers to shift some amount of advertising from premier time band to not so popular one as a part of a package.

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