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Channels see Rs 350 cr loss in shared feed

24-October-2005
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Channels see Rs 350 cr loss in shared feed

Trai's freeze on subscription rates and a drop in advt revenue adds to the TV channel woes.

They also point out that the current freeze on television channel subscription rates imposed by the Telecom Regulatory Authority of India and content-sharing will completely wipe out subscription-based revenue.

Content-sharing with state-run Prasar Bharati will lead to an annual loss of Rs 350 crore for the sports broadcasting sector. This is what private sports broadcasters fear.

The loss will be due to a near-complete wipe-out of subscription revenue and a partial dip in advertising revenue.

Private sports broadcasters say, with broadcasting feed also available on Doordarshan, cable operators will switch to it and not subscribe to private sports channels.

Sport broadcasters get over 50 per cent of revenue from subscription, unlike other broadcasters, who get about 25 per cent.

They also point out that the current freeze on television channel subscription rates imposed by the Telecom Regulatory Authority of India and content-sharing will completely wipe out subscription-based revenue.

"This is a clear violation of intellectual property rights and a very negative move by the government. The government has not taken any recommendation by the industry into consideration," said RC Venkatesh, managing director, ESPN Star Sports.

According to sources in the industry, companies are seeking legal opinion on the issue and a decision will be taken once the guidelines are available. Some companies even hinted at challenging the decision of the government in the court of law.

"We see both advertisement and subscription revenue coming down as a result of this. It makes business completely unviable," said the head of a foreign broadcaster.

According to the government's new norms, events of national importance, and cricket, which accounts for the bulk of sports broadcasting advertisement in India, will have to be shared with Prasar Bharati.

The revenue generated by the public broadcaster will be shared with private broadcaster on a 75:25 ratio.

For cricket broadcast, private players will have to share live feed with Prasar Bharati even if rights are acquired before the notification of the new policy.

Thus, Sony, which has broadcasting rights for the next Cricket World Cup, will have to share feed with Prasar Bharati.

Advertising revenue will dip as Doordarshan can also insert its own advertisements on feed. It is expected that with Doordarshan's wider reach and lower advertisement rates, some advertisers are certain to move away from private broadcasters.

Estimates by sports broadcasters show that incremental advertisement revenue from Doordarshan will cover only 10 to 15 per cent of their loss.

Sports broadcasters are of the view that given the huge rights acquisition cost for sports events, companies have to rely heavily on subscription revenue as advertising alone cannot cover the cost.

RULES OF THE GAME

# Events of national importance to be shared with Prasar Bharati

# All cricket broadcast featuring India to be shared with retrospective effect

# Revenue generated by Prasar Bharati will be shared on a 75:25 ratio

# Channels not obliging will be barred from operating in India

# List of events of national importance to be drawn up by a panel with government and private sector representation

# Disputes to be settled by a government appointed arbitrator

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