The recent statement of the Minister of Finance, Corporate Affairs and Information and Broadcasting (I&B), Arun Jaitley, against ad cap for TV or print media has caused a lot of stir in the industry.
Welcoming Jaitley’s stand, the National Cable and Television Association (NCTA) has written an open letter to him on the issue of 12-minute per hour ad cap stipulated for TV news channels by the Telecom Regulatory Authority of India (TRAI).
The association’s president, Vicky Choudhry, has requested the minister to clarify if he meant to have no ad cap for Pay TV channels as well. “In case, there is no ad cap on Pay TV channels, we presume there will be no ceiling on their prices as well and they will be free to charge any rate for their channels offered in bundle packages,” he said in the letter.
There are 220 Pay TV channels in the country, where the government and the industry regulator have facilitated 480 per cent profit accrued on their business operations the letter stated.
The NCTA said if the government wanted no ad cap on Pay TV channels and prices to be kept in forbearance (free to charge whatever they want to), it should facilitate the Cable TV industry and other distribution platforms such as DTH and IPTV to charge subscription from customers -- keeping provisions for at least 150-200 per cent profit, after the basic cost of last-mile operations, billing and collection is met with.
The letter further stated that it made sense to have higher profit margins for this distribution value chain, if Pay TV broadcasters were allowed no ad cap on their channels, no price ceiling on bundling unwanted channels with popular ones and split a single channel into four, thereby facilitating a handsome profit of over 480 per cent on their recycled content.
“The present government has left everything in forbearance and open to the market forces. Hence, we too would like to earn a handsome profit on our last-mile business operations as Pay TV broadcasters have been doing and have further been allowed to do so without limit. Therefore, the cable TV subscription charges per TV set/ month will be Rs 750, excluding taxes, applicable from April 1, 2015. Also, the ministry should carry out a large-scale campaign across the country and inform 600 million satellite/ cable TV users to pay an average of Rs 600 per month, instead of the present Rs 165.” the letter stated.
This will also ensure much higher service tax and the applicable SH and edu cess collections, giving a boost to the economy, the letter stated.