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New digitisation deadline adds to broadcasters' revenue woes

27-August-2014
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New digitisation deadline adds to broadcasters' revenue woes

The Indian broadcasting community, that has been waiting for  smooth digitisation transition from cable TV and an increase in subscription revenues, is not celebrating just yet. According to media reports, the deadline for the latest phase of digitisation has been extended to December 2015. The Modi government took the decision after taking stock of the issues that are still unresolved; mainly, cable operators' inability to get the equipment in place and securing the necessary permissions and licenses. The extended deadline is likely to hamper subscription revenues, and keep carriage fees fluctuating.

Broadcasters feel let down by the government. CEO of a leading Hindi news channel, on condition of anonymity said, “I fear that the whole process of stabilisation will get delayed. Carriage fees, instead of coming down, have started going up again. Smaller channels are suffering. I suspect channels will start shrinking their coverage.”
 
He also added, “Clearly the Multiple System Operators (MSO)s are 'killing the goose which has been laying the golden egg’ and they have only themselves to blame. Digitisation can happen only when the MSOs bring in the investment and the pace cannot be forced by the government.”

Phase I and II of digitisation were completed after significant delays. However, no acceptable solution had been found to the issue of revenue share between Local Cable Operators (LCOs) and MSOs. Moreover, billings and packaging remain areas of dispute too.

Lamenting the extension of the deadline, Ritu Dhawan, CEO and MD, India TV said, “The digitisation process had taken off very well, the industry had even started to benefit from it but then it slowed down and the deadline had to be extended. The industry will certainly lose the advantage that it had gained from process. Carriage fees will continue to affect our business models. We will be back to where we started from."

While reacting to the extension, M K Anand, CEO, Times Television Network said, “This was expected and would have been factored into plans.”

Though the extended deadline may have upset the broadcasters, who were hoping to make good the incremental advertising and subscription revenues, cable operators are happy to have been granted another year to run analogue signals in other cities while working for seeding the boxes.

Komal Anbarasan, CEO, Makkal TV feels even a year's extension is not enough for Chennai, that is yet to roll out the digitisation process which has been hampered by the lack of seeding. He said, “The Digital Addressable System (DAS) should have been completed this year but the cable industry is now controlled by the government and beset with legal issues. The extension is likely to impact our business majorly.”
 

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