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TRAI notice on ad cap has broadcasters up in arms

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TRAI notice on ad cap has broadcasters up in arms

The issue of 10+2 ad cap has come to the forefront again with the Telecom Regulatory Authority of India (TRAI) issuing a notice to broadcasters, asking them to provide reasons for not implementing the ad cap limit during their shows. The broadcasters have been given time till March 10, 2013 to send in their replies.

This has raised the heckles of the broadcasters who have been opposing the 10+2 ad cap ever since it was first ruled by TRAI in May 2012.

TRAI had stated that no broadcaster shall carry advertisements exceeding 12 minutes in a clock hour in a programme. The clock hour commences at 00.00 of the hour and ends at 00.60. Any shortfall of advertisement duration in a clock hour shall not be carried over. Advertisements included not only the commercials, but also the channel’s own promotions for its shows or for the channel per se.

At that time various broadcaster bodies had opposed the suggestions citing ground realties in implementing them and the fact that the duration and number of ad breaks should be decided by market forces and not by regulating authorities.

Talking to exchange4media, various broadcasters expressed their anguish and said that TRAI’s diktat has been challenged earlier. “We don’t understand why TRAI is overreaching itself. Moreover, TRAI is not the proper authority to issue such diktats as these don’t come under the regulatory body’s jurisdiction,” the broadcasters stressed.

Broadcasters further said that they are running media companies and at the end of the year they need to compile balance sheets with some profits in them. “Implementing these ad caps will make entire news channels to wind up,” they insisted.

Channels walk a thin line
Meanwhile, broadcasters are examining the seriousness of the matter and bodies such as Indian Broadcasting Foundation (IBF) or News Broadcasters Association (NBA) will take a call and reply to TRAI’s notice. It’s a thin line that channels walk – too many ads and they risk losing their viewers who would just switch to some other channel; too few ads and they find it difficult to be economically viable.

It may be recalled that a consultation paper dated March 2012 stated that there was a precedence of a Supreme Court ruling, which had held that the restriction on advertising space in newspapers would lead to reduction in their revenues, which was in violation of Article 19 (1)(a). The same rule should also apply to television.

The regulation also contradicts TRAI’s own ruling of 2004, which had stated that there should be no regulation on advertisements – both on free to air and pay channels.

Another point to note is that ad revenues are not just part of the business model of channels but their very sustenance. Current market dynamics, some created due to the lacunas that had existed in the television distribution system in India, including caps on channel pricing, have not allowed channels to benefit from subscription revenues.

A channel’s ability to demand a certain advertising rate is also determined by television rating. Ratings can be adversely affected if viewers are switching off from the channel on account of ad breaks, duration of advertising or intrusive advertising. In the longer run, this affects the channel itself and hence, the onus is on the channel to provide a better viewing experience. The argument to this is that the likes of news genre, where all channels have similar content to ad ratio, which at present is more than twice of TRAI’s mandated ad time, leave little choice for the viewer.

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The OOH sector is among the fastest growing, globally. Brands and marketers have realized its potential and impact and begun to craft medium-specific adverts. Self-regulation is not only necessary but also essential to growth of the sector. The industry needs to exercise a certain level of this self-restraint to prove its commitment to maintaining the best standards in advertising.

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