Ad cap uncertainty continues to haunt news broadcasters

News broadcasters cannot accept the ad cap. A broadcaster invests 30% of carriage & gains 6% of revenue. What applies to GECs cannot apply to news broadcasters, insist industry experts

e4m by Abid Hasan
Published: Jan 20, 2014 7:57 AM  | 3 min read
Ad cap uncertainty continues to haunt news broadcasters

The 12-minute ad cap – will the relief last beyond March 2014? Or is it a step to wipe the slate clean of all small and medium broadcasters? What are the alternative revenue streams, if any, that may emerge with such a cap? Will it further affect the credibility of news rather than increase content on channels? What about the small and medium advertisers – will they resort to cable channels and what are the regulations for that? An estimated indigenous revenue loss of Rs 500 crore is envisaged, does increasing FDI in broadcast content and carriage entail better quality of content and distribution of resources?

These are some of the issues that broadcasters have been struggling with since last year when the Telecom Regulatory Authority of India (TRAI) issued a diktat, restricting advertising time in one clock hour of programming. While GECs have started implementing the ad cap, news broadcasters have got a stay order from the High Court till March 2014.

Sharing his point of view, Ashish Bagga, Group CEO, India Today Group said, “Putting a cap on news is going against the freedom of speech and freedom of expression. News broadcasters cannot accept the ad cap. A broadcaster invests 30 per cent of carriage and gains 6 per cent of revenue. What applies to GECs cannot apply to news broadcasters, besides advertisements are not bad, it is content.”

According to Bagga, the current situation of the news broadcasters is far from good. Subscription revenues are not more than 5-6 per cent, though there is hope with digitisation underway, however, it will take some time to benefit from the digitisation process.

He suggested a healthy business model that has a decent mix of subscription revenue and advertising. If the subscription revenue is not coming, then broadcasters are totally dependent on advertising.

According to Rohit Bansal, CEO, India Strategy Group, Hammurabi & Solomon Consulting, LLP, “The broadcast industry it is still struggling with the ad cap, when content and ads are increasingly becoming indistinguishable in many ways.”

Kartikeya Sharma, MD, ITV Network added here, “I agree with viewers complaining about ads. The problem is that the Government has followed a fractured policy from day one and has granted too many licenses without ensuring corresponding infrastructure delivery platforms for these channels.”

“We should learn how to say no to clients. When the editorial drops ads, the sales people should take the onus of ensuring that the brand’s appeal remains unaffected,” noted Chintamani Rao, Strategic Marketing and Media Advisor

Ashish Bagga, Rohit Bansal, Kartikeya Sharma, and Chintamani Rao were speaking during a panel discussion on ‘12 minute bane Vs FDI boon?’ at News Next 2014, organised by exchange4media in New Delhi on January 18. NewsX was the presenting sponsor of the event.

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