Broadcasters want longer window for implementation of 10+2 ad cap

Even as TRAI flexes its muscles in the ad cap issue, broadcasters look for more realistic terms & conditions and also an amendment in the ad duration time

e4m by Abid Hasan
Updated: May 23, 2013 10:00 PM
Broadcasters want longer window for implementation of 10+2 ad cap

The 10+2 ad cap proposed by the Telecom Regulatory Authority of India (TRAI) has hit a roadblock with no signs of most broadcasters implementing it. On the other hand, TRAI is toughening its stance and is likely to impose the 10+2 ad cap around the first week of August, according to sources.

exchange4media spoke to a cross-section of broadcasters to gauge the challenges in implementation of this ad cap, a more realistic time frame and whether this is workable in the long run.

Raj Nayak, CEO, Colors highlights three challenges that broadcasters are facing – fulfilling existing commitments, logistics of shooting additional content and bridging the revenue loss. He insisted, “These can’t happen overnight.”

On a more realistic time frame for implementation of the ad cap, he replied, “Ideally a 10 to 12 month window would be the minimum time for channels to be able to make adjustments. It is easier for sports and general entertainment channels, which can work with a shorter notice, but difficult for news and music channels, which will need a longer window.”

At the same time, Nayak maintained that the idea of putting a 12-minute cap on paid ad inventory is a good thing in the long run and even broadcasters acknowledge that. “It is just that we are seeking time and a phased manner to achieve this goal. Just like digitisation, we could set a shorter sunset date for GEC and sports channels and a longer sunset date for news and all other genres,” he suggested.

On the condition of anonymity, a broadcaster said, “In the current scenario, it is impossible to put the ad cap in place. One reason is that subscription revenues have not kicked in yet. Once the revenue model shifts from advertising-based to subscription-based, it is feasible to have the ad cap. Even globally, subscription revenue is more than ad revenue.”

According to him, ideally the sunset date for ad cap should be around June 2015 because digitisation will pan out across the country by then and subscription revenue will also be functional.

Anil Mehra, Vice Chairman, TV Today Network affirmed, “It will be the death of the broadcasting industry if this ad cap is implemented; we have only one source of revenue as of now, which is advertising, since digitisation hasn’t taken place in full-fledged manner.” He pointed out that there is still one and a half years left for the digitisation process to be completed. “The ad cap dialogue should be introduced only by December 2014 and once the subscription model is fully functional,” he added.

According to Mehra, broadcasters will lose Rs 70-100 crore if the ad restriction comes into play.

Agreeing with Mehra, Avinash Pandey, COO, ABP News said, “The biggest challenge is the cost of doing news business. We need to produce fresh content and the cost of distribution very high. With rising rate of inflation, cost of manpower is also way beyond expectation. When there is no subscription revenues, news channels have very thin or no margin at all. In this condition, an advertiser cannot pay double amount overnight.”

At the same time, Pandey added that as an organisation ABP is ready to implement the ad cap if the government gives three months time, since the group has only two paid channels, while ABP Hindi is a free to air channel.

Need a revised ad cap
According to some broadcasters, on an average 30-40 per cent revenue will be impacted if the 10+2 ad cap is implemented at this point in time. Broadcasters feel that the ad cap needs to be revised and that there should be different ad durations for different genres since advertisers and the audience vary from channel to channel.

TV Today Network’s Mehra felt that the 10+2 ad cap is a very old review and needs to be changed. There should be amendment in the ad cap and it could be 15+2 or 20+2, keeping the different segments in mind.”

Meanwhile, for Avinash Pandey the ideal ad cap is around 15+2 for all kinds of genres and healthy advertising.

Another broadcaster suggested, 10+2 for GECs, 15+2 for entertainment and 18+2 for news channel will host a perfect ad cap.

With diverse views of the industry and talks between broadcasters and TRAI not making much headway, no solution seems to be in the horizon on the ad cap issue.

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