Coming soon: Broadcasters may announce new pricing as per NTO 2.0 by Oct 15
Since TRAI has brought down the MRP cap for channels that are part of a bouquet to Rs 12 from Rs 19, broadcasters are considering keeping GECs and sports channels out of bouquets
With the Telecom Regulatory Authority of India (TRAI) asking broadcasters to provide a compliance report on New Tariff Order (NTO) 2.0 implementation, the stage is set for the broadcasters to come out with new MRP and bouquet rates.
Industry sources say that the broadcasters have no option but to file a fresh Reference Interconnect Offer (RIO) since the Supreme Court has refused to grant interim relief to the India Broadcasting and Digital Foundation (IBDF) and its members.
The broadcasters are planning to file RIOs before October 22. An industry source said that the broadcasters might file RIOs as early as October 15. However, most broadcasters are tight-lipped on the issue.
Individual broadcasters are also considering various options as far as bouquet formation is concerned. Since the TRAI has brought down the MRP cap for channels that are part of a bouquet to Rs 12 from Rs 19, the broadcasters are considering keeping general entertainment channels (GECs) and sports channels out of bouquets.
However, the broadcasters have not arrived at a final decision, since this move might impact the reach of popular channels in the short run. A drop in reach will have a cascading effect on viewership and ad revenue.
A senior official at a leading TV network said that each broadcaster will follow its own strategy as far as keeping popular channels outside the bouquet is concerned. “We are still evaluating whether to keep GEC and sports channels in a bouquet. If popular channels are not part of bouquets, then the rates will go up. The rates have not gone up in the last couple of years,” the official said.
However, the prices will go down if the broadcasters continue to offer all their channels in a bouquet. “If we keep popular channels in a bouquet, popular channels will have to be priced at Rs 12. We would have to reduce the rates. That is a big problem. We are still evaluating that,” the official added.
According to a senior executive with a leading media company, NTO 2.0 will be implemented from December 1 if the broadcasters file RIOs by October 15. The executive also said that the prices will go up if broadcasters decide to keep popular channels outside the bouquets.
“If any or all broadcasters decide to keep GECs out of the bouquet, consumers will have to pay more. If popular channels are bundled with other channels in a bouquet, then the prices will go down because the Rs 19 channel will have to be priced at Rs 12,” the executive said.
The executive further stated that popular channels will survive, while weaker channels will have a tough time. “Everyone wants the popular channels as they are the big advertising drivers,” the executive said.
An industry source said that the broadcasters have no option but to file the RIO since SC has not given any interim relief and the TRAI wants broadcasters to comply with NTO 2.0. The source said that the broadcasters will take a call based on their own commercial interests and there will be minimum alignment at the industry level. “There will be a price rise once the NTO 2.0 is implemented and broadcasters are not to be blamed for this situation,” the source asserted.
Another TV distribution executive said that the broadcasters have not decided when to file the new RIO, as there is time till 22nd October to respond to the TRAI's letter. “We have not yet decided whether to keep the popular channels in the bouquet or not. We will take a call soon. Each broadcaster is going by its own commercial considerations while deciding on bouquet formation,” the executive said.
The two major changes brought in by the TRAI with NTO 2.0 is the reduction of price cap of Rs. 19/- to 12/- for inclusion in a bouquet and the introduction of twin conditions. The second twin condition has been struck down by the Bombay High Court.
The first twin condition says that the aggregate of the a-la-carte prices of channels in a bouquet must not be more than 1.5 times the bouquet price. So, if a bouquet has five plus channels with their individual a-la-carte price and a bouquet priced at an X amount, then the total/aggregate price of the channels should not be more than 1.5 times the bouquet price. In effect, the first condition caps a bouquet discount at 33.33%.
The second condition, which has been struck down, mandated that the MRP of any individual channel in a bouquet should not exceed three times of the average MRP of a pay channel in that bouquet. The quashing of this condition will bring some relief to the broadcasters.
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