D-Day for 10+2 ad cap is here. What now?

Recent developments have revealed that the b'casting industry is clearly divided on the ad cap issue. Will it be implemented tomorrow – is the question of the hour

e4m by Priyanka Mehra
Updated: Sep 30, 2013 8:23 AM
D-Day for 10+2 ad cap is here. What now?

The year has been anything but dull for the broadcasting industry; and if the last week is anything to go by, far more eventful times lie ahead.

There has been much talk of whether the much-debated 10+2 ad cap will be applicable or no, with broadcasters clearly divided on the issue. The Indian Society of Advertisers (ISA) took a firm stand earlier last week by issuing a formal notice to Indian Broadcasting Foundation (IBF). A notice sent by ISA Chairman Hemant Bakshi stated: “Members of ISA have brought to the notice of ISA that they have received letters from some members of IBF about their proposal to impose an ad cap self-regulation and, thereby, ration inventory available to the members of ISA on the channels of these IBF members.”

The notice also added among other points: “We will advise our members to abide by the law and the judicial pronouncements. Any unilateral decision that some of your members take to renege on the existing contracts under the so called self-regulation while the matter is sub judice would virtually amount to showing contempt of TDSAT’s order.”

Additionally, News Broadcasters Association (NBA) managed to get a stay against the TRAI order in August by filing a petition in TDSAT, till the next hearing on November 11, 2013.

In another development last week, select music channels have also joined this bandwagon. It may be noted that these broadcasters have been quite open about their large dependence on advertisement for revenue, citing reasons of limited content, coupled with low subscription revenues and high carriage fees. 

The channels that filed a petition against Telecom Regulatory Authority of India’s (TRAI) order on ad cap include Mastiii, 9XM, MTunes and B4U, following which TDSAT imposed a stay on the TRAI order till the next hearing on October 21, 2013.

In the latest development, Sun TV joined these channels with its appeal for an exemption from the ad cap. Sun TV filed an appeal on September 25 with TDSAT seeking exemption from implementing the ad cap on October 1, and is waiting to hear from the Tribunal on its appeal.

Given the current scenario and developments, what happens from October 1 still remains unclear. The D-Day for the ad cap is upon us, but every channel seems to be dealing with the ad cap restriction on an individual level, as opposed to the industry as a whole.

My understanding is some channels have a clear reprieve; until the final decision comes through, clarity is yet not here. Some may choose to do so, some may not (follow the ad cap diktat). There is still ambiguity till the final order,” said Ashish Bhasin, Chairman India and CEO South East Asia, Aegis Media.

His sentiments are echoed by Pradeep Iyengar, President Indian Operations, EMM, “There has to be parity, otherwise there will be a postponement of the ad cap. It cannot be applicable to some and not applicable to the others; otherwise there will be a re-think. In terms of the ad rate hikes, the deals will be stuck because the ad cap has not been finalised across the board and advertisers will not want to pay increased rates.”

It is learned from industry sources that Sony will refrain from implementation of the ad cap, while Star Plus, Zee TV and Colors will follow the mandate.

Taking advantage of the impending ad cap, few channels have already hiked their ad rates, but given the current economic scenario, this move has been ill received by advertisers.

“From a business angle, given the economic scenario, this is absolutely the wrong time for a rate hike. It just means more trouble. The clients are in no mood to pay more. If the festive season goes off well, it will be good news and things will look up for the whole industry. Yes, post the festive season, there can be collective discussion on rate hikes in a bilateral fashion, not the unilateral way it is currently happening,” added Bhasin.

The chances of the implementation of the ad cap indeed look bleak, predict industry insiders. Whether or not the ad cap will be implemented, we will know tomorrow…

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