If implemented, TRAI’s 12-min ad cap can cause havoc in television industry

In the wake of a slowdown and dwindling revenues, broadcasters, especially FTA channels, would have to shut shop if ad time is capped at 12 mins, say industry experts

e4m by Tasmayee Laha Roy
Published: Aug 21, 2020 9:04 AM  | 4 min read

Amid the ongoing debates and discussions on NTO 2.0, TRAI is also in a hurry to introduce a 12-min cap on television advertising. The regulatory body went to the extent of requesting the Delhi High Court an early hearing of the case. However, much to their disappointment, the court has listed the final hearing for September 28. But does that put the broadcasters’ fear at bay?

Not in the present situation. In the pandemic-hit media environment, if the 12-min cap on advertisements comes into effect, it could lead to bloodbath in the television industry.  

“Our revenues have touched record lows during the lockdown. Even with viewership peaking, we could hardly manage to sell ad slots. Then there was a fresh blow about implementing NTO 2.0 which could bring down our subscription revenues. At this time we are not in a position to accommodate an ad cap that would bring down our dwindling ad revenues even further,” said a broadcaster on the condition of anonymity as the matter is sub judice.

Experts also pointed out how FTA would be worst hit. The degree of damage the cap can introduce to the broadcasting ecosystem can be measured by the sheer number of FTA channels.
According to FICCI EY report 2019, at the end of 2019, there were 918 channels out of which 63% were FTA.
“FTA channels are solely dependent on ad revenues as it is their only source of income. TRAI should not endorse any such move that hampers the sustenance of the FTA ecosystem that is providing free content to viewers,” said a news broadcaster.

According to him, news category will take a huge hit if the 12-minute ad cap is implemented as news channels comprise 42% of the total registered channels (386/918) in India.
TRAI’s original argument in introducing the cap was to protect the viewers’ interest. According to experts, in reality, the viewer’s interest would be adversely impacted if the 12- min cap is implemented as broadcasters, especially the smaller ones, would be forced to shut shop, bringing down content options by a huge extent.
Broadcasters are not sure why TRAI is pushing for the cap at a time when the television industry is already going through an all-time low.

“Even in Europe, where the rules were first introduced as Audio Visual Media Services Directive, they were proposed to be changed in May 2016. From the earlier rule of restricting advertisements to 12 minutes, broadcasters were asked to adhere to advertising every 20 minutes and the cap had been set at overall 20% for advertising for broadcasting between 7:00 and 23:00 hours. Interestingly, broadcasters’ own promotions, sponsor announcement and product placement did not fall under the advertising cap. Likewise, we should explore other models and not cap advertisements. This will be nothing but a draconian move,” said a senior member of a broadcasting body in the country.
As per TRAI’s recommendation, the 12-minute ad cap includes 10 minutes of advertising and 2 minutes of self promotions. In a bid to adhere to rules but also manage a sustainable topline, some broadcasters are ready to accept the cap as well. Their only request is to not restrict the cap to every hour but spread it across the day. Unfortunately, though as per TRAI’s order ‘no broadcaster shall, in its broadcast of a programme, carry advertisements exceeding twelve minutes in a clock hour’.
“Even if we accept the 12-minute cap, we can restrict advertisements to a total of 288 minutes. But keeping the 12 minutes restricted to an hour makes it extremely difficult for us. If we exhaust the commercial time limit between late night and early morning where there are no ads in the first place, where do we make our revenues from?” said a popular FTA broadcaster.
The case has been pending for seven years now and goes back to March 2013, when TRAI reinstated the Quality of Service norms (QoS) as per the CTNR (Cable Television Network Regulation) laws, 1995. 
The hearing on September 28 would therefore decide the fate of 900 odd channels that are already fighting to achieve ad revenues just enough for sustenance.

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