Will broadcasters' gamble to keep GEC, sports out of bouquet pay off?

Consumers may eventually have to fork out more money for popular channels; experts think this could push some TV households to shift completely to the OTT side

e4m by Javed Farooqui
Updated: Oct 22, 2021 1:52 PM

TV broadcasters Star India, ZEEL, Sony Pictures Networks India (SPNI) and Viacom18 have taken a big punt by keeping their flagship channels out of their bouquet. The broadcasters have priced their popular entertainment and sports channels above Rs 20 which is even higher than the original MRP cap of Rs 19.
Last week, the TRAI had issued letters to the broadcasters to comply with New Tariff Order (NTO) 2.0. The broadcasters have filed a fresh Reference Interconnect Offer (RIO) with updated MRPs of channels and bouquets. The new rates will come into effect from 1st December, which is incidentally a day after the Supreme Court is expected to take up the NTO 2.0 matter for a final hearing.

Under NTO 2.0, the Telecom Regulatory Authority of India (TRAI) has reduced the MRP cap of channels to Rs 12 from Rs 19. This means that any channel priced above Rs 12 cannot be a part of a bouquet. Further, the sum of à la carte rates of a channel in a bouquet cannot be more than 1.5 times the bouquet price. This implies a bouquet discount cap of 33.33%. The broadcasters argue that these two conditions will have a huge impact on their business.

The TRAI has alleged that the broadcasters bundle 'non-popular' channels with driver channels by keeping the à la carte price of driver channels high. The regulator has also alleged that the broadcasters are offering huge discounts on bouquets. This, the TRAI avers, is forcing consumers to opt for bouquets.

By pricing their driver channels at almost double the MRP cap of Rs 12, the broadcasters have thrown the gauntlet at TRAI, which has been accusing them of 'unfair bundling'. In its counter-affidavit to the Supreme Court, the regulator had claimed that reducing MRP cap and introducing twin conditions (one of the conditions was struck down by the Bombay High Court) will ensure 'fair bundling'.

One of the biggest ramifications of this move by broadcasters is that the consumers will have to fork out more money for subscribing to popular channels. Earlier, the consumers were getting a number of mass as well as niche channels as part of a bouquet. According to the Indian Broadcasting and Digital Foundation (IBDF), almost 90% of the TV homes in the country get their dose of entertainment through bouquets. The Distribution Platforms Operators (DPOs) aggregate channels from different broadcasters and create different types of bouquets to cater to a diverse set of consumers across India.

The likely increase in monthly TV bills will become unaffordable for low-income households and might lead to a drop in the reach of certain channels. The price rise might also push a section of TV households to make a complete shift to over the top (OTT) platforms. The advent of 4G with Reliance Jio and the rise in digital content consumption has been giving sleepless nights to traditional distribution platforms like cable and direct to home (DTH).

By keeping their driver channels out of the bouquet, the broadcasters also risk losing their reach, which might impact their advertising revenues. The bouquets created by broadcasters will also become less attractive as they don't have the driver channels.

To ensure that their bouquets don't become too weak, broadcasters like Star and Zee have kept their non-flagship GECs like Star Bharat and &TV in the bouquet. Star and Sony are offering some of their sports channels as part of the bouquet.
Star is offering Star Sports 2, Star Sports 3, Star Sports Select 1, and Star Sports First in a bouquet. Sony is offering Sony Ten 3 and Sony Ten 4 as part of a bouquet. Sports broadcasters air key sporting properties on multiple sports channels. This ensures the widest possible reach for the property.
On the DPO side, the operators will have to spruce up their backend technology to handle the likely increase in demand for subscribing to popular channels on à la carte basis. The DTH operators have built a strong tech backend, since DTH has been an addressable platform from day one. For multi-system operators (MSOs), building a strong backend system that is able to handle high consumer demand is still a work in progress.
According to experts, the MRP of individual channels is relative to their popularity and strength. General entertainment and sports channels enjoy huge viewership and popularity hence they will have enough takers even on a standalone basis. As reported by exchange4media, Star India has priced 12 of its 62 TV channels at over Rs 12 across Hindi, regional and sports genres. These include Star Plus (Rs 23), Star Jalsha (Rs 23), Maa TV (Rs 23), Asianet (Rs 23), Star Sports 1 (Rs 23), Star Sports Select 1 (Rs 23), Star Sports 1 Hindi (Rs 21), Star Sports 1 Tamil (Rs 17), Star Sports 1 Kannada (Rs 17), Star Sports 1 Telugu (Rs 19), Star Vijay (Rs 19), and Star Suvarna (Rs 15).

SPNI has kept the MRP of its GEC and sports channels above the TRAI mandated cap of Rs 12. It has priced its flagship Hindi GECs Sony Entertainment Television (SET) and Sony Sab at Rs 24 and Rs 23 respectively. English sports channels Sony Ten 1 and Sony Ten 2 have been priced at Rs 20 while Sony Six has an MRP of Rs 15.

ZEEL has kept the MRP of its popular entertainment channels like Zee TV, Zee Marathi, Zee Bangla, Zee Sarthak, Zee Telugu, and Zee Kannada above Rs 12. Accordingly, these channels will not be available in bouquets. Zee TV, Zee Telugu, and Zee Kannada have been priced at Rs 22 each while Zee Marathi and Zee Bangla have an MRP of Rs 25. Zee Sarthak is available for consumers at Rs 20.

Likewise, TV18, which owns a majority stake in Viacom18, has pulled Colors and Colors Kannada out of the bouquet by pricing both channels at Rs 21. The broadcaster has kept the price of its other channels below Rs 12.

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