Will the cable industry appeal to TRAI against new RIOs?

Broadcasters’ revised Reference Interconnect Offers (RIOs), introducing a 12-18 per cent hike in channel prices, has raised concerns among distribution platforms, prompting plans to appeal to the Telecom Regulatory Authority of India (TRAI) next week to regulate the increase, e4m has learnt from sources.

Last week, JioStar, the merged entity of Reliance and Disney, raised its channel bouquet prices by approximately 18 per cent, while Zee Entertainment and Sony Pictures implemented increases by 12-14 per cent.

Channel pricing has long been a contentious issue between broadcasters and the cable industry, with the latter attributing its declining subscriber base to the escalating cost of channels.

While broadcast experts justify the price hike as “reasonable”, sources said that the cable industry is unhappy and aims to challenge it.

“We have deliberated between the members today and everyone is concerned with the price hike. We have asked all the members to do their internal review. Meanwhile, we will be representing to TRAI in next week. The prices are definitely exorbitant this time. Ala carte prices have been increased by 3,700%,” said an expert.

JioStar emerged with the highest bouquet rates, raising prices by 18%. Its Star Value Pack (SVP) Hindi and Hindi Basic SD packs are now priced at Rs110 each, up from a collective Rs 93-94 (Rs60 for Star and ₹34 Colors Hindi pack).

JioStar offers 83 channel packs with 134 channels, including SD, HD, and FTA options, alongside regional language bouquets. Popular channels like Star Plus and Colors Hindi remain at Rs 19 a-la-carte, while Star Bharat rose from Rs 12 to Rs 15, and Star Plus HD increased from Rs 22 to Rs 25. Meanwhile, some prices have dropped, such as Colors Cineplex, from Rs 19 to Rs 15.

Zee Entertainment Enterprises Ltd (ZEEL) and Sony Pictures Networks India (SPNI, now Culver Max) also revised prices, with bouquet costs rising by 12 per cent. Zee’s All-in-One Hindi SD Pack now costs Rs 53, up from Rs 47, while SPNI’s Happy India Smart Hindi Pack increased from Rs 48 to Rs 54. Notable changes in a-la-carte pricing include Sony Pal doubling from Rs 0.50 to Rs 1 and Zee Café slashing rates from Rs 10 to Rs 3.

The price hikes stem from TRAI’s NTO 3.0, which allowed maximum channel prices in bouquets to increase to Rs 19. However, TRAI has deferred further price hikes until June 2024 to ensure stability during the upcoming Lok Sabha elections.

According to sources in the cable industry, TRAI may be approached in order to restrict broadcasters on the price hike issue.

However, a broadcast expert said that “the price hike is reasonable given the rising costs across the board. The cost of broadcasting, manpower, programming, electricity, and even fuel has significantly increased. Look around—prices are rising in every industry, and ours is no exception.

“Manpower costs have gone up as employees expect annual increments of 10 per cent, 15 per cent, or more. Programming costs have also surged due to these rising expenses, which are fundamental to producing quality content. However, the real challenge for the industry lies in the shrinking subscriber base. More people are transitioning to digital platforms or opting for free-to-view services, which is limiting revenue growth for broadcasters,” the expert said.

In November 2022, TRAI released the new tariff order (NTO 3.0) after which the broadcasters were allowed a price hike by 10-15%. As broadcasters executed the order, their subscription revenues also grew by around 30%.

The NTO 3.0 reinstated the Rs 19 MRP cap for TV channel inclusion in a bouquet and also allowed broadcasters to offer a maximum discount of 45% when pricing its bouquet of pay channels over the sum of the MRPs of all pay channels in that bouquet.

This order brought the cable industry and broadcasters at loggerheads in 2023 with the former terming the increase in prices as “steep” and “unreasonable” while the latter had stopped providing feed to cable operators.

However, the standoff was over after the cable operators failed to get an interim relief through the legal route and agreed to sign the fresh RIOs (reference interconnection offer) following which the channels were restored.

According to the FICCI-EY report, out of around 182 million television households in 2023, 19 million were connected TVs, 45 million were FTA screens and 118 million pay TV homes.

Pay TV homes declined by 20 lakh, from 120 million in 2022 to 118 million in 2023 and saw a 9.2% drop since 2020 when the number stood at 130 million.

With this downward trend in Pay TV, consumers are drifting to connected TV and Free TV.