Television

Area-wise rollout to soften pay broadcasters ad hit

MUMBAI: There is no logic in banning advertisements on pay TV channels but higher subscription rates might allow pay channels to reduce their dependence on ad revenues. This view came up rather strongly during the session on "After CAS, will advertisers step out of pay TV channels?" at The National CAS Media Summit 2003 organised by indiantelevision.com at Mumbai's Hyatt Regency Hotel on 4 July 2003.

The general consensus was that overall TV ad revenues would not be hit - only redistributed and pay TV monopoly will go away. While pay TV channels would see a dip in ad revenues, the fact that the rollout was being conducted area-wise in a phased manner in the two main metros would soften the blow to a great extent (mind you these impressions were drawn before the news came in that the whole exercise was being deferred to 1 September). The point was also made that national broadcaster Doordarshan would gain big time post-CAS.

The panelists included Zee Cinema business head and ETC Networks promoter Yogesh Radhakrishnan; media expert (and ex Star India ad sales head) Raj Nayak; media professional (and ex Carat India CEO) Meenakshi Madhvani; Starcom MD (west and south) S Ravi Kiran and WPP Marketing Communications director (marketing and corporate affairs) Sai Nagesh.

Here, we present some excerpts from the discussions.

Meenakshi Madhvani

The media planning scenario post CAS will not be very different than the existing one. There will be three different audiences - terrestrial, FTA C&S audiences and CAS C&S audiences. 

Pay channels will lose revenues because smaller audiences will definitely imply a reduction in ad revenues.

Terrestrial channels will be taken far more seriously; Doordarshan will grow. It is possible that the FTA channels will occupy prime bands.

Pay channel homes will definitely be seen as the premium households but there is no clear cut evidence that products targeting mass media will be affected to lesser extent than those targeting niche segments.

Pay channels might reduce the amount of advertising they accept but add a premium value to the existing rates. 

Raj Nayak

If the CAS rollout had been on schedule (14 July), the entire industry would have taken a cautious stance. Media planners and buyers would have demanded concessions from pay TV broadcasters.

Having a set top box in a house doesn't imply that the members of the household will buy all the pay channels. It is possible that they will use the box to view merely one or two pay channels - perhaps just a Star Plus.

Whenever, there were blackouts, media buyers have forced broadcasters to offer discounts. Therefore, rate negotiations post-CAS seem inevitable.

It is scary because the overall universe will change every month as subscribers will resort to un-subscribing pay TV channels.

There is no logic in banning advertising on pay channels. However, channels will have to indulge in self-regulation and contain ads to permissible levels. There is no point in stretching a two and a half hour film to five hours.

The total TV ad pie will grow but it will get redistributed. In the case of pay channels, monopoly will go away. Subscription revenues will grow at a faster pace.

Peer pressure will come into play and consumers will be forced to buy set top boxes.

Ravi Kiran

Till date, no MSO has claimed to provide data on individual viewership. Media planners and buyers will still have to depend on audited TV ratings. In the initial phase, TV audience data will not even report CAS homes. One million is too small a figure.

CAS has been a mismanaged project and this has led to confusion. The current postponement or deferment will ensure that there are gray areas. There would also be intrinsic complexities wherein subscribers would invest in a set top box, subscribe to pay channels and then even stop subscribing in the next month. However, the overall, TV viewership will not drop.

There is an opportunity in terms of greater access to data. However, it is possible that media planners and buyers will get lost in data.

The debate is not about FTA versus pay but about what viewers would want to watch in the near future. There could be channels on gambling, horse racing, court cases amongst others. Broadcasters have to think in terms of giving viewers better content.

It is possible that pay channels will have FTA versions to recover some money in the interim period.

Zee Cinema business head and ETC Networks promoter Yogesh Radhakrishnan 

The government has taken a bold step and has done a great job in creating a roadmap for CAS. However, Indians still pay $4 as compared to developed countries where consumers pay $28-$30. If India can maintain parity with global norms in oil pricing, why shouldn't there be an effort to do so in the cable TV industry. We still believe that the FTA pricing of $2 is ridiculous.

The cable industry has always survived various shocks and setbacks. Cable operators are bullish about CAS as a large portion of their revenues will eventually come from value added services. As it is advertising had tapered off and subscription would grant revenues to the trade and broadcasters.

Area-wise rollout of CAS is good as the cable trade will be able to put the right amount of thrust and effort in a smaller area.

MSOs such as Broadband Pacenet India will be able to provide data to ad agencies on households.

Advertisers haven't pulled out of any annual deals as yet.

Eventually, it is also possible that pay TV channels will decide to do away with ad revenues when the subscription revenues reaches a certain optimum levels. If broadcasters can sustain the channel at that point with subscription revenues, they can ignore advertising revenues completely.

WPP Marketing Communications director (marketing and corporate affairs) Sai Nagesh 

The impact of the government's decision on implementing CAS has created opportunities such as access to information that the set top boxes can provide.

Post CAS, the battle will be between FTA and pay. However, content will play a major role in the stakes. The longevity of TRPs will shift from the quarterly mode to a daily or weekly or monthly mode.

In the first few months after CAS implementation commences, clients will want to reduce the value of their transactions on pay channels.

Pay channels will take a hit. They will have to invest in better marketing and communication.

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