Broadcasters look set to move court against pay channel price ceiling in CAS

MUMBAI / NEW DELHI: The broadcasters knew it was coming, but that in no way lessened their outrage over the CAS pricing broadside delivered by the sector regulator today. The next course of action will in all likelihood be to move the courts.

In a move clearly aimed at "honouring" the pledge given by the government "that television viewers will have to pay less under a CAS regime", the Telecom Regulatory Authority of India (Trai) today decreed a Rs 5 ceiling on pay channels.

The broadcast regulator has fixed the price of free-to-air (FTA) channels in the basic tier at RS 77 (exclusive of taxes). The regulator, which oversees the broadcast and telecom sectors, has fixed the costing for pay channels whether new or existing at RS 5 making it mandatory to offer all pay channels on a la carte basis.

RC Venkateish, ESPN India MD, did not mince his words while stating, "The pricing of pay channels by Trai are totally arbitrary and damaging for all industry stakeholders, including the consumer who might get low grade programming as investments in sports programming, like in entertainment, is high.

"How can you expect broadcasters to put in money for procuring high-quality programming when the rates realised from the market will go down so much. It will have a dramatic effect on content quality.

"Broadcasters are bound to seek legal opinion and take legal recourse."

That is obviously not how Trai chairman Nripendra Misra sees it. Misra said the prices that Trai had determined were very much in line with market forces. Additionally, Misra was quite categorical that this was "the final order on this subject."

In an interview to business channel CNBC TV18, Misra justified the regulator's diktat by stating: "If you see the features of this policy announcement, the first thing to be appreciated is that there is only a maximum retail price; it does not fix the individual channel price. The second thing is that it does not fix the bouquet price. It also has not fixed the discounts for the bouquets. So everything has been left to the market forces except the maximum retail price ceiling, which has been determined by us.

"To provide some stability to the revenues of the broadcasters, it has also been provided that the MRPs will apply only where the subscription is for a minimum period of four months."

Not surprisingly, the cable service providers are in tune with Misra on the matter. Says K Jayaraman, CEO of the multi-systems operator Hathway Cable and Datacom (in which Star India has a 26 per cent stake), "CAS is the best deal for consumers and the unwanted channels will go. As the fundamental thing in CAS is choice, that gets protected in this pricing structure,"

That line of argument cut no ice with Arun Poddar, CEO, Zee Turner who said, "The rationale behind the pricing stumps us. If the regulator wants channels to come cheap, then the channels too would be forced to lessen expenditure on programming.

"I don't rule out broadcasters taking the regulator to court over the pricing issue."

The Indian Broadcasting Foundation, which represents the interests of broadcasters, is meanwhile scheduled to meet on Saturday to thrash out what legal recourse will be taken, as also to evolve a common strategy, senior channel executives tell

The mood among cable operators was in stark contrast to that among the broadcasters. Cable Operators Federation of India president Roop Sharma, went so far as to say that Trai should have gone even lower on its pricing. "I think the prices of pay channels should have been even less at RS 3. It would have been better for the consumer then. Like in Pakistan, where each pay channel is priced at Re 1 or RS 2.

"I feel it's a win-win situation for everybody, including the broadcasters, who had accused cable operators of under-declaration."

"The comparison (with Pakistan) is ridiculous," an incensed channel executive said. "The whole business model of broadcasting in Pakistan is based on piracy," he pointed out.

Commenting on the FTA channels' pricing, Vikky Chowdhry, president of another cable operator faction NCTA, said, "The price of basic tier of free to air channels should be revisited. Still, at RS 77 (exclusive of taxes), 30 channels are manageable.

Sameer Manchanda, joint MD, GBN, put the whole scenario in proper perspective when he said, "The prices looks low for sports and entertainment channels as programming investment is higher in these genres. The rationale of the regulator seems incomprehensible. At least some genres of channels could have been separated from the others."

Media stocks plunge on Trai's pricing issue

The market voted with its feet today on the news of the Trai's price ceiling ruling with all media stocks sliding southwards. Media stocks showed a steeper fall than the the benchmark Sensex Index, which lost 24.87 points (0.21%), to settle at 11,699.05.

According to a leading investment banker, "The directive issued by Trai will prove detrimental to broadcasters' revenue kitty, especially for general and English entertainment channels and sports broadcasters."

Media scrips that fell today include Zee Telefilms, Sun TV, NDTV, TV18, TV Today and Sahara One Media and Entertainment.

Zee Telefilms opened at RS 290 and closed the day at RS 265, down 8.6 per cent. Chennai based broadcaster Sun TV opened at RS 1,224 and ended at RS 1,199.
NDTV opened at RS 200 and closed at RS 195, while TV18 opened at RS 647.15 and closed the day at RS 599. TV Today opened at RS 77 and closed at RS 76. Sahara One Media and Entertainment opened at RS 346 and closed at RS 339.

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