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Digitisation: Broadcasters not ready to rework ad deals

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MUMBAI: Broadcasters and the media agencies representing advertisers will soon lock horns over commercial deals as India‘s four metros move to digital cable TV from 1 November.

An uneasy calm is already prevailing as the top multi-system operators (MSOs) have switched off English movie channels in Mumbai and Delhi on analogue cable from 10 October, the two prime ad markets. Next to follow is Hindi movie channels from 15th, news channels from 18th and Hindi GECs from 22nd of October.

More real sense of the pain is to come for advertisers and media agencies nearly three weeks after and it can hurt or be a mild irritation depending on the number of consumers who stay without the digital set-top boxes (STBs) in their homes. The problem of television viewer dropouts in the metros of Delhi, Mumbai, Kolkata and Chennai becomes more sensitive in a high-spending festive season quarter during an ad slowdown year.

In this interim transition, broadcasters do not want their commercial deals with advertisers to be reworked. Their logic: the gain will be for the whole industry and everybody has to join in making this sacrifice in order to feast later.

“Our festive ad deals are locked. We are not ready to rework the commercial terms. The IBF (Indian Broadcasting Foundation) is taking up the issue on behalf of the broadcasters,” says Zee Entertainment Enterprise chief sales officer Ashish Sehgal.

The media agencies, on the other hand, are wanting to cut short term advertising deals reflecting rate revisions

based on the extent of STB penetration. Says Havas Media India and South Asia CEO Anita Nayyar, “This has been a year of reduced ad spends and basically a slowdown year. Now there is uncertainty about the reach of the channels in the metros. The deals will have to be re-packaged.”

A part of that duel will be decided on Monday when the IBF, the Advertising Agencies Association of India (AAAI) and the Indian Society of Advertises (ISA) meet TV measurement ratings agency TAM.

The broadcasters are insisting on a “viewership data dark period” to smoothen the process of transition to sort out temporary disruptions and avoid a panic situation. An indirect implication of this: advertising deals can’t be renegotiated as there will be no benchmark data on ratings of TV shows or channels.

Media agencies are taking the opposite course to achieve what the broadcasters are out to prevent. They want ratings so that the reality surfaces and every stakeholder knows to what extent digitisation has succeeded. A tussle can, however, be avoided if the government directs TAM to stop reporting about TV viewership data for a short period, allowing the industry to settle down to digitisation.

Multi Screen Media president network ad sales and telephony Rohit Gupta reflects the aggressive mood that runs through the broadcasting community. “No broadcaster is going to rework the deals. The IBF and the NBA (News Broadcasters Association) are working together on this. The DTH has added over 25 million net subscribers and we haven’t got anything extra for this from the advertisers. There is no reason for us to take a cut,” he avers.

Media agencies have already started making their demands. Sehgal admits that some requests have come asking for rate revisions but no discussions have followed. “We haven’t done any negotiations on rate cuts. Even in our annual deals we haven’t factored digitisation at all.”

So will that mean a part of Zee’s ad inventory will go empty? “Our inventory is sold out for the festive season. Even the big-ticket properties like Saregama have no inventory left. For the network, we have locked in most of our deals,” says Sehgal.

Smaller networks may not be in that lucky state and may have factored in digitisation in their ad deals with media agencies. Says

9X Media chief revenue officer Pawan Jailkhani, “The date of digitisation has been decided months back. Advertisers have factored all of this while doing festival and non festivals deals. They take utmost care to safeguard their interests and they know it is not going to affect much as the blackout will be miniscule.”

Most of the sports channels may consider themselves lucky that they do not have any big sporting event coming up during that early digitisation period and, thus, their revenues will not be affected adversely. "It is an interesting period that the industry is entering into. Nobody knows what the short term impact will be. There could be an ad softening in the festive quarter if only there is a major drop in TV viewership. But if the cable empty homes convert to digital cable within a brief period, then there will be a miniscule impact," says a media analyst.

Also read:

Advertisers want deals to reflect digitisation gaps

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