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2014: A year of de-aggregation

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2014 was a year when the Telecom Regulatory Authority of India (TRAI) issued, as many said, the ‘death warrant’ for the powerful aggregators. The year started with the regulator throwing the ‘big bomb’ on the channel aggregators by introducing the ‘de-aggregation paper’. The paper clearly stated that the broadcaster appointed content aggregators could not mix and bundle channels from different networks before signing deals with the distribution platforms.

With the regulation, the once content aggregators were given a new name, that of ‘agents’ who would carry out the deals ‘on behalf of’ the broadcaster. TRAI gave the aggregators six months to dismantle operations, or realign as agents. As part of the regulation, it was the broadcasters who could now sign deals with the distribution platforms either directly or through agents, who could only work on behalf of the broadcaster and not bundle channels from different networks. The regulation came as a shock as it curbed the power of aggregators Media Pro, IndiaCast UTV Media Distribution and TheOneAlliance.

Soon after, aggregators started disintegrating. MediaPro, the JV between Star Den and Zee Turner was the first to announce its separation. Thereafter, both of them began distributing on their own. Zee Network created a separate distribution entity called Taj Television which would also act as agents for Turner channels. MediaPro CEO Gurjeev Singh Kapoor headed off to handle Star India’s international business while COO Arun Kapoor became CEO of Taj. Soon after this, MediaPro terminated its alliance with NDTV, MGM and MCCS.

The next in line to break up was IndiaCast UTV, the JV between Network 18 (TV18) and UTV. The last to do so was TheOneAlliance (a JV between MSM and Discovery) which has already announced its decision to break away but will formally happen only on 1 January 2015. Meanwhile IndiaCast will act as an agent for UTV as well as Epic TV channel, while MSM and Discovery will be setting up their own operations.

While on one hand broadcasters were figuring out how they could deal with the new clause from TRAI, on the other hand distribution issues were being fought in the Telecom Disputes Settlement Appellate Tribunal (TDSAT). The fiercest of them was between Hathway Cable & Datacom and Star India/Taj Television that lasted for nearly seven months.

The first accusation was from Star when it stated that Hathway had removed its sports channels and placed them as a separate pack. Zee Network was nearing the end of its deal with Hathway and wanted to re-negotiate it with the MSO. Hathway failed to reply on time, leading to disconnection of signals from the broadcaster. Thereby, the MSO took Zee to court.

After long hearings between the three parties, the two cases got combined and it was settled that till the time the case does not come to an end, Hathway would pay Star and Zee at the rate of Rs 23 and Rs 21.5 cost per subscriber (CPS) basis for their entertainment channels and Rs 4 CPS for Star’s sports channels. The last verdict of the hearing came as the TDSAT directed Hathway to enter into RIO agreements with Taj Television and Star India for the DAS markets.

When everyone thought that the case would come to an end, Hathway went to TDSAT once again claiming that there would be partiality in providing RIO rates to various platform operators. The case came to an end with Star India coming forth and stating that it would only be executing RIO deals for DAS markets with all distribution platforms from 10 November. Though Taj Television had also been ordered to get into a RIO deal with Hathway, the broadcaster later on signed a CPS (carriage) deal.

The year’s ending saw much discussion on Star’s incentives that were being provided on the basis of channel penetration, reach and channel placement. While most MSOs vehemently protested against the new RIO at first, in the end they took up the channels on incentive basis and created new packs. Most MSOs decided to put the popular channels on the base pack and give the remaining as separate packs, in higher packs or as a-la-carte.

The year also saw a rise in the carriage fees, which according to many has risen by 20-25 per cent for niche and news channels.

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