Broadcasters get breathing space as Tdsat stays Trai's ad cap rule

Insearchindia.com Team

(12 June 2012 1:45 am) 

MUMBAI: Broadcasters have earned a five-week vacation from the upsetting regulation of limiting ad time on their networks, as Tdsat has stayed the Trai notification till the hearing comes up on 17 July.

For a while, broadcasters will at least not have their ad revenues hanging by a thread, its future determined by a 12-minute ad cap per hour fixed by the Telecom Regulatory Authority of India (Trai). Stressed by a slowdown in the ad economy and anxious about the implementation of cable TV digitisation, the least they want to do is cut down on commercial time and take up the troublesome task of upping advertising rates.

True, none of the broadcasters are willing to obey the Trai order as they feel that the broadcast watchdog is overreaching its powers by regulating TV ad time.

Still, the Tdsat’s stay order comes as a major source of relief at a time when the least that the media industry wants is more headaches.

“We got a stay from the Telecom Disputes Settlement and Appellate Tribunal (Tdsat) today. The hearing is due mid-July,” says Star India chief executive officer Uday Shankar.

News broadcasters have horrible woes. If there is a way for them to wriggle out of the mess that they have themselves created by coughing out high distribution costs, cutting ad rates amidst competition amongst themselves and living under high staff costs, it is by giving more commercial time to advertisers.

Hindi TV news, the most fragmented of the lot, dedicates on an average 20-24 minutes of ad time per hour. Even with this abundant supply, news broadcasters find their ad revenues crawling at below 10-per cent growth and their profitability under attack.

Zee News Ltd (ZNL) chose a different path to tread this year, cutting the commercial time of its flagship Hindi news channel, Zee News, by 30 per cent while upping the ad rates by 40 per cent. However, the 'Maximum News, Minimum Break' journey from 2 April has been a bumpy one.

“The ratings have not seen much impact. And we have ended up producing more content. Perhaps, this experiment needs more time to yield results. We will wait for a couple of quarters more before we take a call on whether we want to go back to our old route,” says Zee News Ltd chief executive Barun Das.

Let's not forget that Zee News’ slash in ad time of eight minutes for every half-hour slot is still above the ceiling of Trai’s prescription of 12 minutes of commercial time per clock hour. So imagine the misery news broadcasters will be in if they have to swallow Trai's medicine!

In the tangled financial problems that the news broadcasters face, it is the timing of Trai’s regulation that comes under question. News channels need more time to weed out the ad inventory flab that they have created due to economic compulsions, much to the irritation of the TV audiences.

Says TV Today Network CEO Joy Chakraborthy, “Trai’s so-called radical step would jeopardise the business models of news channels. Less ad time would mean more content costs. Besides, scaling back on ad inventory by 40 per cent (from our average of 20 minutes per hour to 12 minutes) would mean demand outstripping supply and, hence, higher costs. This will discourage small and local advertisers, who form a fair bulk of clients for news channels, to come on board. These steps suggested by Trai should come when the digitisation rollout is complete. We can’t fight on all fronts.”

The ad time on news channels varies from month to month.TV Today Network, for instance, offered 22 minutes of commercial time per hour in March. This came down to 18 minutes in April.

News and sports broadcasters consider another regulation by Trai as retrograde at this stage of maturity: the ban on part-screen and drop-down advertisements.

“We use scrolls on a positive sense. For Olympics, we, for instance, will run scrolls. We earn Rs 120-140 million from the part-screen and drop-down ads,” says Chakraborthy.

Trai’s ad regulation will also pinch hard the sports broadcasters. According to the broadcast regulator’s prescription, the ads during live broadcast of a sporting event should be only during the breaks in the sporting action.

A clock hour measurement system, however, does not suit this genre of channels as live content is seasonal and limited to a specific period.

Entertainment TV networks have also objected against the capping of ad duration on their channels.

“It looks like Trai is linking digitisation to shrinkage of advertisement space. There is no logic in this and it is very untimely,” says the head of a broadcasting company on condition of anonymity.

Trai’s control in ad diet is something that TV viewers would, indeed, love to have. Broadcasters, however, feel that the best route to maturity is self-regulation in content and ad inventory management.

“Trai’s order is ridiculous. It is like putting the camel’s nose in the tent. Every independent player should decide on what course of action to take. Market forces know best how to play the balancing role,” says Times Television Network MD and CEO Sunil Lulla.