MUMBAI: In line with the stated position of their industry peers, leading sports broadcasters Neo Sports Broadcast, Taj Television, and ESPN Software have red flagged Telecom Regulatory Authority of India’s ad time review policy that has the potential to upset business models of the broadcasting industry.
In their response to Trai’s consultation paper on “Issues Related to Advertisements in TV Channels”, all the three sports broadcasters have unequivocally objected to the regulators interference in the matter over which it has no jurisdiction.
Zee Group-owned Taj Television, which operates four sports channels, has termed the move as “untimely”. The company contends that the premise on which Trai has initiated this policy, that the country is moving towards digitisation and subscription income for broadcasters will jump multifold to become the primary source of revenue stream, is wishful thinking.
It also said that any consultation on the premise of digitalisation should be done only after the system becomes fully addressable wherein income arising out of subscription revenue sees a significant gain.
"It is pertinent to point out that only four metros in the entire country would be digitalised in the first phase beginning 1st July 2012 and it is expected to be rolled out in four phases to be completed by 2014 with lot many more challenges along the way till complete digitisation reaches every nook and corner of our country," Taj said in its response to Trai‘s consultation paper.
"During this interim period the broadcaster would be saddled with problem of under declaration of subscriber numbers (in the non - notified areas), high cost of acquisition of content which is spiraling every year. Therefore, in our humble submission we put forth that there is no need to bring in any fresh regulatory norms for Advertisements in TV channels and let the channels self regulate the time span, format and frequency of the advertisements," it added.
In mid-March, Trai had come out with a consultation paper on "Issues Related to Advertisements in TV Channels" seeking views on different maximum limits for the duration of ads in free-to-air (FTA) and pay channels on an hourly basis.
Trai proposed to limit ads of FTA channels to 12 minutes in an hour. For pay channels, this limit should be six minutes, according to Trai‘s proposition for which it wants to take the views of the stakeholders before framing out its recommendations.
In case of sporting events being telecast live, the regulator feels the ads should only be carried during the interruptions in the sporting action – for example, half time in football or hockey match, lunch/ drinks break in cricket matches, game/set change in case of lawn tennis etc.
What can adversely affect the sports genre most is that Trai is also in favour of allowing only full screen ads. In its view, part screen ads should not be permitted. Drop down ads should also not be permitted, Trai feels.
Presenting its viewpoint, ESPN Software India, the India arm of ESPN Star Sports, has argued that the consultation paper goes against Trai‘s position of favouring self-regulation.
It further said that the authority‘s decision to single out sports and news genre will be detrimental to the business models of these two genres. That sports content has a shorter shelf life only compounds the matter.
ESI also said that the international practices cited in the consultation paper do not compare well since the frameworks within which those broadcasters operate is completely different.
"The fact is that most of the jusrisdicstions covered do not operate under regimes where price ceilings prevail and thus allows broadcasters far more options even if advertisements are subject to regulation," the ESI response read.
The company in its submission has laid down that the should be on a 24 hour basis rather than than hourly basis.
"Such a proposal demonstrates the inherent deficiency where niche channels such as sports channels have not been considered. A clock hour basis measure would not suit this genre of channels where live content is seasonal, limited to a specific period and natural breaks where advertisement would be appropriate (For eg half time in Football or Hockey, lunch/drink breaks in cricket)," ESI held.
Neo Sports Broadcast asserted that the ad time review proposal would hamper the only revenue generation mode of sportscasters who are already suffering due to mandatory feed sharing with Prasar Bharti which robs them of the exclusivity that is the sole critereon for extracting premium from advertisers.
Neo also bemoaned the fact the broadcasters are at the mercy of Trai when it comes to pricing, which has also been an impediment to growth.
"Sports model is a very unique model where many content by its very nature have extremely limited scope to fully monetise its value and hence the channel consciously purchase other properties that offer revenue opportunities and subsidise for loses incurred on other properties. Hence a straight jacketed application of the advertising rule will be completely prejudicial to the business model of sports," Neo said.
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