Not for the first time at FICCI Frames, India today Group Chairman Aroon Purie attacked the content carriage industry, saying that due to lack of Digitization, which brings addressability and accountability, broadcasters in India left with high costs and low revenies, making most of them unviable. Purie said that advertising constitutes only Rs. 12000 crore of a total size of 32000 crore, and broadcasters get only around 20 percent of the remaining Rs. 20,000 crore. He pointed out four issues that impact profitability of broadcasters in India:
– Distribution issues: Purie likened the distribution scenario in India to traffic jams in cities, saying that the demand supply situation is skewed, because cable networks can only support 100 channels, while there are 400 active channels, and 300 more awaiting approval. The broadcasters thus end of paying around Rs. 1800 crore as carriage fee. When aaj tak was started, Purie said, the carriage fee was zero, and over the years, it’s become the biggest cost.
– Lack of accountability: Purie said that just a handful of TV channels in India in each genre are profitable, and a large majority of them are loss making. Thankfully, though, the “dumb money has dried up”. The only way out of this mess is to go to multiple devices and screens. Broadcasters are forced to rely on advertising income, and distributors cheat the broadcaster – the Indian consumers pay Rs. 20000 crore to distributors, but broadcasters get next to nothing.
The minimum national carriage fees today ranges from Rs. 100-25 crores depending on brand. There is little scope for channels to be launched, and those who do, will be a part of the loss making parade. Digitization should be mandated by government. Presently all players are losing money hand over fist. We should go 100% digital, so all channels have to come to a Set Top Box. Mumbai, Delhi, Calcutta and 52 other cities were supposed to be digitized by March 2010, but now shifted to 2012. Similarly, complete digitzation has been shifted from 2013 to 2015, but there’s no guarantee that this will happen.
– Government: The Government is the biggest stumbling block, and it is “deaf, dumb and blind to the broadcast industry. Its policies are short sighted and completely unrelated to ground realities. It only woke up in 1994 with Cable TV Regulation Ordinance, when there were 70k cable operators, all illegal, so they could tax them. Why should the government define the price for subscription to broadcast content, when it does not fix price of magazines or newspapers. The industry is littered with absurd (government) directives, including the “must carry directive”. Every player is a clone of the other. This negates the whole concept of DTH. We in India have to deploy our own perverted model and destroy a functioning model. The phenomenon of carriage fees doesn’t exist elsewhere, and the Government is blind to carriage fees, but it’s too busy controlling the price.
– Lack of cohesiveness: The industry is its own worst enemy, like crabs in a bucket. Broadcasters are not able to present a unified front. Digitization would make carriage fees redundant. Some broadcasters fear that real viewership will be exposed. A digitization fund should be set up, to encourage cable operators to digitize. Broadcasters would have spent Rs. 5000-6000 crore on carriage fees so far. Before we look to solve external issues, we need to fight our own deeds.