Comments Off on New Tariff Regime: Will FTA channels see a revenue spike? – Exchange4media

Free-To-Air (FTA) channels look to benefit in TRAI’s new tariff regime on account of being in the base pack, but will this also lead to increased ad-rates for them?

With the new Telecom Regularity Authority of India’s (TRAI) tariff regime coming into force, there is a sense of cautiousness among the various stakeholders, particularly the advertisers and media planners, who anticipate disruption during the initial phase. This uncertainty has impacted the media plans of advertisers who are now relooking their ad-spends for television for the last financial quarter. While there is a lack of clarity on which channels/genres could see disruption and a fall in viewership, the consensus is that Free-To-Air (FTA) channels could benefit, at least in the short term.

As per the TRAI notification, a consumer can view a set of 100 FTA channels for the base amount Rs 130 plus taxes. While viewers now have the freedom to choose only the channels that they want to watch, it will take a while before things settle down and the reach of the pay-channels, in the new TRAI regime, is determined. In this situation, the guaranteed reach of FTA channels could see advertisers betting on this space.

A genre that is likely to benefit from being part of the FTA base pack is news, particularly Hindi. Says Avinash Pandey, CEO, ABP News Network, “TRAI’s new regulations are in sync with the paradigm that cater to the concerns of the consumers and will make the industry more transparent and streamlined, bolstering the growth. This regulation will prove to be a boon in the long run, heralding greater levels of equilibrium in the industry and amongst the players. Going FTA will definitely strengthen the reach and presence for ABP News Network, resulting in giving boost to the ad monies.”

Commenting on how FTA channels will benefit in the new regime, Pawan Jailkhani, Chief Revenue Office, 9X Media, (which operates five FTA music channels 9XM, 9X Jhakaas, 9X Jalwa, 9X Tashan and 9XO), says, “We will obviously benefit by being present in the 100 FTA channels base pack as our reach will go up drastically.”

However, while FTA channels will benefit from the reach, just being present in the base pack does not guarantee viewer interest and consumption. Jyoti Kumar Bansal, CEO-PHD India, says, “The TRAI ruling will create some turmoil in the immediate term as consumers re-evaluate their options and packages offered by various broadcasters. Immediate term viewership of FTA channels could increase while consumers are in this re-evaluation phase, but eventually it is the content pull that will determine if they reap longer term benefits on viewership.”

Concurring with this viewpoint is Jailkhani, who says, “Given the changes in viewing consumption patterns, default viewing is now over. If you don’t like the channel, you will not see it even if it is a FTA channel. All channels, including FTA channels, will have to give the best content to make itself relevant. This is a strong content driven game and consumer will watch what they want and will subscribe to the pay channel that they want to see. However, an FTA channel with strong content will gain a lot.”

One also must keep in mind that of these 100 FTA channels, it is mandated that 25 per cent is reserved for public service broadcaster Doordarshan. This also raises the question whether the choice of channels in the base pack is decided by the viewer or the Multi-System Operators (MSO). While it is clear that the viewer get to choose the pay channels they want to subscribe to, various stakeholders offer varying viewpoints on how the channels in the FTA base pack will be decided – by the viewer or the MSO, in which case broadcasters may have to have deals with MSOs to ensure being present in the base pack. This could result in a new form of carriage fee with cable DTH operators. Sharing his thoughts on this, Pandey says, “It is true that base pack will be the most preferred pack by the customers. The new regime will remain same across the distribution platforms enabling a level playing field. The customer will also have a choice to either pick channels on a la carte basis or in bouquet form. Hence, a new form of carriage fee/deal will be seen with cable DTH operators.”

Increased reach and GRPs is generally followed by increased ad-rates. However, even though FTA channels have consistently shown high reach and GRPs to match, increasing the ad-rates for the genre has been a challenge for a long time. And this scenario may not change even in the new regime.

Ashish Sehgal, Chief Growth Officer – Advertisement Revenue, ZEEL says, “Channels across the genres, including FTA channels, will see benefits in the new TRAI regime. Whether the ad-rates of FTA channels will increase or not will depend on how the GRPs pan out. FTA channels have shown high reach with good GRPs, however this still has to be monetised. We are in a catch-up situation for FTA channels, as far as ad-rates are concerned.” He continues, “Every broadcaster has been trying to increase the pricing of FTA channels. It’s possible that now during this transition period of TRAI order where FTA viewing is certainty, we could see an increase in the ad-rates due to increase in volumes, and the rates could grow at a faster rate if the advertisers accept the growing importance of this genre”.

On her part, Bansal says, “On the rate front, I don’t think hikes will be a big fallout as eventually any channel is bought on its cost efficiency. Some demand-supply change may happen, but agencies will buy inventory only if it fits their cost benchmarks for specific objectives.”

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