MUMBAI: The Indian broadcasting industry is in a tizzy following the Telecom Regulatory Authority of India (Trai)?s binding decision to implement a 12 minute per hour ad cap effective from October 1.

The ad cap will understandably have an adverse effect on broadcasters? inventories which help them generate an estimated Rs 14,000 crore in advertising revenues. And this could also impact their

survival, because most of them are dependent on sale of their respective advertising inventories at a good price. All in all, it could well turn turn out to be a very expensive regulation.

General entertainment channels like Colors and Star have already announced that they will be raising ad rates by 30 per cent and 20 per cent respectively. This move does not really come as a surprise for many, as Colors CEO Raj Nayak explains: "We would have anyway done our annual hike by about 10-15 per cent so as to be able to absorb the increase in costs of programming, production etc. We have not still seen the full impact of digitisation in the form of either a fair share of reduction in carriage fees or an increase in subscription revenue, and with the inventory cap becoming a reality, we are left with no option but to increase our advertising rates to be able to stay on course."

The hike in ad rates on Colors will be effective from July 1 but one wonders will it work in a marketplace where negotiation is a norm and prices are anyway discounted by up to 30 per cent? To this Nayak asserts: "We are here for the long term and we value our relationships with our clients. We will work closely with them to arrive at a win win situation. Having said that I believe, clients who are paying least will have the biggest impact."

The channel has done all its calculations based on its revenue objectives, annual rate increases and has arrived at the 30 per cent hike figure, which Nayak says is what the channel needs on an average to stay on course.

Star India CEO Uday Shankar preferred to keep his cards close to his chest. He said, "I cannot talk about our strategy."

However, the ad rate hike may also drive advertisers towards lower priced outlets and other lesser crowded genres.

Vikas Khanchandani - Consumption of inventories on under-leveraged channels will improve.

AIDEM director Vikas Khanchandani says: "Both GEC and Niche play different roles for different advertisers and the weight-age applied are depending on the need of the brand. The hike in advertising rates is to bridge the gap from reduction in available inventory to broadcasters on account of the decision by TRAI on the cap. Each broadcaster or channel will increase their rates basis their current P&L and the impact of reduction in airtime over what they are currently selling over the cap and/ or any other escalation in input costs. The consumption of inventories on under-leveraged channels will rise."

In that case, will GECs bother about inventories being spread over to niche channels and other outlets? "That?s not such a bad thing. The truth is there is already an overflow of inventory on GEC channels even without the cap, and with the cap the supply demand ratio will change dramatically," says Nayak.

The ad cap is thus affecting one and all, so wouldn?t the niche channels want to go the GEC way and hike their ad rates as well? Do we see the rate hike spreading across the ecosystem- news, niche, etc or to other mediums? Nayak replies in the affirmative saying: "We believe this problem of supply-demand will also spill over to the Niche, Music, Sports & News & movie channels too. So I will not be surprised if they too will be forced to re-look at their advertising rates. I would like to believe that with the pipe getting choked, these channels too will not be left with an option but to increase their ad rates, unless they have a magic wand or a secret formula."

A magic wand or not, all broadcasters general entertainment or niche would do all that they can to lessen the adverse impact of the impending ad cap.

Offering a media buyer?s perspective ZenithOptimedia partner Navin Khemka said that the smaller channels that sometimes run as much as 25 minutes of ads in an hour will find it difficult to sustain themselves. "They will take a big hit if they are not able to increase the effective rate. The ones who run 12-15 minutes should be fine. The key is to be a top three player in a genre. Then you should be alright and manage a hike. At the moment it is hard to say what kind of a rate hike channels can manage. You also have to consider the fact that sometimes annual deals are done. Channels will either try their best to honour them which they should or do some restructuring."

In terms of ratings he thinks that the issue of variance in numbers will resolved in a couple of months time. "It is actually in the channels interest that the fluctuation continues as then they can say that they are not responsible for the poor delivery."

A+E Networks| TV18 VP, head marketing Sangeetha Aiyer offers a different take saying that for the factual and lifestyle genres increasing rates might not be feasible. "The current economic environment is difficult. The ad market is not great. With the slowdown most genres apart from the Hindi GECs are facing a revenue crunch. Also packaging in digital cable has not happened. Tam also has to get its house in order. FMCGs account for 40 per cent of the factual genres revenue. So ratings do play a role especially since factual channels have language feeds."

So what is the way forward? She notes that doing more local properties is one way as for that channels could charge a premium. "The aim should be to conceptualise ideas that can work as a tentpole which is what we did for ?The Greatest Indian?. Of course for that you have to earmark monies for production, marketing. I would have preferred it if the ad cap had come once digitisation was complete. We normally air 15 seconds of ads."

MSM Rohit Gupta - It?s a demand-supply equation.

MultiScreenMedia (MSM) president network sales, licensing and telephony Rohit Gupta declined to talk about his channel's strategy. He however added that it is likely that most genres will go in for a rate hike. "If you don?t then you will lose money. It is a demand supply equation. Market forces will take over. You could see a situation where clients look at more genres and channels given the shortage of available inventory on channels that they frequently use."

Times Television Trigunayat - Movies Now to hike rates by 50%

Movies Now is looking at a 50 per cent rate hike in the coming six months. Times Television Network CEO English entertainment channels Ajay Trigunayat is in favour of the reduced inventory. "English movie channels air around 15 minutes of ads in an hour. What was happening was that channels in other genres were abusing inventory and airing as much as 20 minutes an hour. This compromised the effective rate in the English movie genre. Now the viewer experience will be better. Less ads will result in more stickiness for the genre which will also justify a rate hike. Overall I expect ad rates in the English movie genre to grow by 25 -30 per cent."

Trigunayat concedes that the 50 per cent hike target is ambitious. "But we always set out ambitious targets for ourselves. In the short term there will be issues. I expect resistance from clients. But things will iron themselves out. A clearer picture of various channels? strategies will emerge by August. On our part we are not getting the rate that we feel we deserve. Generally for a new player clients wait to see the response that the channel is getting. The other challenge has been TAM ratings which have seen big fluctuations. Our rate has been flat for the past six months and fluctuations in the ratings have played a part in that. The ratings could take over a year to settle down. Clients therefore will have to look at other metrics like brand positioning, quality of the content etc. We also have to spend more time convincing clients".

On the issue of rating fluctuations Gupta conceded that there is a trust issue. "At the same time clients do not only use ratings. There is qualitative analysis that goes into media buying. Clients do their research. Over the past five years Sony?s inventory has stayed the same. Yet we manage revenue growth of 20-30 per cent as we hike rates."

Asked if less inventory on more mainstream genres will benefit the English movie genre Trigunayat noted that English movie channels are already running at full capacity. "If you look at players whether it is us or Star Movies, HBO, Pix their inventory is full. They will all increase rates. Clients will benefit if they book spots now well in advance which is what happens in the US."

Neo Sports Krishnan - Ad cap unfair on sports genre

Neo Sports Broadcast COO Prasana Krishnan said that the ad cap is unfair on the sports genre as breaks happen according to the sports action going on rather than on the basis of the clock. "Sometimes you might not have much of an ad break in an hour. Sometimes you might have more if there is a live cricket telecast. I would have preferred it if the rule was an average of 12 minutes an hour in a day. Then things would have evened out".

The news genre is not left unaffected by this development. An industry insider points out that the government should be more considerate towards news broadcasters. "You cannot reduce our ad inventories while you do nothing about the enormous burden of carriage fees that we have to bear." He further adds that unless the carriage fee is brought down substantially and subscription revenues are also looked at, the ad cap compulsion is unfair. There must be a considerable drop in carriage fees wherein a network of 2-3 channels has to pay approximately Rs 10 crore - Rs 12 crore while single channels pay not more than Rs 2 crore - Rs 3 crore, he said.

Khanchandani adds: "Impact on news will be different from that of niche. News is most impacted by the decision and have to significantly increase their own rates on account of very high dependence on ad time. If the increase in GEC pricing is very steep the advertiser might optimise the plans in favour of some genres but as I mentioned it depends on the requirement of the brand."

A CEO of a news channel while refusing to come on record admitted that "the news broadcasting industry will also look at hiking ad rates because even our inventories are being adversely affected."

In such a complex scenario based on the government and business environment, the advertiser?s target audience and consequent decision remains the bone of contention. After all, with the impending digitisation, there is a lot of ambiguity revolving around which channels are reaching the audience and which are not.

Khanchandani gives some perspective: "The television platform continues to be an effective medium for advertisers at large and I strongly believe in the medium. The impact will be varied across genres and channels. It?s a function of demand and supply and their respective state of inventory utilisation. Fundamentally prices will go up across channels and inventory utilisation across under leveraged channels will improve."

GECs are confident of their loyal advertisers; as Nayak puts it: "The advertising market is buoyant, I see a reasonable growth this year over previous year and we believe as long as we deliver value people will continue to invest in our channel."

MUMBAI: The accolades continue to pour in for Star India?s path-breaking Sunday morning Aamir Khan helmed social initiative and TV programme? Satyamev Jaayte (SMJ). Earlier this month, it was awarded the best programme with a social message Indian Telly Awards. Other awards that SMJ has taken home include: one by the National Commission for Scheduled Castes and the other by CNN-IBN in 2012.

And now it has been conferred the Mumbai Press Club?s prestigious RedInk Awards for Excellence in Journalism 2013.

The special award was handed out to Star India CEO Uday Shankar for featuring gutsy journalism on a general entertainment channel. The award recognizes SMJ?s remarkable contribution in highlighting social issues that continue to plague modern India and to help create public awareness through the pioneering TV program.

?It is extremely gratifying to receive this recognition. I am honoured and humbled. Satyamev Jayate was our modest attempt to bring to the fore many important challenges that modern India continues to grapple with,? says Shankar. ?It was an initiative to offer a public platform to issues that concern all Indians. While I am delighted to see these efforts being recognized, the focus should continue to be on the issues and all those working to make a difference.?

The Hindu former editior-in-chief N. Ram and author-journalist-activist KuldipNayar were honoured with the RedInk Lifetime Achievement Award by chief guest Maharashtra governor K Sankarannarayanan.

Veteran journalists and senior editors from across the length and breadth of the country graced the evening that was hosted by renowned columnist Bachi Karkaria in her traditional wit.

I&B minister Manish Tewari called for robust self regulation, at the Red Ink Awards 2013

I&B minister Manish Tewari, Uday Shankar, and N. Ram participated in an engaging panel discussion on ?Keeping Media Free and Fair? that was moderated by television anchor Arnab Goswami.

The RedInk Awards for Excellence in Journalism by the Mumbai Press Club honour and celebrate good journalism in India to encourage values of fearlessness and ethical writing. Journalists were rewarded in nine categories based on votes by an eminent panel of judges including Kumar Ketkar, Pritish Nandy, Minhaz Merchant, Shirish Inamdar, Hussain Zaidi, Khalid Mohammad, Colvyn Harris and Rahul Bose.

MUMBAI: The penetration of paid Cable & Satellite (C&S) television households in India is expected to grow to 173 million by 2017 representing 91 per cent of TV households.

The Ficci KPMG report on the Indian television industry pegs the number of paid C&S households to be in the region of 121 million, which is 79 per cent of the total TV households in 2012. The report excludes DD?s free Direct-to-Home platform DD Direct.

The number of TV households in the same period is expected to increase from 154 million to 191 million aided by strong growth in sale of television sets. The number of C&S households in India increased by 11 million in 2012 to reach 130 million.

Approximately 14 million television sets were sold in India in 2012, the report said adding that a large proportion of these television sales represent replacement of old television sets, institutional TV sales, and a second or third TV set entering a household.

The television industry in India is expected to grow at a CAGR of 18 per cent over 2012-17, to reach Rs 848 billion in 2017 from an estimated Rs 370 billion in 2012 aided by digitisation and the consequent increase in Average Revenue Per User (ARPUs).

The share of subscription revenue to the total industry revenue is expected to increase to 72 per cent (Rs 607 billion) in 2017 from 66 per cent (Rs 245 billion) in 2012. The television ad revenue to the total industry revenue during the same period will decrease to Rs 240 billion (28 per cent) in 2017 from Rs 125 billion (34 per cent) in 2012.

Digitisation of cable, which is expected to usher in an era of transparency, will reduce carriage fees, building a case for the launch of niche channels and investment in content for existing channels.

Developments and refinements in viewership measurement systems may affect the way advertising is distributed among channels, the report stated.

As per Ficci KPMG Indian M&E report, most stakeholders had indicated a delay of 6-12 months for complete digitisation across metros, and that DAS is likely to be successful in comparison with the earlier CAS.

While there have been implementation challenges in Chennai, DAS rollout is estimated to be almost complete in Delhi and Mumbai. Kolkata is expected to be largely digitised by the end of March 2013.

?The digital ecosystem in India cannot remain where it is. It will either move forward to completion, or regress, like CAS did. If Phase 2 and 3 don?t go through, even the metros will relapse,? said Ficci Media & Entertainment Committee chairman and Star India CEO Uday Shankar.

The TV industry has witnessed a trend of broadcasters coming together to consolidate their distribution functions, to improve negotiating power. Mediapro and One Alliance are examples. This trend continued in 2012, with the formation of IndiaCast to distribute Viacom18, Disney and Eenadu Group channels.

Digitisation upside was not materially felt in 2012 since MSOs are still in the process of establishing subscriber management systems, except for sports and niche segments. The broadcaster-MSO agreements continue to be based on fixed fee arrangements for the most part.

MSM COO NP Singh said, ?Early benefits of cable digitisation were seen in the form of some increase in subscription revenue and some decrease in carriage in two major metros. However, real benefits will come in over the next 2-3 years as other towns get digitised.?

Industry experts pointed out that digitised markets of Mumbai and Delhi have witnessed a 15 to 20 per cent drop in carriage. In some cases, broadcasters have continued to pay the same carriage, but are able to carry a larger bouquet of channels at the same cost.

While carriage fee may decline further over the next 2-3 years, part of this may claw back in the form of placement fees, where broadcasters pay for placements in various tiers of channel packages.

?Placement fee shall never be an equal replacement for carriage, it will be a localised and a relatively small revenue stream since digital cable can easily carry 500 channels, and the channels anyway need to be grouped by genre which reduces the value of placement charges,? feels Zeel chief strategy officer Atul Das.

In the process of digitisation, while STBs have been seeded by MSOs, and the consumer has started receiving digital signals, packages have not yet been deployed. The consumer is receiving the full portfolio of channels from their MSO. However, this has helped MSOs retain a large share of their analogue subscriber base.

While MSOs appear to be optimistic about deploying packages by April 2013, the larger industry believes that this process may get done sometime in the second half of 2013. Deployment of packages, being a way to differentiate the customer base, is a key driver to raise Arpu.

DTH and Digital cable to co-exist

The Indian market, the report noted, is large enough to provide significant growth opportunities for digital cable as well as DTH service providers.

Digital cable, which has 19 million subscribers out of a total of 130 million TV homes, will grow to 81 million subscribers in 2017.

DTH with 44 million subscribers is expected to touch 90 million subscribers by 2017, thereby becoming the biggest platform.

The ARPU for digital cable is expected to be on par with DTH by 2017. Arpu for digital cable is projected at Rs 289 per month from Rs 166 in 2012 while Arpu for DTH is projected to grow to Rs 293 in 2017 from Rs 170 in 2012.

Ad slowdown and impact on the TV industry

The television advertising industry continued to be under pressure due to the soft global and domestic economic condition. This resulted in muted growth, particularly in the first half of 2012.

On an overall basis, the total TV advertisement market is estimated to have grown around 8 per cent in 2012, lower than industry expectations. In comparison, growth in the TV advertisement market was estimated to be 12 per cent in 2011 and 17 per cent in 2010.

?2012 has been the toughest year in recent times; in many ways, it was even worse than when the subprime crisis hit in 2008. At least then, the sentiment was still bullish coming on the back of a few years of robust growth. This time, the mood is a lot more downbeat. Everyone is going into capital conservation mode. Having said that, in 2008, the perception of things to come was much worse than reality and ad spends were perhaps cut down a lot more than was warranted,? Shankar elaborated.

The total number of channels increased from 623 in 2011 to 845 in 2012, leading to an increase in advertising inventory. Most of the volume expansion is estimated to have come from other genres while GEC volumes remained stable. Existing GEC broadcasters may have seen a limited increase in free commercial time.

The top 10 sectors continued to account for approximately 60 per cent of the overall TV advertising volume share during 2012; similar to the past three years. The FMCG sector continued to dominate the advertising space with 9 out of Top 10 advertisers being FMCG players. Personal products (care and hygiene, accessories, hair care, healthcare) accounted for 26 per cent of advertising volumes in 2012, up from 25 per cent in 2011, and 23 per cent in 2009.

Bulk buying on account of large FMCG companies maintained the pressure on advertising rates. Hindustan Unilever with the largest portfolio of brands continued to maintain its position as the top advertiser on TV by a wide margin.

Continuing the trend observed in the past few years, advertisement revenue growth was largely attributable to volume growth. Rates continued to remain flat or even declined in some cases.

MUMBAI: For a $15 billion media and entertainment industry, the lack of reliable data is one of the major factors pulling down growth.

Star India CEO and chairman of the Ficci Media & Entertainment Committee Uday Shankar wondered how a fledgling industry could function without availability of acceptable data.

Urging stakeholders of M&E industry to set their house in order, Shankar said that there is lack of reliable data on audience measurement across verticals of the media and entertainment sector.

"How can this industry function without a shared and non-controversial view of the most basic facts? Numbers are supposed to be the foundations of rational business decisions. How can we make decisions when professionals in the business of numbers can?t get their numbers straight?," he questioned.

The lack of reliable data is not limited to TAM, Shankar elaborated. "As a TV executive, I am surprised sometimes how I am even able to function. I do not know enough about my viewers ? in fact, I don?t even know how many of them are there. There are 140 million cable and satellite homes but the measured universe is 62 million households."

Shankar also said that the country?s premier media agencies differ on a fact as basic as the size of the advertising market.

He also pointed out that it?s not just the television industry that suffers from lack of reliable data. In fact, the whole industry across verticals is functioning without proper data.

"The ambiguity in data for other sectors of the media and entertainment is no less. For instance, no film producer seems to know accurately how many people actually bought tickets to watch his film," Shankar averred.

Shankar also exhorted that there is a need for a change of mindset among stakeholders to take the industry to the next level.

The M&E industry is a real economic enterprise and not just a vehicle of glitz and glamour, one that has the potential to solve the problem of unemployment by creating new jobs.

"The time has come for all of us to make sure that it is not just industry status that we seek; it is a fundamental change in mindset," Shankar said, while delivering his keynote address today at Ficc-Frames 2013, an annual media and entertainment conclave held in Mumbai.

He also said that the M&E industry is capable of creating employment and wealth much faster than most other sectors and has the ability to be a force multiplier, like it is in most countries.

"It is particularly relevant in India because it can be an employment generator without massive public investments and without being hampered by the deficiencies of public infrastructure. Just to put things in perspective, as a $15 billion industry, we employ over 6 million people. This can be so much more significant and meaningful," he said.

He also bemoaned the fact that the industry despite the huge potential has not got the adequate support from government.

A case in point, Shankar said, was the government?s recent decision to increase customs duty on Set Top Boxes, notwithstanding the fact that the cost of STBs will go up at a time when the country is moving towards mandatory cable television digitisation and impose withholding taxes on content rights

"The lens often used to look at this industry is largely one of glamour and propaganda and the biggest debate is on how to control and contain it. As a result, the growth of M&E has not been supported by policy and regulatory initiatives," he added.

Emphasising that the industry is facing an imminent talent crunch, Shankar said: ?We hide under the pretense of creativity and have convinced ourselves that creativity gives us the license to be informal and chaotic. It is this informality and chaos that has seeped into our approach to spotting and grooming talent. This is dangerous. We must realise that discipline and formality are not antithetical to creativity and if anything they are necessary ingredients to fostering the creative process.?

Shankar said efforts to curb free speech in a robust democracy like India is one of the biggest challenges that can potentially derail the industry from its trajectory. ?When Satyamev Jayate points to weaknesses in the medical system, doctors are offended. When Jolly LLB creates a courtroom satire, lawyers are offended. Even when a precocious teenager posts a comment on Facebook, some people start baying for her blood,? he lamented.

?What is interesting to me is that we all agree that the role of media is to question the status quo. But with the right to question must come the right to provoke and the right to offend.?

Shankar also set out the ambitious Rs 10 billion target for Indian movies. "We should work hard and strive for such success. If the stakeholders can come together, a lot can be achieved. We have seen that in the case of digitisation," Shankar said.