News channels to be most affected by TRAI ad-cap

Television industry was expected to make Rs 14,000 cr in ad revenues this year, which now looks like a difficult task

Broadcasters are in a fix as the deadline for Telecom Regulatory Authority of India's (TRAI) ad cap mandate approaches. The television industry was expected to rake in Rs 14,000 crore in ad revenues this year according to the FICCI-KPMG media and entertainment report which now looks like an uphill task.

 

Broadcasters have appealed to TRAI to give some kind of respite and the news broadcasters' body the New Broadcasters Association (NBA) has in fact moved the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) in this regard and the tribunal has exempted the news channels from the ad cap till November 17 when it will hold a hearing in this regard.

 

In the event of the ad cap being implemented, the news channels stand to lose the maximum revenues. Currently news channels have been asked to limit their advertising to 20 minutes an hour. According to sources, some news channels had up to 30 or 35 minutes of advertising per hour and continue to do so even after he TRAI regulation. If the ad cap is made mandatory, this will reduce the ad inventory of the news channel by more than half resulting in huge losses. 

 

“There is no doubt that the news genre will take a huge beating. Only the channels with deep pockets and a pan India reach and appeal can hope to survive in that event. Others will either face a shut down or will have to look at consolidating with bigger networks in order to stay operational,” says a media planner who preferred to remain unnamed.

 

The news genre currently contributes nearly Rs 2500 to 2800 crore from the total television advertising pie. This could become significantly smaller if the ad cap comes in place since there will be no way to recover the loss of inventory by hiking the ad rates.

 

The Hindi general entertainment channels, which command the lion's share of the ad pie. The genre currently accounts for nearly Rs 5000 crores of the total television advertising revenues, of which a majority chunk comes from the top six GECS. While the advertising time on the GECs today is nearly 15 minutes per hour. This will come down to 10 minutes of commercial advertising once the ad cap is implemented. Though the loss of inventory may not be much, it could translate to heavy losses in case the economy fails to improve.

 

Karthik Laxminarayan, COO, Madison Media says, “The GECs will have a tough time if things don't improve with the economy. With the autio and FMCG sector looking at tightening the purse strings, the reduced ad inventory may have a significant impact on revenues.”

 

However, the leading GECs have some big ticket properties launching over September and October which may be a way to salvage the situation to n extent. Kaun Banega Crorepati (Sony Entertainment Television), 24 and Bigg Boss (Colors), Buddha (Zee TV) and Mahabharat (Star Plus) are all bug properties and the channels expect to raise substantial revenues from each.

 

The one genre that may actually remain unaffected will be the regional non news channels. These channels give very good returns on investment and thus the brands will not mind spending a bit extra to advertise on them. Moreover, the advertisers will focus on reducing spillage and advertising on regional channels allows them to focus on a particular geography rather than paying a premium to advertise pan India.