More pay channels may become free-to-air after Trai's tariff amendments

The Telecom Regulatory Authority of India (Trai)’s amendments to its tariff order of February 2019 might result in broadcasters making several not-so-popular channels free-to-air (FTA), to make them a part of the 200 channels on offer at Rs 130 (plus taxes) per month, analysts say.

Trai’s amendment has forced broadcasters to go back to the drawing board as they revise pricing for channels. Analysts believe, broadcasters like Sony Pictures Networks India and Star India could be impacted more as their bouquet offerings were at discounts of 35-54 per cent. In fact, sources said, Star India, which was expected to come out with its new channel pack on Thursday, has now deferred the same.

According to Trai’s amendments, which will come to force from March 1, a broadcaster cannot price channels in a bouquet such that the maximum retail price (MRP) of all a-la-carte channels in the bouquet is more than 1.5x the price of the bouquet. The telecom regulator also laid down a second condition that the MRP of any a-la-carte channel cannot be more than 3x the average price of any channel in that particular bouquet.

“Broadcasters would find it difficult to club a Rs 12 channel with a much lower priced 50 paise or Rs 1 channel in the same bouquet. The general tendency in bouquet formation was that a clutch of not-so-popular channels were clubbed with a few flagship channels that have takers. Now, broadcasters would consider taking out some of the less popular channels that may not have takers a-la-carte and make them free to air. This way these channels can be a part of the 200 channels bucket,” said a senior official at a broadcasting firm.

The official admitted that Trai’s move definitely gave more power to consumers to choose. Moreover, with Trai capping discounts that broadcasters can offer for bouquets over a-la-carte at 33 per cent, analysts said firms like Star India (35 per cent) and Sony Pictures (54 per cent) would be the most impacted.

Karan Taurani of Elara Capital said the size of bouquets, too, will come down from about 8-10 channels to 3-4 channels. He expected that some channels like Zee Anmol – which were earlier free-to-air before the February order and became a pay channel, losing viewership – to go the FTA route.

Moreover, Trai decided that only those channels that had an MRP of Rs 12 or less would be permitted to be part of the bouquet offered by broadcasters. The earlier cap was Rs 19.

Analysts felt this could lead to price revision of flagship channels. Abneesh Roy of Edelweiss said most broadcasters have an a-la-carte price of Rs 19 and Trai’s move could lead to price revision of even these channels. Roy added that while average revenue per user (ARPU) was definitely coming down, it was too early to estimate the loss in subscriber revenue for networks.

Taurani, however, felt broadcasters like Sun TV had better prospects because of digitisation in Tamil Nadu. He expected subscriber revenue growth to decline in low single digits and ad growth, too, to slow down. The subscriber revenues for broadcasters have grown at about 30-40 per cent because of higher share and increased ARPU after the new tariff order came in.

Trai increased the number of free-to-air channels at a monthly cost of Rs 130 (plus taxes) to 200 from 100 earlier. Cable operators would charge Rs 130 per month as network capacity fees (NCF) for which they would provide these 100 channels. This has now been capped at Rs 160. Trai has also kept out channels declared mandatory by the Ministry of Information and Broadcasting from the 200-channels list.