Advertisers may move court over TV rate hike

Leading television advertisers represented by the Indian Society of Advertisers (ISA) are planning to go to court against the decision by broadcasters to hike spot ad rates by 25 per cent.

The move comes after a high-powered meeting of over 60 companies (all members of ISA) in Mumbai today, even as the broadcasters blacked out most of their advertisements from the channels.

The ISA members have rejected the hike by the Indian Broadcasting Foundation (IBF), which represents Star TV, Sony, Zee among others, and have decided to divert advertising budgets to other mediums such as print even as the festival season gets underway.

Companies spend about 30 to 40 per cent of their advertising budgets during this season. "Despite having valid contracts with companies, the channels have not telecast ads. This is breach of contract, so advertisers will go to court and claim damages," said an executive, who attended the ISA meeting.

A senior telecom executive, who was also at the meeting, said, "None of us can afford a 25 per cent increase. So we have to look at other advertising strategies. Also, such arbitrary increase is a breach of contract."

The ISA said in a statement after the meeting that its members had "authorised it to take necessary legal action to stop the IBF and broadcasters from collectively imposing rate increases."

"The members also confirmed that they will take individual legal action on the breach of contracts if any," it said.

Responding to the ISA threat, an IBF executive said, "We knew that they would take this action. However, we will discuss the issue and decide on further action."

However, media buying houses are hopeful that the impasse will be resolved within a week. "There are other ways to work things out. An option is to look at a more acceptable rate card that will be of fair value to both parties," said an executive at a leading media agency.