Channels may move court on cable rates

Private broadcasters are expected to take the Telecom Regulatory Authority of India's (Trai) to court challenging its order to fix the annual increase in cable television rates at 4 per cent for 2006 and the mandatory sharing of content with Prasar Bharati.

The industry feels that these two decisions will cause massive loss of revenues to the broadcasters.

For the sports broadcasting sector alone, it is estimated that the mandatory content sharing with Prasar Bharati would lead to an annual loss of over Rs 350 crore. Sports associations also say the value of bids for sporting events like the BCCI-organised matches may decrease as a result of this move.

Private sports broadcasters fear that with the broadcasting feed also available on Doordarshan, cable operators will not pay subscription to the private sports channels and will switch over to Doordarshan's broadcasting.

Sport broadcasters get over 50 per cent of revenue from subscription, unlike other categories of broadcasting, where it is just about 25 per cent.

"This is a clear violation of intellectual property rights. The government has not taken any recommendation by the industry into consideration," said R C Venkateish, managing director, ESPN Star Sports.

This may also result in a dip in advertising revenues as Doordarshan can also insert its own advertisements on its broadcasting feed. It is expected that with Doordarshan's wider reach and lower advertisement rates, some of the advertisers are certain to move away from private broadcasters.

"We see advertising revenue coming down as a result of this. It makes business completely unviable," said the head of a foreign broadcaster, which has cricket broadcasting properties.

Estimates by sports broadcasters point out that the incremental advertisement revenue from Doordarshan would cover only 10 to 15 per cent of the loss. In addition, the losses arising out of the 4 per cent hike in cable rates may be much higher for the broadcasters.

Last year, a hike in cable charges was capped at 7 per cent. Broadcasting industry is of the view that it should be freed from the practice of Trai fixing the rate of increase.

The cable distribution business is estimated at Rs 10,000 crore per annum and it is growing at about 25 per cent. But due to under-declaration of subscribers by the cable operators, broadcasters manage to get just about 25 per cent of this.

"Trai's decision to fix the cable rate increase will limit our investment options. About 25 per cent of our revenues come from distribution. With this move curtailing our ability to invest in our businesses, we may have to look at other options including the legal one," said Peter Mukherjea, chief executive officer, Star India.

The loss in revenue due to sharing comes as a result of the near-complete wipe-out of subscription revenue and a partial dip in the advertising revenues.

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LOSING OUT

MANDATORY CONTENT sharing with Prasar Bharati will lead to Rs 350-crore loss for the sports sector

INCREMENTAL advertisement revenue from Doordarshan will cover only 10-15% of the loss

WITH THE broadcasting feed also available on DD, cable operators are likely to switch over to Doordarshan's broadcasting