Ten years ago if you had compared the film and television broadcasting businesses in India, you wouldn’t have given films a second chance. Today the film industry looks attractive while the TV business seems to be falling apart.
Circa 1999, the Rs 7,000- odd crore broadcasting business was, largely, well organised. Sure, cable was chaotic. Operators under-declared routinely so pay-revenues were stuck at about 20 per cent of the money collected. The thinking was that when new ways of distribution such as DTH (direct-to-home) came in, pay revenues would jump. Broadcasters’ revenues and double digit growth came predominantly from advertising. Films, on the other hand, were a chaotic business end to end. There were 12,000 single screen theatres, thousands of producers and scores of distributors fighting over various territories. Under-declaration and piracy were rampant. At just Rs 1,800 odd-crore in revenue for an estimated 3 billion tickets sold, the returns were pathetic.
Circa 2008, TV broadcasting revenues have been stagnating, even going down in real terms in the last 3 years. Pay revenues are still 20 per cent of the money collected. Cable remains a regulatory and structural nightmare. DTH has got off to a good start but is many years from contributing seriously to revenues. Of the estimated Rs 29,000 crore TV industry topline in 2008, barely half came to broadcasters.
On the other hand, the film industry is doing very well, across the value chain. In retail, over 2,800 screens now belong to corporate entities such as multiplex or digital theatre chains. That number is rising everyday leading to a steady rise in box office revenues. In distribution and content production, companies such as UTV and Yashraj Films have brought in scale and discipline. In 2008, within ten years of corporatisation, the Indian film industry stood at Rs 12,600 crore in revenue. Why is TV in reverse gear? Of the many reasons — structural, regulatory etc — two stand out.
One, terribly ad-hoc regulation focused on micro-managing the industry instead of enabling it.
Take foreign investment. While telecom players are allowed 74 per cent foreign investment if they distribute TV signals via IPTV (Internet protocol TV), cable and DTH are allowed only 49 per cent.
On cable pricing, the regulator (Trai or Telecom Regulatory Authority of India) is so fixated on price per channel and cost per programme that it has lost sight of one basic fact — that this is the television broadcasting business, not telecom. In telecom, the main product, voice, is a commodity. Therefore using everyone’s costs and revenues as an indicator for price regulation is fine. But applying the telecom logic to television is counterproductive. There is a huge difference in the costs of acquiring rights to cricket matches or films, to producing soaps or reality shows. Trying to arrive at average programming costs will do little to reduce pricing. The joke is that regulators will next tell broadcasters not spend on celebrities like Amitabh Bachchan because the average programming costs, and therefore prices go up.
The regulator claims that it is acting ‘in the interests of consumers’. The best way to give consumers a good deal is to incentivise competition across distribution formats. As cable, Direct-to-Home (DTH), telecom and (possibly) Headend In The Sky (HITS) operators fight among themselves, prices are bound to come down. Quick suggestions — even out foreign investment and technology norms, make it easier to buy space on non-Isro satellites and license the cable business. These three moves alone will give a rocket-like boost to pay revenues.
The second big reason the TV industry is a mess is this deep desire within TV companies to stab each other. Nobody in this business, it seems, has heard of co-opting on policy and competing in the market. The Indian TV industry competes through policy. This has resulted in at least half a dozen different organisations that lobby (rather ineffectually) on somewhat contradictory issues. There is a lobby of news broadcasters, DTH operators and at least a dozen cable operator associations among several others. None have bothered to plot their price to the consumer for the last ten years — that alone would prove that competition has lowered cable prices.
While the different players and lobbies squabble, Trai keeps coming out with well-researched and sensible consultation papers (albeit with a telecom mindset), that the Information & Broadcasting ministry keeps ignoring. So nothing happens.
Keep watching this telly going further down the tube — before something gives.
The writer is a media consultant. vanitakohli@hotmail.com.
