Four pay channels — Star Utsav, Zee Anmol, Colors Rishtey and Sony Pal — are likely to go ‘free to air’ for two months from today.
These channels had earlier been put in a ‘promotional scheme’ while remaining pay channels, with their prices slashed from Rs 1-2/month to Rs 0. This was intended to increase their reach at a time when people are spending more time watching TV.
However, that move did not create the expected results, as the status of these channels remained that of pay channels and therefore, they could not be included in the Free To Air packages of cable and DTH providers.
Most cable and DTH operators have their own ‘free’ channel packs made up entirely of Free to Air channels and it is important for free channels to be included in such packages if they want to reach the maximum audience.
However, according to India’s broadcasting rules, any channel that is designated as a pay channel by the ministry of information and broadcasting cannot be included in such FTA packs.
Since these four channels had only implemented a temporary (promotional) price change to Rs 0 per month, they continued to be designated as ‘pay channels’ on the ministry’s website, preventing their inclusion.
Because of this, there was hardly any increase in the reach of these channels even after their prices were reduced to Rs 0 under a promotional scheme.
At the same time, they could not easily change their status from ‘pay’ to ‘free’ because of another rule that requires channels to give a notice of at least 45 days to cable/DTH operators before changing their status or price.
Because of this rule, even if these channels wanted to change their status to free to air, they will still have to wait for 45 days for cable and DTH operators to implement the change. However, by then, the Coronavirus lockdown might end.
The 45 day rule was introduced recently to give time to cable and DTH operators to carry out price changes.
TAPPING THE MARKET
The channels are being forced to go ‘free’ due to recent market changes.
First, due to a severe economic slowdown associated with Coronavirus, advertisers are cutting back on their budgets.
At the same time, paradoxically, the Coronavirus-related lockdown is leading to people spending more and more time in front of their TVs, which has increased the audience size.
However, much of this increased audience is being tapped by free-to-air channels. This is partly because consumers are not willing to spend much on pay channels, and are trying to reduce monthly cable and DTH bills by relying more on free channels.
In this situation, it makes sense for the owners of pay channels (broadcasters) to tap into the free-to-air market by also offering some of their channels for free.
However, the 45-day rule, as well as the channels’ status as ‘pay channels’, was coming in the way.
MINISTRY INTERVENTION
The broadcasters have therefore approached the Ministry of Information and Broadcasting asking it to give them a ‘one-time permission’ to convert these channels from pay to free channels without a notice period.
According to industry sources, the ministry has agreed to this request, and will reclassify these channels as ‘free’ channels later today.
After 15 days, these channels can again apply to convert themselves into pay channels if they so desire, and implement the conversion after two months from now.
On the downside, if these channels are converted into free to air by the ministry, they will have be removed from various channel packs of these broadcasters.
These channels are currently included in packs such as Star Value Pack, Zee Family Pack, Sony Happy India Pack and so on. But as free to air offerings, they will not longer be allowed to remain inside pay channel packs.
UDPATE: Ministry of Information and Broadcasting has issued a special order, allowing these four channels to remain inside pay channel packs and free-to-air packs at the same time.
These channels were originally free to air until a year ago, but were converted into pay channels based on the assumption that consumers will be buying channels in packs.
At the time, the broadcasters assumed that these channels would get more reach if included with various pay channel packs, such as Family Pack, Value Pack and so on, compared to keeping them free and separate.
However, current market conditions have given them reason to rethink the strategy.