Punit Goenka, the MD and CEO of content maker Zee Entertainment Enterprises, expressed reservations about the possibility of implementing TRAI’s revised tariff order in the current financial year.
Responding to an investor query on what impact he saw the implementation of the January 1 tariff order would have on his company’s subscription incomes this year, Goenka said he was not chalking up any estimate as yet.
“My accounting for that is that it’s not going to happen,” he said soon after the company came out with its first-quarter results.
“The reason for that not happening is two-fold. One, the matter is sub-judice. I cannot understand, on what basis, TRAI has asked us to declare our pricing by 10th of August.”
In addition, the whole time-table is also not been laid out yet, he added.
“Assuming that it’s still encorced, my second question is what is the date for the implementation for consumers,” Goenka asked. “On that, TRAI is silent completely.”
‘BUNDLING’ WOES
TRAI’s tariff order of 2017, and the amended version unveiled in January this year, are arguably the most controversial pieces of legislation in the media and entertainment industry in more than a decade.
The tariff order of 2017 was meant to put a stop to the practice of ‘bundling’: The practice of tying up TV channels in the form of packages and forcing consumers and cable/DTH operators to carry/buy all or most of a broadcaster’s channels.
At the time TRAI came out with the order, it was largely the channel broadcasters who determined which channels would be delivered to millions of cable and satellite TV living rooms across India.
Since cable and DTH operators could only get viable access to channels in the form of packs or bundles, they were forced to carry dozens of channels from each broadcaster on their network.
Even though channels were also technically offered one-by-one, their individual prices were so high that it would make zero economic sense to access them individually.
Because of this, bigger broadcasters — each of who has 35-70 channels — were able to corner most of the capacity on cable and DTH networks, making it difficult for smaller players and newcomers to reach consumers. Many small broadcasters found it difficult to survive due to the tough competition for slots on networks.
TRAI wanted to dismantle this practice as it resulted in a lack of effective choice at the consumer end and also prevented innovation in the market by increasing barriers of entry for newcomers.
LEGAL TANGLE
However, the tariff order was taken to court in 2017 itself by various parties, including Star India, Airtel Digital and Tata Sky, which caused a delay of more than 1.5 years in its implementation.
It was finally implemented in early 2019, but without its key safeguards against bundling.
The rules, as implemented in 2019, effectively prevented the bundling of channels by cable and DTH operators, but was toothless in preventing bundling by channel owners.
In the end, instead of improving the situation, it led to an increase in end-user prices.
Due to the ensuing backlash from consumers and cable and DTH operators, TRAI was forced to bring back some of the anti-bundling safeguards envisaged in the 2017 rules and publish an amended set of rules on January 1 this year.
However, this too was taken to court by the channel broadcasters, who requested the court to provide them interim relief in the form of a stay on the operation of the revised tariff order.
However, the broadcasters were unable to get a stay. But, to everyone’s relief, Bombay High Court finished the hearing in a matter of days, and reserved the order in early March.
This prompted TRAI to voluntarily abstain from pushing ahead with the implementation of NTO 2.0 before the court came out with its order.
However, with the court failing to come out with an order even after five months, TRAI earlier last week directed broadcasters to implement the provisions of NTO 2.0 by August 10.
If implemented, broadcasters, including Zee Entertainment, are likely to be forced to bring down the prices of their popular channels from around Rs 22 per month to around Rs 14 per month.
However, said Goenka, TRAI has so far asked only broadcasters to publish new prices, and not given the full time-table for the roll-out of the new tariff plan.
“At the end of the day, my pricing is relevant only if the consumer date is finalized. So how do I assess the impact of the NTO 2 implementation until I know the date of implementation of for the end-consumers,” he asked.
For now, the fight over bundling and channel prices is turning out to be a protracted war between TRAI on one side and broadcasters on the other.
Consumers and cable/DTH operators, for their part, seem to be largely sympathetic to the regulator as they believe that the unbundling of channels would allow them to carry or consume only those channels that they want, while rejecting the others.
Broadcasters, however, believe that such a turn of events would result in a sudden loss of viewership for many of their less-popular channels, which could affect their profitability and even their financial stability.
They claim that they are able to fund the operations of their popular channels thanks in part to the revenue generated by the less-popular channels. Without one, the other too will become nonviable, they argue.