Broadbandindia Magazine

The Telecom Regulatory Authority of India (Trai) has asked stakeholders to disclose their financial and operational details, something which broadcasters, cable TV operators and DTH service providers have been cagey to reveal.The sector regulator says such details would help it have a “realistic understanding” before issuing the consultation paper relating to tariff for cable TV services in non-Cas areas.

Information seeked

The information that Trai is asking for includes audited financial data and break-up of key revenues and costs; insights into the operating model; factors determining key payments being made by various stakeholders in the current supply chain; and issues in the current market scenario and their impact on the business. “In line with the established transparent procedure followed by Trai, the Authority has initiated the consultation process on the issue of tariff for cable TV services in non-Cas areas,” the sector regulator said.Broadcasters will have to provide information like their yearly financial performance, ownership structure, crossmedia ownership, pricing, revenue and carriage and placement fees.

If this wasn’t enough, Trai wants broadcasters to disclose their advertising and subscription revenues separately from India and overseas and from different platforms. What could irritate broadcasters further is the revenue break-up that the sector regulator seeks for each channel.Distribution platforms such as DTH and cable TV operators will have to furnish details on carriage & placement fee and content cost. In case of DTH operators, Trai would require a breakdown of the content cost based on revenue share, minimum guarantee and lumpsome payment. They would also have to thrash out details of subscription revenue by bouquet/channel and region.

MSOs will have to open up their carriage and placement fee sharing arrangement with the local cable operators (LCOs). They will also have to provide brand-wise carriage and placement fee norms for the Tam markets (which measure ratings of programmes and channels based on which advertisers spend their monies).

Trai has appointed Ernst & Young to assist in this exercise.Trai had asked broadcasters, aggregators (authorised distributors of the broadcasters), DTH operators, multi-system operators (MSOs), cable operators and consumers to submit the information in the prescribed format by 17 August.Trai said it has  initiated the consultation process as per the Supreme Court order dated 13 May. The apex court had directed Trai to consider the matter relating to tariff for cable TV services in non-Cas areas de novo as regards all aspects.

Cable TV industry demands more time

However the initiative undertaken by the Trai is expected to be delayed, as all industry stakeholders have decided to seek more time.In fact, according to industry sources, several broadcasters, cable operators and others are opposed to sharing detailed financial numbers of their respective companies. “We have made Trai aware of the possible hurdles in making such financial disclosures. Disclosures can happen, provided there is ample time and a consensus among those involved,” the legal head of a leading media house said on condition of anonymity.

The regulator failed to get an all-round response from the stakeholders, sources in Trai said. Various stakeholders, especially the privately-held ones like  several broadcasters, cable operators and others, are divided on how much financial details to share with the sector regulator, fearing information leakages that may impact their future business prospects.

“Trai wants to know details like how much did we pay in carriage fees to a particular cable operator and how much advertising revenue was generated on each of our channels. Such details, once out in the public domain, could lead to a severe undermining of future business negotiations,” a senior executive, representing a leading media house, said.

“The Indian Broadcasting Foundation (IBF), the apex body of all leading broadcasters, recently met and decided to seek more time from Trai on the matter,” a senior IBF executive said.

Current Cable TV prices

Currently, cable TV prices are capped depending on the city and number of channels, starting from Rs 82 for at least 30 free-to-air channels. A consumer in Ahmedabad and Bangalore can only be charged Rs 251 at the most for 30-40 pay channels and at least 30 free-to-air channels.

The maximum charge applicable for residents of Cuttack or Kolhapur for the same number of channels is Rs 214. In areas notified for the Conditional Access System, TRAI has fixed individual channel prices at a maximum of Rs 5.35. The re-pricing exercise will affect the price at which DTH operators are offered channels.

According to an interim TDSAT order, DTH operators pay broadcasters half of what cable operators pay. Most cable consumers receive unencrypted feed in analogue formats, unlike DTH or CAS homes where set-top boxes are required to unlock digital signals. In non-addressable cable, broadcasters whose subscription revenues are collected by operators have no way of knowing the number of homes their channels reach. Charges are negotiated between the two parties.

Broadcasters accuse cable operators of declaring fewer or as little as 20% of houses serviced. Operators argue that the figure is not an under declaration but a “negotiated subscriber base”. Operators say that this is justified as broadcasters too offer different channel combinations for different subscriber bases. In a market where there are more number of channels than what the delivery technology can accommodate, finding space can also cost a premium.