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Several broadcasters contemplate cutting carriage fees

By Sumantha Rathore , afaqs!, New Delhi | In Media Publishing | November 12, 2008
Many broadcasters are planning to implement cost cutting by reducing the carriage fees paid to cable operators

Media & #BANNER1 & # firms are feeling the brunt of the economic slowdown. As a latest measure, broadcasters are contemplating to cut cost decision reducing the carriage fees paid to cable operators for better placement of channels. A few broadcasters have told afaqs!, they are reviewing the whole thing. The list includes, E24, News24, INX Media, Sony Entertainment television and UTV . Other broadcasters may also join the list soon.

Calling it a baseless expenditure, the channels are taking a firm stand regarding the issue and hoping to implement the measure very soon.

According to a company insider, INX Media will implement a 40-60 per cent cut in the existing carriage fees.

A UGBL (UTV Global Broadcasting Ltd) spokesperson says, "We have studied the trend of carriage fees over the last few months and research has confirmed that there is no direct correlation between the carriage fees paid and the channel reach numbers. Hence, we have optimised our carriage payouts on a selective basis."

Though TV Today refused to comment on the issue, well placed company insiders say that it is also planning to go ahead with the fee cut.

Many broadcasters such as Viacom18, NDTV and Sahara TV, were unavailable for comment, till the time of filling the story.

Other channels are also interested in becoming a part of this initiative. Amit Ray, chief strategy officer, BAG Films, says, "No one knows what we are paying for and media firms are being forced to pay this amount. The fees should be paid based on the value they are receiving, not on average amount. It is not a rational expenditure. I support this notion and we would like to be a part of it."

He adds that both E24 and News24 would like to follow suit and implement cost cutting measures, such as reducing staff. "Cost cutting is a continuous process and not restricted to one measure. We will do whatever is required," adds Ray.

NP Singh, chief operating officer, Sony Entertainment Television, says, "As of now, we are not doing any such thing, but it is certainly on our radar screen. Carriage fees have become a huge issue at this point of time. It is something which is going through every broadcaster's mind at present. We will also find a way of moderating it."

Roop Sharma, president, Cable Operator Federation of India, has a different take on the issue. She says, "Their programmes are failing and they have to put the blame on someone. They should stop launching more channels if they can't afford it. Most of them don't have the money to sustain their channels. The postdated cheques (PDCs) of a news channel keep bouncing."

According to the channels, since cable operators don't reveal the exact number of viewers, the deal is not very lucrative for them. But Sharma believes that if they are not getting a fair deal, they should shift to other options, like CAS. "If that is the case, then bring CAS, and if it is implemented, they won't get one-fourth of what they are getting now from cable operators," she asserts.

Citing an example, she says that the revenue of lead sports channel went down from Rs 2 crore to Rs 15,000 a month after CAS was implemented in Chennai. According to her, cable operators give an average estimate of viewership to the channels, but because the system is so bad, it is not possible for them to give the exact number of consumers.

A source at one of the broadcasting company, says, "The cable operators take money from customers and advertising and media houses. Carriage fees are just an additional burden on the channel, which can be waived off, without letting the business be affected."

Whatever the final result may be, this step certainly adds to the list of issues with which the channels are trying to cope.

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