FICCI Frames: Aroon Purie on the mess called broadcasting

By Devina Joshi , afaqs!, Mumbai | In Media | February 18, 2009
At Day 1 of FICCI Frames '09, Aroon Purie of the India Today Group chose to talk about the shortcomings of the Indian media environment

Aroon Purie, chairman and editor-in-chief, India Today Group, means different things to different people. But the one thing that those who know him will swear by is his uncanny ability to tell it as it is. In that sense, his presence at a FICCI Frames session on Day 1 in Mumbai was no different.

While the topic assigned was 'Media and Entertainment industry stalwarts share their success stories', Purie promptly began with a quip: "The past is boring. Besides, with the current economic situation, I don't feel too successful. So, I will choose to speak on the mess in broadcasting instead...the ugly underbelly of the industry."

To & #BANNER1 & # him, there are three essential "messes" that the industry is grappling with: distribution topped his list, followed by lack of transparency and an inadequate audience measurement system.

As the industry adage goes, if content is king, distribution is God. "But our distribution is so outdated -- it is like a traffic jam where everyone is stuck. No one is obeying the rules, and you can move forward only at the cost of someone else," he grinned.

Today, India has 84 million C&S homes, out of which 76 million are analog, six million are DTH and two million are CAS homes. With 350+ channels, and another 150 waiting in the wings for licenses, the word "overcrowded" is an underestimation.

"Furthermore, analog cables are incapacitated to carry so many channels, which has led to broadcasters fighting with cable operators/MSOs to carry their channels," Purie said. This has led to the distribution costs for broadcasters increasing by 50 per cent last year. In such a situation, it is a terrifying prospect to launch a niche channel, because it easily takes Rs 25-30 crore to achieve national distribution for any channel in India.

"Today, carriage is the highest cost in our balance sheets," Purie exclaimed. The situation was completely different in 2001, when the group launched Aaj Tak, for distribution costs were practically zero.

Purie felt broadcasters are also to be blamed somewhat. Since they fight fiercely with each other and don't share information about what they end up paying the cable operator, the cable guy has a ball, and has no incentive to move to digitisation.

"Even the government made a rather feeble attempt at digitization with CAS," declared Purie. CAS is supposed to be rolled out in 55 cities by 2010, but is currently available only in four cities. "So, it's clearly not happening," he said.

"The government is only concerned about the pricing of channels and bouquets. Perhaps, the Indian government is the only one of its kind to think that cheap cable connection is some sort of fundamental right," he added.

Instead, he propagated that the authorities should be in sync on what's happening around the world, and stick to laying down standards, instead of interfering at every level. And one ought not to forget the poor consumer, who is bombarded with a majority of channels he doesn't want.

At some level, Purie said, even broadcasters are afraid of digitisation, because their real viewership will be bared to all, which in turn will affect advertising revenues. Not sparing DTH, he stated that DTH too, has become a clone of cable. It is governed by many restrictions and conditions, ensuring that there is no exclusivity, the way it was intended at the onset. "Even DTH is charging carriage to broadcasters…where's the difference?" he questioned.

Purie then moved to his second grievance: the lack of transparency. Consider this: viewers pay Rs 15,000 crore to cable operators, and these operators in turn pay broadcasters a sum of Rs 2,500 crore as subscription. Out of that, the broadcasters pay cable operators around Rs 1,500 crore as carriage. This leaves the broadcasters with a net earning of Rs 1,000 crore: a fraction of what the viewer originally paid.

"Our model is too dependent on advertising revenues and there's hardly any revenue through subscription," Purie stated. Things could correct themselves if there was greater transparency in the entire system, he added.

Purie's third and final point was that of an inadequate audience measurement system. "TAM considers 1 lakh+ urban towns, which is 45 per cent of the C&S universe, equal to a sample of 7,000 households, which is inadequate. This means that the remaining 55 per cent are unknown to TV advertisers," he pointed out.

What also complicates the scheme of things is the way state politicians are entering the distribution business. "That gives content regulation a whole new meaning," Purie quipped, concluding his speech.