Complicated regulatory policy limits Indian television

By afaqs! news bureau , afaqs!, Mumbai | In Media Publishing | March 24, 2011
Television revenue depends on advertising, as well as subscription, but in India, we do not get subscription revenues.

While the Indian television industry is witnessing a tremendous growth in volume, the growth in its value is very limited. This is because, the industry notes, the television sector is empowered by a very complicated regulatory policy.

While addressing the audiences at the 2011 FICCI Frames 2011 Convention, held at the Renaissance Powai in Mumbai, G Krishnan, executive director and CEO, TV Today Network, said, "Television revenue depends on advertising, as well as subscription, but in India, we do not get subscription revenues."

Krishnan was speaking at the panel, Confronting Realities In Television: Crossing Over Regulatory Hurdles. The other speakers in the panel were Joe Welch, senior vice-president, government relations, Asia, Newscorp, Shardul Shroff, managing partner, Amarchand Mangaldas, and Sameer Nair, CEO, Turner General Entertainment Networks and George Elias, principal advisor " broadcast & policy, TRAI. The session was moderated by Vivek Couto, executive director, media Partners Asia.

Krishnan noted that while the cable TV subscribers are paying Rs 20,000 crore, the money is not reaching the content providers. "This is primarily because of inaction on the part of the regulator. Why is there no service tax or income tax being charged on this amount?" Krishnan wanted to know.

According to Nair, while the cost of content continues to rise, the price at the retail level remains stagnant.

"While Indian consumers are ready to pay for various other products that are at par with the global pricing of those products, they pay just one-third of those global numbers, when it comes to media. And, cable TV within that, is the cheapest," says Nair.

The Indian television industry today is highly undervalued and broadcasters depend heavily on advertising revenues.

Currently, the only way ahead to generate extra revenues is to make digitisation mandatory by the government.

This will not only help generate subscription revenues, Krishnan notes, but because the choice to buy a particular channel will stay with the viewers, the quality of content will also improve.

When comparing India to other countries, Welch noted that while de-regulation has happened in large pay-TV markets such as America, Korea and Japan, in India regulation is only increasing. "And, this does create a lot of hindrance," he said.

The panel had a question: Why does the government need to control the pricing of television channels when it has not invested anything into it?

According to industry stalwarts, since carriage fee is a major spend for broadcasters today, the government needs to discuss this issue and play a critical role in the matter.

But, Shroff stated, "The regulator really cannot get into the policing space. There is a high political cost attached to it."

The industry also demands that the FDI regulations should become more flexible. In the global scenario, India is becoming an interesting market to reach out to. The general consensus is that a lot of foreign capital is ready to flow in, but due to the FDI restrictions, it is not happening.