Advantage, free to air?

For the cable operator to strike back at established media companies is hard.

But he is trying to do just that. By pushing pay channels off the prime band -a strategy that is quite viable in India's cluttered, technologically backward, television channel market. Up against him, companies that want to go pay are banking on a combination of technology, viewership loyalty and reach.

One of the major victims of the strategy is STAR Plus, which has borne the brunt of the cable industry's ire for its attempts to introduce the concept of pay television in the country. According to the survey results of Media Reach's OTS Update, STAR Plus, which in November 2001 was available in 90 per cent of the TV households in Mumbai, was available only in 43 per cent of the television households in January 2002. Similarly, Sony has fallen from 64 per cent prime band availability in November 2001 to 37 per cent by January this year.

Cable operators are planning to hit the pay channels where it hurts most. The Hinduja backed InCable in Mumbai, and Seven STAR, another cable operator network, have shifted STAR Plus and Sony to the mid- or UHF band (beyond 471 MHz) which is not as accessible as prime bands. "Prime band availability is one of the crucial reasons that enable these channels to charge premium rates for advertisement slots. By denying them access, we are in effect cutting into the reach of the advertising on these channels," explains Rajesh, a cable operator based in Chembur, a Mumbai suburb.

In a city like Mumbai, crucial to any media planner, with its 2.9 million television homes, or 10 per cent of the market, the strategy could be damaging, as agencies may not be willing to pay huge rates for limited reach. According to industry estimates, of the 70 million television homes in India, 36 per cent have B&W sets with just 12 channels, and 24 per cent have pre-1996 colour television sets that can accommodate just 16 channels. Only 40 per cent are cable ready, allowing for more than 70 channels.

Thus, only 12 channels are universally available - those that come in the prime band (48.25 MHz to 62.25 MHz and 175.25 MHz to 224.25 MHz). Of these, four go to DD by law, two to the channel operator's own channels, one to such services as pagers etc, and three to the most popular pay channels - usually, STAR, Zee and Sony, and two are decided on by the cable operator. Now, the cable operators are cutting the pay channels out, and hoping that media planners, discouraged by lesser reach, do the same.

That is because media planners have to work within tight budgets. A senior media planner based in Delhi explains how this budget is allocated. If the budget is Rs 1 crore, around Rs 70 lakh goes to a prime channel (say, STAR), Rs 15 to Rs 20 lakh to the southern channels, and it is the remaining Rs 10 lakh that the other channels get to fight over. And free-to-air channels have banked on their greater frequency of reach to sell.

SABe TV, for example, crafted its market strategy based on this. SABe aimed at the remaining Rs 10 lakh, offering advertisers incentives like the possibility of sponsoring one day per week of daily soaps such as Office, Office or packages in which two days out of four, or one out of three were sponsored. In an industry where the same company usually sponsors a serial for all days of the week, this was innovative. And these came at a cheaper rate. Among the companies that opted for this cost-effective solution were P&G, which, say sources, was discouraged by the high rates on STAR.

"Satellite television has got three religions - news, sports, and movies; but that does not mean advertisement revenue. What matters is how you market your time," avers Sandeep Singh, vice-president, marketing, SABe TV. With good marketing, SABe was able to convert its sales of advertising slots to near the level of the prime channels. For example, for the week January 27 to February 05, according to TAM figures, SABe sold 42,853 seconds, quite near to Zee's 48,815 seconds, and STAR Plus's 52,465 seconds.

For companies like STAR, the question is whether high rates can be sustained if their channels are not on the prime band. Especially since the free-to-air channels actually pay cable operators "carriage fees" to carry their channels.

After the current tiff-off, companies like SABe and Sahara have gained tremendously. SABe TV went up from 13 per cent to 36 per cent availability on the prime band. And, going by GRPs based on programme ratings, for C&S homes, 14 cities, in the target group ABC females in the 15-plus age group, SABe TV's GRP rose from 29.8 on November 10 to 58.4 in the week ending February 02, 2002. The biggest gainer was Sahara TV, which went up from 3.4 per cent to 36 per cent.

It is this that the free-to-air channels are hoping to cash in on. "While even earlier we used to get on to prime bands, we were second choice. Right now, there is a clear market opportunity for free-to-air channels. It is a new market dynamics altogether," says Priya Raj, vice-president (publicity, promotions and PR), Sahara TV.

At the same time, what channels like STAR are banking on is a combination of viewer loyalty and technology. "Most of the TV sets are cable enabled in Mumbai; so this (shift from prime-band) may affect ratings to a certain extent, but right now, there has been no dramatic shift in the TRP ratings, or viewership loyalty of our programmes," says an official spokesperson for STAR India.

The enormous popularity of programmes like Kyunki Saas Bhi Kabhi Bahu Thi is also working in favour of STAR. "At the end of the day, it is consumer pull that works in favour of a channel. A viewer is watching a programme, and not a channel, and if popular programmes are not shown, the cable operator will be flooded with calls," points out Shrikanth Raman, media director, Mudra. Analysts say that only niche channels could be affected if they are blocked out, as the "nuisance value" of their fans is comparatively small. At the same time, industry sources reveal that rather than take a hard line, the distribution teams of pay channels are working to reach a settlement.

All in all, a royal battle seems to be shaping up, with everyone - cable operators, free-to-air channels and pay channels - hoping that victory will smile upon them. © 2002 agencyfaqs!