To remain pay or go free-to-air?

"It is a mismanaged project," says Ravi Kiran, managing director, Starcom India (west/south). This statement has been made in connection with the roll-out of CAS in the four metros (Mumbai, Delhi, Kolkata and Chennai) which, to put it mildly, has left more questions than answers in the minds of consumers, broadcasters, cable operators and every other interest group that has some kind of stake in the business of television.

Kiran points to the "mismanagement of the government" regarding the confusion surrounding CAS. "Apart from the July 14 deadline, the government has set no intermediate milestones to meet this deadline. Yes, it has announced the composition and pricing of the basic tier, but it is highly inadequate. More was required."

Agency heads such as Kiran may be vocal about the conundrum that CAS is or rather what has become of it, but the bigger question worrying broadcasters especially the ones with mass channels under their belt, is, whether to remain pay or go free-to-air?

The confusion stems from the recent notification issued by the Government that stipulates 30 F-T-A (free-to-air) channels available for a price of Rs 72 per subscriber. "This is a broad sweeping statement made by the government," states a senior media planner in a Top 10 agency. "There are almost 70 to 80 F-T-A channels; which ones are they talking about? Four genres including entertainment, education, sports and information, will make up the basic tier, but there are a number of F-T-A channels operating within this space. Which ones would finally make it to the list? This kind of ambiguity will naturally lead to push and pull among channel-owners to be included in that revered list of 30. Plus the pay channels cannot be ignored especially the mass channels who depend heavily on reach."

"Logically speaking, mass channels ought to be free-to-air, since reach is critical to them, while special interest channels should be pay," says Sandip Tarkas, president, Media Planning Group (MPG), South Asia. "Since mass channels have been deriving 30 to 40 per cent revenues from subscription in the last two or three years, they would be unwilling to give up this viable stream of revenue."

Though no official comment has been forthcoming on the subject, industry sources point out that ZEE and Sony Entertainment Television (SET) may go free-to-air, post July 14. "That is the only way, they can retain their audience and consequently their advertisers," explains a channel executive. "STAR might remain pay because they are leaders in their category. But the issue of availability of set-top boxes coupled with the fact as to whether these boxes should be analog or digital and whether each box will be compatible with different broadcasters are critical at this point in time," he adds.

Kiran of Starcom opines that the first two months could see a downward trend in price and volumes (ad seconds) of channels. "It will go the negative way. However, much will depend on how many people are buying the boxes and which channels of relevance are going through the boxes."

Tarkas of MPG is also of the opinion that the first few months will see a drop in revenues especially advertising revenue. "Advertisers are adopting a wait and watch policy," he says. "But the real problem will emerge if TV viewing time falls. If an average Indian housewife is watching two hours of TV today, and post-CAS, it comes down to 1.5 hours owing to the quality of software (that is, television content) available, then there is a serious problem. Advertisers will have to consider other means of reaching their audience." © 2003 agencyfaqs!